A host of stakeholders speak frankly on what the Army needs to do to preserve its industrial base
By Army AL&T magazine staff
Preserving the unique and often highly specialized skills and capabilities of the Army industrial base is critical to the Army and to the nation. In addition to the organic industrial base, companies both large and small in the commercial base offer critical or hard-to-make products and services that ultimately result in critical systems that help maintain the U.S. military’s superiority.
Yet fiscal austerity is likely to constrain U.S. spending on national security even as the Army faces growing complexities and multifaceted dangers. Some of those companies may be at risk of losing their indigenous capabilities to develop and produce critical goods and services. So, too, may some of the Army’s own organic capabilities be at risk of ramping down to the point that they are no longer readily available.
“Critical Thinking” generally offers the perspective of a single thought leader from outside DOD and the defense industry on issues faced by the Army AL&T community. Our intent is to provide fresh opinion and expertise on difficult challenges. However, for this issue, we took a slightly different approach.
It’s clear that, just as the Army’s industrial base is broad and complex, so, too, are the interests and concerns of those who work in and around it. With that in mind, rather than reach out to a single individual with multiple questions, Army AL&T magazine reached out to multiple individuals with one question:
In your opinion, what does the U.S. Army need to do in the very short term, in the near term and in the long term to protect the skills and capabilities of its industrial base?
Here are the answers from 10 individuals representing a cross-section of big and small defense businesses, think tanks and interest groups. These views are the opinions solely of the individuals and do not reflect the policy or viewpoints of Army AL&T, the U.S. Army or DOD.
Seal Science Inc.
The United States’ ability to provide for the safety and security of its citizenry is being significantly impacted by a silent killer that has received almost no attention—the loss of critical engineering talent and the inability to attract the next generation of scientists and engineers who will make up the Army industrial base.
Misunderstood by many, the industrial base is not just six large prime contractors focused on producing equipment for the Army. The Army industrial base comprises mostly small to mid-sized companies that possess the intellectual property, specialized skill sets and unique technical capabilities necessary to develop the products used by our nation’s military. Small businesses employ most of America’s best scientists, engineers and skilled craftsmen to deliver products that make our military the best equipped, most advanced and most effective in the world.
Fiscal austerity is permanently crippling the Army industrial base, specifically the attraction and retention of the high-tech, highly skilled workforce that is the real foundation of the industrial base. The Army will not be able to be reconstitute that workforce when times require.
The defense industrial base has become the consummate underdog in the competition for our nation’s best and brightest young engineers entering the workforce. Top graduates who historically entered the defense industry were driven by a desire to serve, an opportunity to work on cutting-edge technology and a reasonable expectation of job security—all at a discount in salary to the private sector.
Today’s fiscal crisis is driving an industry drawdown that is different from those in the past. Fewer public dollars means fewer contracts, but it also means less private investment. Investment is needed to hold on to the defense industrial base’s essential infrastructure—its people.
Engineers, as very rational individuals, are deciding en masse to leave careers in the Army industrial base as further cuts in defense and reductions in workforce are forecast. Moreover, because of the already scarce supply of STEM [science, technology, engineering and math] graduates, the heavily recruited best and brightest engineers and scientists are choosing careers in social media and in nondefense-related industries.
In order to attract and retain the technical workforce required by the Army industrial base, resources are required to conduct the research and development (R&D) that allow our scientists to deliver the cutting-edge technology as well as to innovate and deliver future solutions and capabilities that our uniformed military uses in the field. R&D funding is critical in attracting the next generation of scientists and engineers, by providing them with the opportunity to learn on the job from our nation’s elite “retiring” engineers and to work with cutting-edge technology.
The Army industrial base, with its specialized workforce, must be treated as a national asset and insulated from furloughs, job “insecurity” and funding uncertainties. Moreover, DOD must develop a long-term industrial base strategy focused on core capabilities that are critical to maintain technological superiority.
For the first time in modern history, U.S. security is at risk due to the weakness in the total defense industrial base. As a consequence, the nation may no longer be able to produce certain essential military systems and capabilities. Facilities and equipment can be built and replaced relatively quickly—people and skills cannot.
Sikorsky Military Systems
To protect the skills and capabilities of its industrial base, the Army needs to focus on two critical areas.
First: Protect your multiyear commitments to the industrial base, even in this fiscally constrained environment. Multiyear contracts allow the Army to reap significant savings through quantity pricing. And they give companies the short-term financial security to continue investing in new technologies and more efficient manufacturing processes.
Very few significant technologies can be developed in the course of a single year, so a revenue stream over more than one year raises the certainty that companies will fund technology development projects that take longer than one year to mature.
More importantly, multiyear contracts allow prime contractors to provide a high degree of certainty to their own supply base. For many of Sikorsky’s small and medium-sized suppliers, predictable revenue maintains company viability.
Secondly, even with the short-term fiscal challenges, the Army cannot lose sight of its longer-term needs. The Army must clearly define the capabilities needed to prevail on the 21st-century battlefield, and allow industry to compete with innovative solutions and advanced technologies.
Without definition, the danger arises that those who work projects within a constrained budget environment will bring an unprecedented level of influence to a short-term focus.
The long-term view will mean protecting future programs like the Army’s Armed Aerial Scout (AAS) helicopter, or the Joint Multi-Role/Future Vertical Lift (JMR/FVL) program that seeks to replace the Black Hawk and Apache helicopter fleets in the mid 2030s.
Programs like AAS and JMR/FVL stimulate industry’s top technical minds to develop game-changing technologies.
Currently, an entire generation of engineering and technical talent could languish without ever working on a new-start, next-generation rotary-wing program. That is dangerous and shortsighted, and could “level the playing field” as it relates to our country’s current and future combat operations.
A clearly defined long-term view is required if companies are to continue their willingness to speculatively invest millions of dollars in R&D, without which our nation’s industrial base and long-term military superiority are at risk.
GEN Gordon Sullivan (USA, Ret.)
Association of the United States Army (AUSA)
As I reflect upon my time as chief of staff, I can remember an important message I shared with representatives of industry at AUSA’s Winter Meeting two decades ago. It still rings true today: “We must combine forces, leverage our resources and make the best decisions for the welfare of our Army and our nation.” Now, as AUSA’s president, I’m even more convinced that the Army’s partnership with the industrial base is key to success.
Many of the unsung heroes of the wars in Iraq and Afghanistan reside within the industrial base, which includes the 23 geographically dispersed government ammunition plants, manufacturing arsenals and maintenance depots that comprise the Army organic industrial base (AOIB), as well as commercial enterprises small and large. Their significant contributions to materiel readiness ensured that members of the joint force had the tools needed to accomplish the mission.
A healthy industrial base with the depth, breadth and diversity needed to support the joint warfighter—today and in the future—remains paramount to sustaining military operations in an uncertain, complex national security environment. Senior leaders face a difficult fiscal environment that requires hard decisions about how to prioritize spending on personnel, readiness and modernization.
A focus on four key areas—capacity, capital investment, modernization and workload—will chart a path for the future of the AOIB. This will allow the Army to leverage best business practices; maintain an experienced, skilled and specialized workforce; make prudent investments in modern, safe and capable infrastructure and equipment; and ultimately provide the capability for the joint force. Likewise, commercial enterprises that best meet the emerging readiness and modernization requirements of the joint force and embody best business practices to maximize return on investment of taxpayer funds will have the best prospects, now and in the future.
The secretary of the Army and the chief of staff of the Army said it best when they testified before the Senate Armed Services Committee in April 2013: “The ability to reduce the industrial base in times of peace but surge as required remains essential to equipping the Army, the Joint Force and, in many cases, our allies and coalition partners.”
For more information, see “The Army’s Organic Industrial Base: Providing Readiness Today, Preparing for Challenges Tomorrow,” online at http://www.ausa.org/publications/ilw/DigitalPublications/Documents/tbip-aoib/index.html.
President and CEO
A capable, responsive and resilient industrial base is essential to the national security of the United States. In order to retain the essential skills that underpin the base, there are five fundamental enablers that should be considered and incorporated into the Army’s approach, now and in the future.
First, maintain and expand an open and active dialogue between the Army—particularly acquisition managers—and industry. With data points that include product inventories, consumption rates, potential impacts due to force size reduction, and training or doctrine requirements, industry can make informed decisions that support the preservation of industrial base capability. To assist in the open dialogue, use and improve industrial base tools developed by joint life-cycle commands. One example is the Minimum Sustaining Rate database that helps identify the production and support levels necessary to avoid placing the industrial base at serious risk.
Second, an acquisition policy that incentivizes innovation, preserves intellectual property rights and streamlines contracting practices would improve and sustain the industrial base. Meaningful dialogue on long-term plans, ensuring a steady flow of information to inform industry planning and investment, is a necessary element of this policy. Also, it is necessary to address Army and DOD policy regarding competition and maintaining multiple sources for products. History demonstrates that repeated competitions and smaller awards to multiple suppliers present serious challenges for industry, which can swiftly erode capability and threaten the health of the supply chain.
Third, adequately funded programs and realistic requirements are essential. With clear and concise program requirements and plans, industry not only focuses on delivering key performance parameters and controlling cost, but also can more efficiently identify and develop critical skills to meet current and emerging needs.
Fourth, increasing the Army’s support for international sales could reduce and/or sustain current production costs. The resulting expanded market for U.S. military products would help lower procurement costs to the Army while helping sustain the domestic manufacturing base.
And finally, the Army, along with the other services, should continue to explore new ways to work productively with industry, academia and local communities to support STEM education. Investing in STEM education initiatives will help our nation attract, train and retain the next generation of innovators and skilled workers needed to lead the industrial base of the future.
Michelle J. Lohmeier
Vice president, Land Warfare Systems
Raytheon Missile Systems
I believe the Army and industry face similar challenges associated with sustaining the defense industrial base, and share responsibility for putting together collaborative, forward-leaning solutions that establish the right balance of investments in technology and talent.
In the case of technology, the Army must fully implement the recommendations put forward in its latest industrial base study. For example, the Army has made protection of the Abrams main battle tank industrial base a priority and is investing in key subsystems accordingly. The precision munition and missile industrial base is particularly reliant on technologies that exist in the sub-tier supplier base. Going forward, Army and industry must work jointly to identify critical, at-risk companies and develop roadmaps for sustaining investment in them during the downward trend in defense spending.
In addition, industry must challenge itself to retain a tight focus on evolving core capabilities and products in a way that increases capability and reliability while reducing cost. This aligns well with our desire to further optimize operations and deliver even more value to the Army acquisition customer.
DOD and industry must also face head-on the dual challenge of a decline in new college graduates with technical degrees and the aging of our respective workforces. Companies like Raytheon have launched STEM initiatives, ranging from middle school to university, that encourage young Americans to enter math and science fields. In addition, we need to find ways to make a career in defense more appealing to young, tech-savvy people with lots of career options. We have a compelling story to tell about developing innovative solutions that protect our warfighters and secure America and our allies in an uncertain world.
Combined with a focus on sustaining key technologies, a joint approach to building the defense workforce of the future will be critical to protecting our industrial base.
Dr. Ron Rosemeier
Brimrose Corp. of America
The global battlefield as we know it is changing rapidly, and the American Soldier must be equipped to stay ahead of the enemy. As global technology and information become more commonplace, the ability to stay ahead is becoming more challenging. Therefore, it makes sense for the Army to look to smaller companies as it faces reduced funding allocations, because they don’t require the larger funding leads that bigger companies do.
At Brimrose, we are focused on helping the Army stay ahead in the technology race, to keep its edge in terms of critical battlefield thinking. We place tremendous effort in moving rapidly from concept to instrumentation. If we receive $500,000 to $1 million, that goes a lot further than it would for a larger company, which might require several times that amount to do the same thing.
For example, we are studying our leading-edge unmanned aerial vehicles and exploring innovative ways to use and control them. Further out, we have initiated tests in which drones can literally be controlled by the brain waves of Soldiers in the field. This kind of technology already is being used to help wounded warriors control artificial limbs with their thoughts. Complementary to that, we are studying how a Soldier thinks in the field, how he or she responds to stress, and what he or she can and cannot handle.
Are these at the outer limits of conventional warfare thinking? The answer is yes. But a lot of people thought Thomas Edison was crazy because he was ahead of his time. Smaller companies can move faster and move resources more rapidly, and they are unlikely to have resources tied up by the bureaucracies that plague some larger companies.
Michael E. O’Hanlon
Senior Fellow, Center for 21st Century Security and Intelligence
Director of Research, Foreign Policy Program
In assessing the health of the national security industrial base, we can take several approaches, each of which has its own value:
- Try to preserve defense employment in general, especially in a time, like the present, of national economic difficulty and need for federal fiscal stimulus. In other words, try to save jobs.
- Seek to preserve the immediate capacity of our industrial base to ramp up production fast in the event of a national security surprise.
- Attempt to keep key manufacturers in crucial areas of industrial capability as healthy as possible.
- Promote ongoing technological advancement by paying special heed to those parts of industry that are also pushing forward scientific and technological frontiers, with linkages to R&D and basic science activities.
Because these industrial base goals are quite different from one another, it is important to be clear about which ones a given policy might support. As a general proposition, the latter two are of greater concern to me than the first two, in light of scarce defense dollars and downward pressure on Pentagon budgets, combined with our generally adequate inventories of advanced military gear today. This is especially true for many ground combat systems, which, while extremely important to our nation, may not always be as technologically sensitive or advanced as, say, stealth aircraft or nuclear submarines or tilt-rotor aircraft.
As such, without disregarding the first two concerns entirely, I would submit that we focus more on advanced, avant-garde and/or endangered technologies. How to do this? In its “Annual Industrial Capabilities Report to Congress” (2012 edition), DOD lists a number of areas of military technology and manufacturing capacity that it deems to be at risk, given trends in overall defense budgets as well as specific developments within the Pentagon’s acquisition accounts. These areas of technology are rather specific in some cases and include the following:
- Heavy forgings.
- Heavy castings.
- High-precision bearings.
- High-temperature and low-temperature co-fired ceramics.
- Rare earth elements.
- Long-range cruise missile propulsion technologies.
- Tri-mode seekers.
- Solid rocket motors.
- Thermal batteries.
- Rayon precursor material.
- Triaminotrinitrobenzene (TATB) explosive.
- Advanced fuzes.
- Ammonium perchlorate.
- Butanetriol trinitrate propellant.
This list is a good place to start. It is not the end of the debate, to be sure. But by mapping various Army-related manufacturing capabilities against the above list, we can perhaps construct a first draft of those technologies that most require our vigilant oversight and perhaps even our nurturing. And then, with that first draft in hand, we can move on to a second draft. But there needs to be a place where we begin.
Lt Gen Lawrence P. Farrell Jr. (USAF, Ret.)
National Defense Industrial Association
The Army, like the other services, is facing a big hill. Continuing pressure from the 2011 Budget Control Act (BCA), combined with the sequester, is squeezing needed funds as the Army faces a tough transition from continuous war to the need to reset the force. One major issue in the transition is the health of the industrial base in a downsizing environment. The latest budget deal provides some breathing room in BCA budget caps. How, then, to protect critical capabilities in the base?
A first step is to recognize that company downsizing, defense business exits and consolidation are certain. So we need a way to assess the likely impact on critical suppliers of coming budget levels.
A model program for this already exists in the munitions area. A few years ago, the Joint Munitions Command (JMC) and industry undertook a collaborative project to develop assessment tools for the situation we face today. One of these, the Industrial Base Assessment Tool provides the ability to identify the impact of a given budget on a specific product area. Another tool, the Minimum Sustaining Rate tool, permits the JMC and the Single Manager for Conventional Ammunition to identify the impact on key production facilities (read: businesses).
These methods, if expanded and applied to other Army industrial base sectors, would go a long way toward ensuring the survival of critical indigenous capabilities in the Army industrial base.
In my experience as a former DOD executive and combat veteran, determining and defining an industrial base’s near-term and lasting value was critical to deciding how a requirement was established and to what extent the American industrial market could meet those requirements. There is a misperception in the defense community—both on the procurement side as well as the industrial base—that the commercial or defense market should be able to answer all requirement needs if DOD could just write a better requirement or invest in the necessary infrastructure absent a requirement.
Unfortunately, specifying a better requirement demands that those responsible for authorship are capable of predicting a future threat, and securing infrastructure investment assumes that the need will be imminent or takes years to procure. But the time invested in guessing about the future will not produce a better force structure—nor will it matter, if the nation pays for infrastructure designed for the wrong future.
The alternative approach to ensuring a responsive call to arms is based on investments in the practical sciences—electrical and mechanical engineering, electronic engineering and chemistry—rather than basic sciences. These skills serve to germinate a community that is available for today and is necessary to prepare a workforce for the future. Lasting employment in these science fields occurs through rapid fielding, constant experimentation and iterative designs for the creation of new products over time.
A lasting industrial base, then, is one that can employ and train these skills. It is one that allows for failure through trying, creation through doing, and success by iterating product design—without depending on a single funding source. An industrial base solely dependent on defense funding, making payroll by delivering existing products at a slow, steady rate, will not survive a competitive market.
In my experience as a current corporate leader, making payroll is accomplished by investing in the future through workforce education, steadily delivering new products and participating in or creating new markets. This is not done through reliance on grants by the federal government or by paying the high cost of doing business with the services, but by preserving and reinvesting profits in workforce skills and in new product development.
The question should be: To what extent has a company invested in its own future? How much does it cost to do business with the Army? How long does it take to get on contract? How many innovative, small and agile product-oriented companies are being nurtured?
Disproportionate payments to training serve to secure a workforce for today; service-related contracts solve current problems; and funding laboratory facilities keep bases open. But none of these fuels a future. Perpetuating a current product base made for a threat that is long past, rather than by investing in the future serves only to prolong the inevitable. The best near-term protection against an unknown future is through funding the practical science skills in engineering, and more reliance on industrial commercial standards as a guide.
Associate Professor of Public Affairs
Lyndon B. Johnson School of Public Affairs
University of Texas at Austin
(Editor’s note: From 2010 to 2012, Gholz served as senior adviser to the deputy assistant secretary of defense for manufacturing and industrial base policy.)
The Army needs a political game-changer. Too many of its proposed acquisition budget adjustments have foundered in Congress. For its part, Congress has seen too many well-intentioned but overambitious investment plans end in technological failures. Representatives are inclined to go with what they know works, which also happens to prop up government spending in their districts. Meanwhile, prime contractors’ experience tells them that continuing production is the reliable way to profits. The industry’s poor working relationship with its DOD customers in recent years makes it hard to trust an alternative path forward.
So when the Army proposes to temporarily suspend the production of tanks, infantry fighting vehicles or trucks—the warfighter has enough right now—the legislative process recoils. Rather than giving the Army authority for targeted investments to right-size facilities, improve the manufacturing process or allow workers to practice critical skills, Congress directs spending for procurement of long-lead items and otherwise ties the industrial base to current production.
The Army and the nation would be much better off with the targeted investments. This alternative would cost less, because it would not require as much material or large-factory overhead. And each dollar spent would be much more likely to go to a critical capability, whether in engineering, facilities improvement or high-end workforce skills. The Army would still allow prime contractors to profit. Critical subcontractors would also work directly with the team.
Everyone wants to help fragile niches in the defense industry. But instead of a three-way working relationship among industry, Congress and the Army, the Army has been the odd man out of the political coalition. The key remedy is for the Army to rebuild trust with its industry partners; if industry and the Army are on the same page, Congress will follow.
The Army has been working on it for several years, but the job is far from done. Badgering industry for short-term overhead savings, blaming industry for program difficulties and trying to shift program risk to contractors all just reinforce industry’s embrace of traditional lobbying strategies. It is time for a new partnership.