Officials Outline Pentagon
Officials Outline Pentagon’s
Support to Industrial Base
By Karen Parrish,
American Forces Press Service.
Washington D.C. -- November 2, 2011 -- (AFPS)
– The Defense Department’s role in sustaining its industrial base is as complex
as the base itself, a senior defense official told Congress yesterday.
Testifying before the defense industry panel of the House
Armed Services Committee, Brett Lambert, deputy assistant defense secretary of
defense for manufacturing and industrial base policy, said the defense
industrial base is not a monolithic entity.
It includes companies of all shapes and sizes, from garage
start-ups to some of the world’s largest public companies, he noted. The vast
majority of those companies act as suppliers, and only a few deal directly with
the federal government, Lambert added.
“Companies at any tier and at any size may offer critical or
hard-to-produce products that ultimately lead to the systems used by our
warfighters,” he said.
Lambert said the challenge for defense officials is analyzing
the mass of companies that provide goods and services to the military. As
defense budgets grow leaner, the nation’s military superiority can be maintained
only if key elements of the industrial base are sustained, matured and nurtured,
“For decades, the U.S. has commanded a decisive lead in the
quality of the defense-related research and engineering conducted globally, and
in the military capabilities and products that flow from this work,” he said.
That advantage is not a birthright, Lambert told the panel.
“In the high-budget environments of the past, many companies
have grown to expect high [profit] margins, independent of quality,” he said.
“As budgets shrink, this practice must end. As the budget environment changes,
we do expect some niche firms to face difficulty due to decreased demand.”
Those niche firms may be suppliers to prime contractors and
may not be readily apparent to defense program managers, who typically have
“soda-straw visibility” of projects, he explained.
“We do need greater insight. … We need better data at that
second- or third-tier level,” he acknowledged.
DOD officials are working to map and assess the industrial
base tier by tier and sector by sector so they can identify “fragility” in the
industrial base before critical capabilities are lost, Lambert explained.
Defense officials also are increasing industry outreach
efforts, investing in research and development programs and pursuing purchasing
strategies that diversify acquisitions across multiple companies, rather than
relying on single providers, he said.
“Our commitment to working with industry, however, does not
mean the department should underwrite sunset industries or prop up poor business
models,” Lambert noted. “It does mean the department will create an environment
in which our vital industrial capabilities, a foundation of our strength, can
thrive and continue to provide our warfighters with the best systems available
at a reasonable cost.”
Andre Gudger, director of DOD’s Office of Small Business
Programs, also testified before the panel on the department’s initiatives to
expand defense market opportunities for small businesses.
His office manages three programs aimed at fostering small
business opportunities, Gudger said: the mentor-protégé program, which gives
small businesses one-time help from a larger company to develop future
capability; the small-business research and technology transfer program, under
which DOD funds technology and services development to meet urgent department
needs; and the Indian incentive program, which authorizes contracting officers
to make 5 percent incentive payments to Native American-owned subcontractors.
Gudger said his office also has changed acquisition
regulations to speed payments to small businesses.
“We recognize access to capital [is] a challenge for most
small businesses,” he explained. “This put billions of dollars into small-business
pockets … to allow them to hire workers, expand their capabilities and look for
ways to participate in new contracting opportunities more rapidly.”
Gudger said the continuing resolutions that have funded
federal spending since September 2010, along with uncertainty over the depth of
future defense budget cuts, have hindered opportunities for small businesses.
“With the amount of uncertainty, small businesses tend to not
invest and make key hires for the future,” he noted.
Slowdown Must Preserve Industrial Base