ARTICLE

January 2004

Washington Pulse

by Geoff S. Fein

Pentagon to Assess Defense Industry Capabilities
The Pentagon is undertaking an assessment of the defense industrial base’s capabilities to respond to the military services’ needs, according to Suzanne Patrick, deputy undersecretary of defense for industrial policy.

Her office is analyzing five functional concepts relevant to the defense industry: battle space awareness, command-and-control, force application, protection, and focused logistics, she said in a speech at the 2003 Defense Manufacturer’s Conference.

This month, her office is publishing its first report on the concept of battle space awareness, said Patrick. The reports based on the other four concepts will follow in early 2005, she added.

“The aim of this series is to redefine and reassess…which industrial base capabilities are truly critical to the war fighter,” she said. The ultimate goal is that the description of these critical capabilities will help re-focus the manufacturing base, she added.

“Where we identify deficiencies, we will propose remedies: be they in increased S&T [science and technology] funding, different program management or acquisition strategies, or collaborative measures with other agencies of the government,” she said.

In response to Operations Enduring Freedom and Iraqi Freedom, Patrick’s office “quietly processed more than two dozen changes in industrial priorities to bring needed equipment to the war fighter on an urgent basis.” The items ranged from multi-spectral targeting arrays for unmanned aerial vehicles to the Spectra Shield plates for anti-ballistic vests deployed with the soldiers in Iraq.

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Industrial Base Study to Be Briefed in 2004
The Center for Strategic and International Studies plans to brief senior Pentagon officials on its most recent research work on the defense industrial base.

CSIS is hopeful that this study, unlike many other studies produced in recent decades, will have an impact on policy making.

Leading the CSIS research work is Pierre Chao, a top defense industry expert. “All the good ideas are out there. We just have to get them implemented,” Chao told senior defense executives.

There are serious misunderstandings about the defense industry, he said, most notably the assumption that the massive budget increases in recent years have boosted spending on new weapons systems. That is not the case, said Chao. “It’s the first time in 60 years that the defense budget is going up, but the investment accounts are not keeping up.” The procurement, research and development budgets have become “bill payers” for more pressing needs, such as personnel, operations and maintenance.

R&D investments, for example, are down from 4 to 2 percent of the defense budget. “We are eating our seed corn,” he said. These are not “happy fat times” for the industry.

Another concern is Social Security and Medicare, he said. “To cover the baby boom generation benefits will cost $35 trillion to $45 trillion. It’s the biggest threat to defense spending.”

Chao also cautioned industry executives that the defense sector could be vulnerable in the future, if government spending declines, because contractors tend to be purely focused on military work, rather than diversified into commercial areas.

“From 1880 to 1990, the industry has been fairly well integrated with the commercial sector,” said Chao. In the past 10 years, there has been consolidation, and the message from Wall Street has been to “stick with what you know.”

The top tier of the industry mostly is dependent on defense contracts. “That hasn’t happened in 100 years,” Chao said. “The fundamental issue is that we’ve lost a lot of the traditional shock absorbers,” because Wall Street didn’t want diversification, he added. “There is a higher risk now of being too DOD dependent.”

The space sector also will be addressed in the CSIS study.

“Space has major unresolved issues,” Chao said. Although there is some recovery in the satellite market, “investors view it as the airline industry: it can’t get any worse. … There is too much capacity and a lack of demand.”

Transatlantic cooperation in the defense sector is another topic of interest for the CSIS research group.

“The mood is pretty bleak,” said Chao. “‘Buy America’ has scared the heck out of everyone.”

He predicted it’s unlikely that there will be any “mega-mergers in the near term” between U.S. and European companies. “The political mood is not conducive.”

One bright spot in transatlantic industrial cooperation is the NATO Airborne Ground Surveillance program, Chao noted.

“I can’t think of a better example that points to positive things,” he said. “It’s not a Fortress Europe vs. Fortress America. It’s a legitimate military requirement.” Both teams competing for the contract include companies from the United States and several European countries.

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NORTHCOM Faces Growing Need for Information
Sharing information across government agencies and obtaining a “common operational picture” are key goals for the U.S. Northern Command, said Air Force Maj. Gen. Dale W. Meyerrose.

As director of architecture and integration at U.S. Northern Command, Meyerrose has helped coordinate 47 inter-agency exercises during the past 12 months. At least 85 organizations participated in the exercises, he told a conference of the Institute for Defense and Government Advancement, in Arlington, Va.

“We have mapped out how we connect to 650 organizations across the country,” said Meyerrose. “Two dozen of those contribute, on a day to day basis, to our common operational picture.”

It’s not a well-known fact that every man, woman and child in the United States is within 75 miles of a National Guard facility, Meyerrose said. “There are over 5,600 armories in the United States. Every one of those is a potential launching pad for extending our capability to assist.”

Northern Command’s ability to respond to a crisis was tested on February 1, 2003, in the hours following the space shuttle disaster. “That was a seminal event in our maturation in understanding how we needed to do business in this AOR [area of responsibility],” said Meyerrose.

“In our AOR, the players change in every instance. … On 1 February we gathered 10 new partners in the first 90 minutes after the shuttle went down, for purposes of just opening lines of communications.”

The Northern Command, responsible for homeland security, has a “fairly sophisticated information exchange environment,” he noted.

Information sharing is not necessarily seamless, but it has improved considerably, he said.

Among the biggest challenges are breaking through the cultural barriers and developing trust. “We have to motivate organizations to be willing to grant access and know that access will have the right protection parameters,” Meyerrose said. “Many people we deal with don’t have Defense Department clearances.”

The Global Command and Control System is the Pentagon’s backbone for all defense and military operations, but it only runs on the classified Siprnet.

Most government agencies do not have access to Siprnet, Meyerrose noted. “GCCS is great for connecting with traditional partners. But what about getting that secret information out to state/local authorities?”

“The intelligence community is working very hard to make information available,” he said. “In the meantime, we are doing practical things, as part of the national response plan.” For example, there is a coordinating officer at Northern Command assigned to work with all government agencies. “We have already deployed encrypted capability to those elements that have clearances,” he added.

Current encryption systems, based on firewalls and network sensors, are only “transitory technology,” he said. A better alternative is “object-oriented encryption,” where the focus is on protecting the data, rather than the network.

“I agree with the business of protecting information,” he said. “But protecting information today equates to protecting the network. It is my belief that if we move our focus to protecting the information, then we’ll make a lot more progress. …

“When you protect a closed network like Siprnet, you can’t offer it to anyone else. You can’t readily and quickly join in. We need to rapidly access. … That is why object-oriented networking appeals to me.”

Object-oriented encryption puts “protective wraps around the packets of information,” he explained. “Then you ensure that anyone who you want to have access to that information has the correct ‘unwrap’ capability.”

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