The new deputy undersecretary of defense for industrial affairs,
Suzanne D. Patrick, will be expected to address a growing concern
at the Pentagon: how to maintain competition in critical markets
in an era of rapid industry consolidation.
Patrick reports to the undersecretary of defense for acquisition,
technology and logistics, Edward C. "Pete" Aldridge.
Jeffrey Bialos, who had Patrick's job during the Clinton administration,
said that she comes to the Pentagon with "solid industry credentials,"
having worked as both a staffer for the secretary of the Navy and
as an investment manager at Sanford C. Bernstein and Co., a Wall
Street capital management firm. There, Patrick provided advice to
clients concerning the defense and aerospace industries.
A commander in the U.S. Naval Reserve, specializing in defense
economics, Patrick was a George C. Marshall scholar as an undergraduate
at Randolph-Macon Women's College. She received a master's degree
in national security studies from Georgetown University and holds
certificates in international relations from the Institute D'Etudes
Politiques in Paris and in aerodynamic design from the Virginia
Polytechnic Institute.
"I think she's exceptionally well qualified for the job, and
her affiliation with the military and her Wall Street experience
will be a benefit," said David R. Oliver, former principal
deputy undersecretary of defense for acquisition, technology and
logistics. "Her private sector background on Wall Street will
give her the expertise and insight into why and how the Street reacts.
She will be able to look at things from the best interest of defense.
"If you don't understand how Wall Street is going to react,
then you are likely to react differently. She understands that it's
all part of the same picture," Oliver said. "If you haven't
been in that arena, then you're quite surprised when the Street
responds to lots of different issues—you don't want to get
buffaloed by that. She won't get overly excited, and will be able
to function in the best interest of defense, which is her job."
"In my judgment, her experience in finance will help us develop
cost-effective policies, not only for our armed services, but also
for the military services of our allies, who depend on our services
for their weapons acquisition needs," said retired Air Force
Maj. Gen. James McInerney. "She has over 20 years of experience
in aerospace industry finance and weapons system acquisition for
U.S. and NATO forces," he added.
According to Bialos, Patrick's experience in international markets
will be helpful in her new position. In the 1990s, she studied the
defense industries of Hungary and Czechoslovakia, and supervised
research and development projects between Hungarian research institutes
and the U.S. aerospace firm, United Technologies. She rounded out
her career on Wall Street as portfolio manager for New Poland Eagle
Investment Advisors.
Bialos stressed that understanding competition in defense markets
is critical to setting future industrial policies for the U.S. industrial
base. Mergers, for example, will have to be monitored carefully.
"The first major mergers that the new administration reviews
will set the tone and send significant signals on their views toward
competition. In that regard, allowing a merger to [create a] monopoly,
whether it would be in ships, aircraft or any other sector, would
send a signal that is contrary to the long-standing Defense Department's
policy on mergers. I would hope that she does not go that route,"
said Bialos.
Bialos noted that the Bush administration needs strong leadership
in defense policy. "We have come from a period of declining
defense budgets to a period of stable and slightly increasing budgets.
There are several competitors in most of the defense markets. The
challenge is how to maintain that competition. I hope and expect
that the new administration will maintain a competitive industrial
base and not move toward monopolies in defense markets," he
said.
According to McInerney, "There are a great deal of factors
that go into determining the essential elements of any industrial
policy. To make decisions in that field, it is not only important
to have a great deal of experience, but also the capability to figure
out where those policies will take you."
Though she is not yet well known within the Defense Department,
neither Bialos nor Oliver believes that will hinder her performance.
"They were looking for skill sets, rather than expertise,"
said Bialos. "The question is, do you understand competition
in defense markets, not necessarily are you a full-fledged expert
on a particular program?" he said.
"She administered an international fund," Oliver said.
"She has spent a great deal of time on central Europe, it is
good to have a person in the job who has this experience, because
there are numerous international issues involved."
Oliver added, "It's not that any of these jobs are so difficult.
The question for the people they put into these posts is, have they
demonstrated the background and ability to assimilate new ideas
and make an evaluation of facts and research? She has a large staff
to assist her and a significant sum of money to procure additional
research as needed," he said.
Citing scheduling conflicts, Patrick was unable to comment for
this article.