The Year Ends on Some Positive Notes

As we enter the holiday season and reflect back on the year, we all have much to be thankful for: family, friends and the safety and security of living in our great country — one that is clearly the “indispensible nation,” as former Secretary of State Madeleine Albright once described it. If you enjoy the fruits of being an American, then you are by all objective measures a most fortunate human being.

But moving past the personal to the professional, there have been some positive developments during the past few weeks that pertain to our national security and the immediate health and future prospects of the nation’s defense industry.

In late October, Congress agreed to a budget blueprint that is very much in the nation’s interest. Former Speaker of the House Rep. John Boehner, R-Ohio, played a major role in pulling together sufficient support to pass budget legislation in the House by a vote of 266-167, followed the next day by Senate action that passed 64-35. Shortly afterwards, President Barack Obama signed the bill into law.

Budget resolutions do not need to be signed by the president, but this particular legislation required his signature as it included two significant items. It included language that raised the debt limit and pushed out the need to reconsider it into 2017, which would be the early days of the next administration. This means that an item that has served as a flash point over the past few years will now be removed from the political agenda for the remainder of the Obama administration.

And perhaps of more immediate concern, the legislation raised the caps imposed by the 2011 Budget Control Act, thereby avoiding the threat of sequestration for two years.

This action, which may very well mean the beginning of the end of the caps stipulated by the act, allotted an additional $80 billion over two years, evenly divided between defense and non-defense discretionary spending, a step that greatly reduces the pressures being felt within the defense budget, particularly the modernization accounts.

Recall that in my September column, I strongly advocated that Congress follow its own procedures in crafting the annual budget, a process normally called “regular order,” where budget resolutions are followed by appropriations bills that the president signs into law. I was heartened when new House Speaker Rep. Paul Ryan, R-Wis., said it “would allow us to return to regular order in our budget process.” 

As the former chairman of the Budget Committee, Ryan has played a key role in solving the recent budget morass. I was pleased to hear his reference to the possible return of “regular order.”

The second item of significance was the recent award of the Air Force’s long-range strike bomber program to Northrop Grumman. I have no special insights on the technical aspects of the proposals submitted by Northrop Grumman or the competing team of Boeing and Lockheed Martin that have protested the award. The Government Accountability Office will have to decide on the issues raised in the protest. But from the strict perspective of the health of the industrial base, it was an important decision.

In 1980, when President Ronald Reagan was elected and restarted the Rockwell B-1 program that ultimately produced the B-1B Lancer, there were some 14 companies capable of designing, manufacturing and fielding high-performance military aircraft. By last year that number was down to two and a half — with Northrop Grumman being the half. Had Northrop not won this competition, as National Defense magazine suggested a few months back, it might have exited the military aircraft market. This would have left only two providers in this important industrial space: Boeing and Lockheed Martin.

Air Force Assistant Secretary and Service Acquisition Executive William LaPlante emphasized that industrial base issues were “not at all a criteria in the source selection.” I have no basis for feeling otherwise, and I certainly take his comment at face value, but at some point, industrial base considerations are legitimate concerns. More players in the defense market translates to more technological vibrancy and competition-induced cost control. That is what defense customers want, what our warfighters need and what the taxpayers deserve.

Certainly one can get technological innovation and cost control from two talented, healthy, well-managed companies. But the odds are quite high that one will gain much more from 14 such companies.

And, of similar importance, the process of making it to the award selection has taken four years. It is nearly the universal opinion of all authorities on defense acquisition that this process is simply too slow and laborious. So, getting to an award is itself a positive development.

As we close out 2015 and move into 2016, there are many things to be thankful for, as mentioned above. The coming year will be demanding as we deal with international developments, economic and financial challenges, and the inevitable excitement and uncertainties of a presidential campaign that will result in a new administration. The National Defense Industrial Association will also make changes as we reshape the organization to address emerging and expected conditions.

Count on this: We will continue to advocate for the industry and educate interested audiences about its actual circumstances. I cannot say with certainty that our efforts in 2015 played a major role in shaping the two developments detailed above — the budget agreement and the bomber award; but I think they probably did. And for that I thank the NDIA family.

Topics: Defense Department, DOD Budget