President's Corner

Industrial Base Issues on the Agenda for 2007

By Lawrence P. Farrell Jr.

February 2007 - Every year at NDIA we engage in an earnest debate about the issues we believe to be critical to the defense community.

Based on input from our members, we have identified six issues that, for all intents, affect everyone who is involved in the business of providing goods and services to the nation’s military, homeland security agencies and first responders. As we begin a new year, I believe it is important to highlight these concerns, and to ponder their significance.

Issue 1: Maintaining integrity and responsiveness of the acquisition process.

An equitable procurement process that supports the needs of the war fighter must achieve high levels of integrity and fairness. The acquisition process was designed foremost to be accountable, often at the cost of efficiency. Our national security demands an effective acquisition process that is transparent and ensures the ability of the government to purchase high quality products and services for fair prices.

There is no place in our procurement process for personnel on either side of a transaction that behave in a manner unworthy of public trust. Industry and the government must reinforce high ethical standards in the entire acquisition process. The federal procurement system must support this by enforcing effective checks and balances to eliminate the potential for unethical conduct, on all sides of a transaction.

Issue 2: Promoting defense workforce sustainability.

The Defense Department’s acquisition workforce faces considerable challenges. During the next five years, nearly 50 percent of staff with these critical skills will be eligible for retirement. It is important to develop and preserve qualified acquisition personnel. We also need effective training with empowered leadership that supports and rewards acquisition professionals’ use of individual judgment in decision making within the regulations. It is also obvious that in the past we have experienced failed leadership in some elements of defense acquisition. Superior leadership continues to be a central element in regaining and maintaining the public’s trust in acquisition.

Issue 3: Investing in technology to support the war fighter and maintain readiness.

Funding for ammunition procurement is expected to shrink significantly during the coming years. The Defense Department and industry must begin now to plan the cooperative steps needed to secure a U.S. munitions industrial base. Historically, funding for procurement of ammunition has declined at high rates. Between 1985 and 1994, it dropped by 80 percent as budget cuts were made across the board. Little consideration was given to the consequences of this decline on long-term viability of the industrial base, and no planning was done to maintain munitions production capability. The result was a crippling of the industry. More than 75 percent of the companies exited the business.

The Defense Department and industry must determine the size and scope of an objective munitions industrial base that can be achieved in five years, and it should have a skilled workforce; modern and efficient equipment and facilities capable of surge performance.

In other areas of the industrial base, the Defense Department must boost funding for ground robotics research, for advanced manufacturing technologies and for aircraft survivability.

Issue 4: Improving small business utilization.

Recognizing the unique and vital role that small businesses play in the defense industry and the economy of the United States as a whole, an effective small business policy is critical to the health of the industrial base. Small businesses provide some of this nation’s most innovative technologies. Two efforts, the Small Business Innovative Research (SBIR) and the Small Business Technology Transfer (STTR) programs are valuable. But there is a lack of marketing and business experience that often prevents SBIR/STTR technologies from entering the marketplace and transitioning into the defense community. Commercialization assistance beyond development funding of a technology would greatly enhance the success of these programs and the return on investment of the taxpayer dollar.

Issue 5: Preparing for defense transformation.

Information sharing and interoperability are key challenges for the Defense Department, the intelligence community and the Department of Homeland Security. Achieving this vision requires a framework of standards and architectures acceptable to both government and industry. Transforming acquisition, management, and operation of business information systems through increased application of commercial information products will allow the government to more effectively support national goals.

Issue 6: Ensure international competitiveness of the U.S. defense industrial base.

U.S. companies operating in the international marketplace face a major challenge. On one hand, there is an unprecedented push from many nations to develop future weapon systems in a coalition environment. On the other, there is a new imperative for vigilant controls of sensitive defense-related technology and data. To address these issues, the U.S. government has entered into bilateral discussions with its key allies. A prerequisite to participation in many U.S. led multi-national partnerships on defense procurement has been the strengthening of allies’ export control regimes, especially third party transfer restrictions. Recently, the argument for stronger export controls has been buttressed by the growing threat of terrorist access to sensitive technologies. This “push” to tighten controls on technology juxtaposes with the “pull” of greater and more effective multi-national participation in weapon system development. These two opposing forces must be reconciled.

NDIA opposes the widespread imposition of protectionist measures and other actions that suppress innovation and competitiveness.

These six issues were selected based on input from our members. They were refined and approved by the NDIA Board of Directors.

The discussion associated with each one of these issues is too extensive to be covered in this column. A complete description of these issues can be viewed on the NDIA web site (www.ndia.org) under Advocacy-Policy and Top Issues. The bottom line, however, is simple: We want to ensure that the nation has a globally competitive industrial base that can continue to support the world’s most powerful military force.

I welcome your thoughts.

Please email your comments to LFarrell@ndia.org

President's Corner

Industrial Base Issues on the Agenda for 2007

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