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Washington Pulse
December 2004
Washington Pulse
Reported by Sandra I. Erwin
This Month:
Defense Industrial Policy Debated
Army leaders and defense industry officials will convene in Washington, D.C., this month to discuss the future of "industrial preparedness," said Army Assistant Secretary Claude M. Bolton Jr.
A key topic will be the Army's past failures in projecting equipment demand. Bolton, who is the Army's top acquisition executive, said that the service needs to do a better job forecasting long-term needs, so contractors can anticipate and prepare for sudden surges in production.
The goal is to prevent what happened two years ago, when the Army was caught short of body armor and steel-plated Humvees to supply soldiers in Iraq. Once the shortage was identified, it took about a year for depots and contractors to ramp up production lines. Bolton told a recent industry conference that he would like to see these cycles shortened from months and years to days and weeks.
When workload and budgets soar, it's easy to keep the lines warm, but the Army, Bolton said, would like to find a way to maintain industrial readiness during slow times.
"We are meeting our tactical industrial requirements," Bolton said. "Now, we need to address our strategic industrial requirements."
Military Pork-Barrel Projects Rolling In
It has been a banner year for the Army's research arm, as far as congressional largesse goes. The Tank Automotive Research, Development and Engineering Center received an extra $152 million in fiscal year 2005, which will be spread among dozens of projects. "This is the high-water mark for TARDEC for congressional adds," said Richard E. McClelland, the agency's director. The good news, he noted, is that many of the projects are for much-needed technologies to upgrade Army trucks and trailers. The bad news for contractors is that the money comes with strings attached. Before any companies rush to spend millions of dollars writing bid proposals, they should make sure that the program they are targeting is not a "sole-source," which means that the Army must award the contract to the company that a lawmaker specified. "My advice to industry: don't make a great investment on these. Invest in a phone call first. Find out what the lay of the land is."
$60B Estimated for Iraq Reconstruction.
The cost for the reconstruction of Iraq's basic infrastructure should top $60 billion, according to David Nash, former head of the U.S. office in charge of the rebuilding efforts. Out-of-control looting only has compounded the woes of the Iraqis, he said. A case in point was the widespread plundering of electricity plants last year. In fact, the price of copper dropped significantly in the Middle East, because looters were pulling down high-voltage wires, smelting the copper and transporting it to Iran and elsewhere. Cement shortages also are a huge problem, said Nash. Iraq has 12 cement factories, but the reconstruction program will need 10 times more than what they can produce. That explains the huge markups that builders are paying for foreign-made cement.
.Rebuilding Also Plagued by Rampant Corruption
Nash told a gathering of defense contractors that they should expect trouble getting equipment into Iraq. Suppliers of heavy construction gear claim that many of their shipments sit in Kuwait and can't get transported into Iraq. A major hurdle is "border crossing corruption," said Nash. "Getting stuff through the border is difficult. The roads are spotty."
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