The Defense Department’s determination to keep the "winner
take all" acquisition strategy on the Joint Strike Fighter
(JSF) and the decision to not allow the country’s only two
nuclear shipyards to merge underscore the Bush administration’s
aproach to industrial policy, said Suzanne Patrick, deputy undersecretary
of defense for industrial policy.
"There are three major tenets that we consider when we make
industrial policy decisions affecting major weapons systems or warfare
areas," she told National Defense. "These criteria are
equally relevant to acquisition policies on major programs as they
are to proposed corporate restructuring initiatives."
The first tenet is a "strong commitment to the principles
of market economics and our confidence that these market forces
and companies’ responsibilities to shareholders will generally
result in cost-effective, innovative behavior," she explained.
Second is the "importance we place on the operational requirements
process as the best way to field weapons systems to war fighters
in a timely, cost-effective manner."
The third tenet is the ability "to look as far into the future
as practical, to assess our decisions" and make sure that they
reflect the Defense Department’s "transformation"
goals.
In the case of the JSF winner-take-all strategy and the source
selection, "it was important that we not engage in ‘bait
and switch’ practices in the end game," Patrick said.
"We were also confident that the competitive award process
had captured all of the best that our fighter aircraft industry
could encapsulate in two very exciting designs."
Members of Congress had pressured the Pentagon to make the winner
of the JSF contract, Lockheed Martin, share some of the work with
the losing bidder, Boeing. But the Defense Department rejected that
notion, on the basis that it was a fair competition and that the
rules of the game should not be changed arbitrarily.
However, Patrick said, "if Lockheed judges it appropriate
now or in the future to bring onto the team design or systems innovations
from other manufacturers, we are confident that they will do so."
Having a second JSF team would be prohibitively expensive, she
said. "To build and maintain a second production line and design
team would have likely cost $500 million to $ 1 billion …
effectively the cost of 10-20 additional aircraft."
Additionally, "as we looked to the future of tactical aviation,
with the operational experience with Unmanned Aerial Vehicles gathered
in Desert Storm, Kosovo, and now Operation Enduring Freedom, we
are confident that the future of tactical aviation will be much
less platform centric," Patrick said. "Hence, narrowing
our fighter aircraft industrial base to one team did not appear
to be a disproportionate risk."
On the shipbuilding side, the Pentagon endorsed the Justice Department’s
view that a merger of Newport News Shipbuilding and General Dynamics
Electric Boat would have created a monopoly and thus hampered competition.
The Defense Department did not oppose, however, the acquisition
of Newport News by Northrop Grumman Corporation.
"We viewed it as prudent to maintain the maximum level of
competition possible in this sector of shipbuilding," Patrick
said.
"As we looked out over the next 20 years, we have the requirement
to replace the Trident submarines in the 2020 timeframe," she
explained. Ongoing submarine programs such as the Virginia-class,
the Jimmy Carter class, and unmanned underwater vehicles are proceeding
successfully. Nevertheless, she said, "we could not be as confident
as we were in the case of fighters that we would not have to field
one more futuristic generation of nuclear attack submarines."
Maintaining two shipyards was considered appropriate, "in
order to secure a competitive base both for the potential requirement
for a next-generation attack submarine as well as the Trident replacement."