In the weapons-acquisition world, the “normal” ways of doing business are frowned upon around the E-ring these days.
And for good reasons: nearly $400 billion in weapon programs’ cost overruns; untold billions of dollars spent on hardware that doesn’t meet the needs of today’s military forces; and a procurement system that is so slow that by the time new technologies are fielded, the war is likely to be over.
Defense Secretary Robert Gates has told the military services to banish their Cold War worldview of arms buying. The problem is that no new business model has yet emerged to replace the status quo.
Dozens of acquisition reform studies provided ad nauseam accounts of what is wrong with the system. Congress has enacted reforms that only have led to marginal change. As it is, the Pentagon still fundamentally acquires weapons according to McNamara-era rules.
Gates has not pushed for a complete overhaul of the system — only for the system to make room at the table for nontraditional programs and for rapid acquisitions such as the mine resistant ambush protected armored truck. Gates often cites the MRAP as a case study of how the Pentagon was institutionally unable to respond to urgent needs until he personally intervened. The program quickly ramped up to produce $26 billion worth of trucks at a rate of several thousand per month.
What troubles Gates is that the MRAP feat would not have been accomplished had it not received such extraordinary level of attention from the high command. A similar from-the-top-down effort was needed to produce electronic bomb jammers.
So, can the institutions adapt?
Probably not to the extent that Gates wishes. The MRAP and jammer acquisition models were so far off the mainstream that it would be unrealistic to expect that scale of response from every program, says Roger Smith, former deputy assistant secretary of the Navy for expeditionary warfare. Both projects saw more high-level involvement than any he had ever seen, Smith says. “They threatened a lot of rice bowls.”
Executing these programs required unprecedented amounts of legal counsel to ensure actions would not lead to future litigation. Project managers also had to muster support from the weapons-testing office in order to expedite the evaluation of the equipment before it was shipped to war. “We all worked together” but more forcefully than would be the case under normal circumstances, Smith says. Senior officials also personally contacted the chief executives of each participating company. That also is out of the ordinary, Smith says. “We specifically had meetings with them to ensure they understood the intensity.”
The funding mechanisms for trucks and jammers also were remarkably unconventional, he says. Regular acquisition programs are subject to annual budget reviews and oversight that typically slow things down. “I don’t know that you can institutionalize this [the MRAP model],” he says. “You’d never be able to resource it properly.”
If Defense leaders are serious about permanently changing the procurement system, maybe they should consider instituting a “contingency team” that would have resident expertise in how to mobilize government and industry during a crisis.
On the industry side, the issue is complicated as well. When MRAP came to light, some companies weren’t invested properly, or had the depth in their balance sheets to compete, Smith says. Some cash-strapped firms ended up teaming with bigger contractors.
“Industry will lean into the challenge if we go out and ask them to do it,” Smith says.
But industry officials in recent months have cautioned that the Defense Department should not take the private sector’s readiness for granted. Last month, the Aerospace Industries Association published a study that called for the Defense Department to take into account the health of the defense industry in its long-term strategy. AIA President Marion Blakey says the partnership between industry and government is “weakening.”
Retired Air Force Gen. Charles Boyd, president of Business Executives for National Security, faults the Pentagon for not thinking about the state of a particular industry until a crisis erupts. “Nobody at the Pentagon that I know of spends a minute of his time worrying if the defense industry is healthy,” he says. “We can’t be a secure nation without that component.”
Norman Augustine, former chairman of Lockheed Martin, predicts that industrial responsiveness to military needs will suffer over time as companies diversify into commercial markets in anticipation of declining Pentagon spending.
“Companies that have been traditional defense companies are trying to broaden out of defense,” he says.
Augustine poses a hypothetical: When a company’s business is 20 percent government and 80 percent commercial, if an executive gets two phones calls — one from the defense secretary and the other from his biggest customer, which one do you think he’s going to take?
In all probability, the CEO will take calls from both. As Smith suggests, companies in this sector adapt and ultimately manage to satisfy their customers and shareholders.
So, until the next crisis erupts, it will remain business as usual.