By Marina Malenic
The Pentagon is looking to commercial manufacturers for product innovation and cost savings as the government prepares for a significant spending growth slowdown, the Defense Department’s top industrial policy official said yesterday.
“The defense industrial base is no longer immune to economic reality,” said Brett Lambert, the director of industrial policy in the department’s acquisition shop. “We must do more to encourage those in the commercial space, on the leading edge of technology, to provide product to the Department of Defense.”
Lambert was speaking at an event hosted by the Center for Strategic and International Studies, a nonpartisan Washington think tank.
Officials have warned that the Pentagon’s spending growth, which ballooned at the height of the wars in Iraq and Afghanistan, will likely slow to about one percent annual increases. Defense Secretary Robert Gates earlier this year launched an “efficiency initiative” to slash overhead that he would then apply to necessary program’s and front-line needs.
“Economic efficiencies are the first priority,” Lambert said yesterday. He added that he sees “tearing down barriers to entry” and “increasing coexisting with commercial products” in the Pentagon’s buying plan as a way to additional cost savings.
“We buy from everyone,” he said. “What has changed…is that we consume less and less specialized products, and we are thus more focused on the commercial world.”
Lambert hailed innovation as the primary driver of U.S. military dominance.
“We compete because we’re innovative, not because we manufacture more,” he said.
Asked whether the Pentagon’s industrial policy will have to expand to consider issues such as Northrop Grumman‘s [NOC] decision to rethink its involvement in shipbuilding, Lambert said “the market” would dictate companies’ decisions.
“Companies will make their decisions on what they perceive the market to be,” Lambert said. “We don’t have control over that.”
Several members of an expert panel who spoke following Lambert’s remarks noted that the defense industry is already struggling due to the lack of new-start military programs.
Chris Raymond, vice president of business development for Boeing‘s [BA] defense and space business, said defense companies have been internally funding many research and development projects over the past few decades.
However, “that’s not an infinitely sustainable model if no program comes,” Raymond said. “We need to leverage commercial where we can, but complete [commercial off-the-shelf purchasing] hasn’t worked that well.
“We’ll find a way to collaborate around new starts,” he added, “but, if there are none of those, industry dries up at every level.”
Raymond said the department must continue to “prime the advanced-design pipeline that leads to production.”
“We’re struggling as an industry…and we’re concerned about what happens five or 10 years hence,” he said.