Defence

DOD advisory board urges sweeping changes to US defence industry structure

By Stephen Trimble

A special advisory board to US Secretary of Defense Robert Gates has proposed perhaps the most sweeping structural reform of defence industrial base policy in 15 years.

The findings of a Defense Science Board (DSB) task force warns Gates that the industry-wide consolidation frenzy set in motion in 1993 must be halted, and may even have already advanced too far to avert a "coming crisis".

The task force, chaired by Jacques Gansler, former President Bill Clinton's top military acquisition official, stops short of urging the Department of Defense to break up the five major US defence primes - Boeing, General Dynamics, Lockheed Martin, Northrop Grumman and Raytheon - created by the post-1993 consolidation.

But the new report challenges the DoD to adopt several methods, some controversial, to foster greater competition at all levels of the supply chain for weapons and a rapidly growing market for military services.

The most divisive policy recommendation would be to enable a new flood of foreign suppliers in the US defence market by lowering the regulatory barriers limiting the ability of non-domestic firms to compete.

"This will require adjusting the [International Traffic in Arms Regulations], export controls, Berry Amendment, speciality metals [restrictions], and other limitations that hinder DoD's ability to procure world-class capabilities from the rapidly evolving global technology and security market," the task force's report says.

The DoD should also lower the barriers for commercial firms with relevant technologies to participate in the defence market, according to the DSB.

"DoD no longer has a virtual monopoly on military-relevant technology," the report says. "Technologies key to military effectiveness come from varied commercial sources, often from outside the USA."

The task force also says its nine key recommendations should be wrapped into a new "vision statement" for the DoD's industrial policy, clarifying the intentions of the world's largest weapons buyer.