I've excerpted two small passages from this week's Defense Science Board report on the defense industrial base (here and here), and now I will try to summarize.
The report is likely the most radical and comprehensive call for reform by a DOD advisory panel of the industrial base since the 1993 "last supper" prompted the frenzy of consolidation that continues even today.
The report, prepared by a DSB task force chaired by former President Bill Clinton's top weapons buyer Jacques Gansler, is also an alarming indictment of both the industry's increasingly anti-competitive practices and the Pentagon's inability or unwillingness to stop it.
Given the report's description of the problem, the Gansler task force's recommendations seem perhaps timid. The reports calls for halting mergers and acquisitions activity and re-injecting competition by embracing foreign and commercial firms offering relevant technology (erm, tankers perhaps?).
To be sure, these are not uncontroversial ideas. Embracing foreign and commercial firms means re-writing the rulebook for trading and sharing sensitive technology with overseas suppliers, not to mention tossing out the entirety of the government's arcane and sometimes frivolous cost accounting standards. Does anyone believe that kind of change is possible in the current political/social/economic environment?
But, if the Gansler task force has chosen to go that far, may I ask: Why stop there?
Why accept the current structure of five super primes -- namely, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman and Raytheon? The often unhelpful market power wielded by these uber-contractors upon the taxpayer is the result of Pentagon policy.
So, if such power now causes more harm than good, the same policy instruments used to create this clout can be called upon to strip it away and de-consolidate the industry.
The report is likely the most radical and comprehensive call for reform by a DOD advisory panel of the industrial base since the 1993 "last supper" prompted the frenzy of consolidation that continues even today.
The report, prepared by a DSB task force chaired by former President Bill Clinton's top weapons buyer Jacques Gansler, is also an alarming indictment of both the industry's increasingly anti-competitive practices and the Pentagon's inability or unwillingness to stop it.
Given the report's description of the problem, the Gansler task force's recommendations seem perhaps timid. The reports calls for halting mergers and acquisitions activity and re-injecting competition by embracing foreign and commercial firms offering relevant technology (erm, tankers perhaps?).
To be sure, these are not uncontroversial ideas. Embracing foreign and commercial firms means re-writing the rulebook for trading and sharing sensitive technology with overseas suppliers, not to mention tossing out the entirety of the government's arcane and sometimes frivolous cost accounting standards. Does anyone believe that kind of change is possible in the current political/social/economic environment?
But, if the Gansler task force has chosen to go that far, may I ask: Why stop there?
Why accept the current structure of five super primes -- namely, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman and Raytheon? The often unhelpful market power wielded by these uber-contractors upon the taxpayer is the result of Pentagon policy.
So, if such power now causes more harm than good, the same policy instruments used to create this clout can be called upon to strip it away and de-consolidate the industry.
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