[pjw] NEWS: Defense industry needs 5 percent annual budget growth to stay healthy (Defense News 4/25)
Peace and Justice Works
pjw at pjw.info
Sun May 27 19:44:11 EDT 2018
Hello Peace and Justice Works supporters
As we brace ourselves for the flag-waving on Memorial Day tomorrow, it
reminds me that we used to (circa 1992-2000) hold a Peace and Justice Fair
on that holiday. The idea was to remmeber those who gave their lives in
war by working toward a world without war.
The unpredictability of this particular administration doesn't much change
this nation's history of wars for resources, regional/global dominance and
"Just Cause" (that was the name for the Invasion of Panama for those who
don't get the reference). But the below article jumped out at us during
the Iraq Affinity Group meeting on May 14, because as it's always said,
"Follow the money." The Defense industry is asking for 5% cost of living
increases or they won't be able to manufacture killing hardware and make a
profit. Boo hoo.
I also had downloaded links to a few pieces about the 15th anniversary of
the invasion of Iraq. Jeremy Scahill made a documentary marking 15 years
from the statue of Saddam Hussin being toppled in April.
Also, NPR (sometimes known as National Pentagon Radio, but, perhaps
compared to Fox News not so much) did a few stories, one of which I heard
back in March, about the anniversary. It had more insight about what
happened to Iraqis than most pieces.
We, the Liberators
OK, now here is the article about the Defense industry. Let's hope we can
make war nothing more than a memory.
peace and justice works
Defense industry needs 5 percent annual budget growth to stay healthy, says
new AIA report
By: Joe Gould April 25
WASHINGTON - The American defense-industrial base needs Pentagon
budgets to grow at least 5 percent per year to remain healthy and
stable, the industry's leading trade group said in a report
The report by the Aerospace Industries Association blames Budget
Control Act cuts and Congress' repeated deferral to continuing
resolutions for a steep drop in the market's number of prime
vendors. It's unclear exactly how smaller suppliers have been impacted,
but "the detrimental impact of budget cuts have been felt throughout
the supply chain," the report reads.
Recent years marked by brief government shutdowns and lengthy
continuing resolutions have yielded waste, disrupted major programs at
key milestones and driven inefficient spending practices at the
Department of Defense by forcing it to spend money faster, the report
argues. That hurt the industrial base and produced a magnified effect
at lower tiers of the supply chain.
"We can fix whatever acquisition problems we see, but if we don't have
stable, robust, balanced spending, our free-market economy will not be
able to respond to DoD's needs in a timely, effective way," John Luddy,
AIA's vice president for national security policy, told Defense News.
"It doesn't all boil down to money, but it starts with that."
The 5 percent figure intentionally hews to Defense Secretary Jim Mattis
and Chairman of the Joint Chiefs of Staff Gen. Joe Dunford's calls
for sustained budget growth through 2023 to maintain the country's
military edge over competitors Russia and China, Luddy said.
AIA's 10-page report contains 20 recommendations for Congress and the
Trump administration, all part of AIA's input into a governmentwide
study aimed at fixing gaps in the U.S. defense-industrial base,
which President Donald Trump ordered in July.
AIA, which represents more than 340 major aerospace and defense
companies and their suppliers, has welcomed the Trump administration's
study and leaned in with its own industrial-base working group to aid
"It's giving a marquee level of interest to things we talk about every
day," Luddy said.
A government-spanning task force created by Trump's executive order has
since presented internal interim findings, which identified risks in
the industrial base. The government's effort has yet to publicly
present its finding, but its conclusions are likely to influence future
defense policymaking on Capitol Hill and within the administration.
Upcoming for the study is a series of war games to show how well
certain industry subsets are prepared to surge in war scenarios and may
yet include a survey of defense firms.
The in-depth review will reveal where America's supply chain relies on
Russia or China, the two other great powers in the world.
Broadly, AIA's recommendations for a robust defense-industrial base
cover stable congressional appropriations, streamlined military
acquisitions, targeted technological investments and a skilled
"Our nation has entered an era of great power competition in which
there will not be time to 'play catchup' or surge to meet our war
fighters' needs," the report warns.
A two-year budget deal contained a big boost for national defense,
setting top lines for the Pentagon at $629 billion for 2018 and $647
billion for 2019. But AIA remains cagey, as Budget Control Act caps for
2020 and 2021 remain in place at $576 billion and $591 billion
"We've seen it happen where they get to the edge of the cliff, and then
they pass an agreement - and this [year] there was a very positive
development for defense," Luddy said of Congress' budgeting process.
"We have to hope that happens again, but we have to prepare for the
AIA not only recommends repealing Budget Control Act caps for defense
spending, but also embracing lot buys and multiyear procurement
vehicles. Citing disproportionate reductions to the DoD's research,
development, test and evaluation and procurement accounts, AIA
advocates stronger support for long-term R&D and infrastructure
Budget austerity and cost-based acquisition policies have left the
defense industry feeling squeezed and "serve to restrict the
competitiveness of the supply base, crowd out and tie up resources for
investment in R&D, personnel and facilities in government and industry,
and discourage new entrants and independently-funded technologies from
being offered to DoD," the report reads.
"Some acquisition practices aimed at controlling cost have merely
established non-value-added bureaucratic requirements, tied up cash
flow, erected barriers to commercial technology and investment, and
imposed a de facto lowest price, technically acceptable environment,"
the report states.
As DoD officials seek an edge in new technologies - offensive and
defensive cyber, hypersonics, and access to trusted
microelectronics - AIA points to Russia's efforts to dominate in
electronic warfare and China's efforts to dominate in
semiconductors and other technologies.
Trusted microelectronics and hypersonics respectively require intensive
investment in foundries and infrastructure - especially test facilities
- that cannot be recouped outside of the DoD, the report warns.
"In these areas industry will largely rely on [independent] R&D funds,
which support industrial base health and national security objectives
by enabling industry to take risk on defense-unique solutions," the
report reads. "DoD should remove any barriers that directly or
indirectly limit industry's ability to flexibly utilize [independent]
R&D and earn sufficient returns on those investments."
Among the 10 recommendations specifically aimed at fixing the DoD's
often-sluggish acquisitions process, AIA wants to see the department
establish an overarching strategy for intellectual property - a
hot-button issue, as the DoD's been criticized for overreach in its
pursuit of access to intellectual property.
AIA also argues the DoD's blanket requirements for vendors to provide
technical data, software rights and other information could undermine
its efforts to attract new technology. Instead, the DoD needs to ensure
its workforce is "asking for the right IP for the right reasons based
on a program's acquisition strategy and sustainment considerations,"
the report reads.
Those recommendations come as the DoD absorbs fundamental changes
to its acquisition hierarchy mandated by Congress.
The report also takes aim at the department's contract audit regime,
which it regards as punitive and a hindrance to speedy purchasing.
"We're not advocating that DoD or Congress give up their oversight, but
everybody knows there are far too many people involved in every
decision, far too many decision points on most things," Luddy said. "I
think the department is working very hard on that also."
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