The lead story in Defense News this week is “QDR Aims to Protect Industrial Base.” The article is based on a set of remarks made before an investors’ forum by Brett Lambert, the Pentagon’s industrial policy director.  According to the Defense News report, Lambert said that the QDR will spend “several pages” discussing “industrial policy, industrial base” and the fact that “the goods and services that the department relies on are far deeper into the economy than almost everyone [sic] appreciates.”  And, more particularly, Lambert noted that he was “not too worried about the top seven” defense companies “waking up tomorrow and not having a job.”  Rather, “I’m worried about the second-, third- and fourth-tier vendors….That’s where we’re going to focus a lot of energy in the next few years.”

I suppose the fact that OSD and the Pentagon are taking note of the potential problem with the defense industrial base is a good thing.  But we should be clear: throwing “a lot of energy” at the problem will not solve it.  This is not rocket science.  With procurement spending falling flat (or worse), ongoing programs being cut and significant new R & D on the back burner, the industrial base will suffer — and significantly.  Does anyone really believe companies are going to keep the best and the brightest on board to just finish out contracts or be able to attract new talent with nothing new of real note to work on?   And why, for that matter, is Lambert sanguine about the top companies?  Sure, they will cut work-force, perhaps consolidate even more and survive.  But what happens to those companies’ ability to sustain the engineering and scientific talent necessary to do the “out-of-the-box” development work that no small company can do or afford to do but which American military preeminence depends on?  And what happens to industry efficiency when there is even less competition?  And what defense industrial “surge” capacity will exist when we need it, once the industrial base has been cut to the bone, as it will be if the Obama budget plans for defense hold true?

Most importantly, the “systems integration” and program management capacity — the ability to keep things on track, which is only resident in the larger defense firms and which the government itself cannot do — to develop and field modern complex weapons will undoubtedly atrophy.   The irony is, when that time comes — and it will come — there will be a lot more money and time wasted as the defense companies relearn and retool to deal with the new demands.

There are no clever solutions here.  If you don’t spend a sufficient amount on defense procurement, the defense industrial base will in fact shrink, become less innovative, less capable.  The QDR can prattle on all it wants about the industrial base; it’s the budget that ultimately matters.


Gary Schmitt
is director of the program on advanced strategic studies at the American Enterprise Institute
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AEI