Pentagon Increases Efforts to Protect Defense Industrial Base

Pentagon Increases Efforts to Protect Defense Industrial Base

The Pentagon is stepping up efforts to sustain and preserve the health of the U.S. industrial base in the event  sequestration continues into 2014 by assessing vendor capabilities, watching for mergers and acquisitions, and analyzing the supply chain as it relates to producing critical capabilities.

Fewer acquisition dollars available in fiscal year 2014 and beyond could translate into a situation where vendors building key components and technologies for the Department of Defense might not have the ability to sustain operations.

“We are now entering the second year where we are likely to face sequestration. The health of the industrial base is a question that is near and dear to the department’s leadership interests,” said Elana Broitman, acting deputy assistant Secretary of Defense, Manufacturing and Industrial Base Policy, told Military​.com in an interview.


Broitman explained that the Pentagon’s policy office is focused on looking at vendors’ production capacity as well as the need to preserve or maintain a highly skilled, technical competent workforce.

“In order to equip the warfighter, we depend upon a healthy industrial base that continues to innovate,” she added.  “The assessments of the industrial base that we do are an important tool in understanding how the industrial base will fare during this down turn.”

Industrial base considerations have informed the calculus regarding a handful of major acquisition programs.

For example, the Navy decided several years back that it would expedite development and production of the Virginia-class submarine. The Navy chose to have one half of each Virginia-class boat built at Newport News Shipbuilding owned by Huntington Ingalls Industries in Newport News, Virginia, and another section built by Electric Boat, a division of General Dynamics based in Groton, Conn.

This strategy was done, in part, to preserve the highly specialized, technically-skilled workforce that works on submarines. However, others say the industrial base has received too much consideration and that the free-market can address most issues.

It’s not always the services who go out of their way to try and protect the industrial base. Congress often works to keep production open on parts and vehicles open even after service leaders have said they don’t need them. For example, Congress wants the Army to continue building Abrams tanks even though the Army said it has enough and asked to use the money elsewhere.

The Pentagon’s industrial base policy office relies upon a couple strategies to maintain the industrial base. One of them is by drawing upon an existing data repository created by a Pentagon-led multi-year industrial base study called Sector-by-Sector, Tier-by-Tier, or S2T2.

While still somewhat of an ongoing project, the majority of the work has been completed, Broitman explained. S2T2 is a carefully compiled data base of vendor capability, supply chain issues and manufacturing details regarding the production of critical components, platforms and technologies. Although all of the vendor-specific information is kept in strict confidence, and is therefore not publically available, Broitman did describe the S2T2 effort as an invaluable resource.

“With S2T2, we really delve deep into each tier of the supply chain in order to be accurate whether a particular company is critical, meaning if it goes away no other company could fill its spot so the entire supply chain is at risk,” she said. “We’re weaving the S2T2 analysis throughout.”

The S2T2 data repository, which also includes a detailed examination of relationships between second and third tier suppliers, continues to greatly inform the calculus regarding industrial base issues, Broitman said.

“Single points of failure” is another key phrase in the lexicon of Pentagon industrial base personnel, meaning they look for instances wherein the ability to produce a certain product could potentially go away.

“On single points of failure we look at the fragility and criticality of the supply chain,” she added.

Broitman said identifying these single points of failure tend to be more common among products or technologies that are solely manufactured for the Defense Department, meaning there is no alternative commercial use or market for the product.

One analyst agreed, explaining that industries with a large commercial industry are likely to be more stable regarding what they can provide DoD during a downturn.

“For example, you have a commercial airliner industry that is going really well. Companies without diversification elsewhere (beyond DoD) will have a much harder time,” said Richard Aboulafia, vice president of analysis at the Teal Group, a Va.-based consultancy.

Aboulafia also added that the Pentagon might want to emphasize examination of individual companies on a case-by-case basis instead of a sector-by-sector approach, adding that there is significant diversity within sectors.  One company in a given sector might be diversified with commercial products or multiple defense programs, whereas another may not, he added.

At the same time, in other cases, an industrial base issue could emerge regarding product that is available in parts of the world but the U.S. would like to ensure that it is produced domestically, Broitman said.

Another analyst wondered if single points of failure might, in reality, wind up merely meaning market prices increase for a particular product.

“A single point of failure may become a price increase because there is almost always someone who will make something if the price is right,” said Benjamin Friedman, senior fellow, defense and homeland security studies, CATO Institute, a Washington D.C.-based think tank.

Friedman said globalization and the “netting” together of markets is likely to make DoD less dependent upon one particular source of supply.  He emphasized that the free-market would, in most cases, be well suited to address industrial base issues.

“The more technically difficult or complex it is to produce something, the more we should worry about an ability to make it at low cost, “ he added.

Mitigation strategies also are a large part of the equation, circumstances wherein a particular strategy is employed to foster competition, sustain production or identify key areas of needed investment.

In still other instances, mitigation strategies may involve DoD investment in a particular product or area in order to preserve the supply chain and critical core capabilities.

“We’re not looking to invest forever. When we do this it is a temporary solution.  We need to know if, at the end, there is a way forward for the company without us. These are not long-term investments,” Broitman said.

At the same time, DoD is careful to analyze the market for certain areas so as to ensure that any investment will prove both relevant and worthwhile. In short, it is important to keep pace with market changes and technological progress, Broitman added.

“We don’t want to spend money if a particular product will be moving to the next generation by the time there is an exit strategy,” she explained.

Over the last several years, there have been some instances wherein DoD has invested in order to preserve critical capabilities. These examples include investments in lightweight materials, GPS-related technologies, rocket components and battery items, Broitman explained.

There are various funding avenues through which the Pentagon can invest in these “mitigation strategies,” to include use of the Defense Production Act and a DoD technology funding program called ManTech, among others, Broitman said.

“We try to do small, flexible, nimble investments,” she said.

Tags: , ,

Join the Conversation

What, this article is too “wonky” for all the usual suspects to chime in here?…
Or am I really the only one who still thinks strategically forward?
All you armchair generals and couch warriors DO tend to lean BACK…
Thank God for the Portsmouth Navy Ship Yard…
We’re converting Miami for DEEP SEA fishing!…lol…

Industry and logistics aren’t glamorous enough. I expect Dfens, smsgt mac to show up at some point.

Let’s throw out an example:

The Apache Block III uses a new transmission system that increases effective horsepower of the turbines enough to make up for the increased bloat put on the AH-64. This transmission is called RDS-21, manufactured by Northstar Aerospace.

Northstar met tough times, went into bankruptcy, got acquired by a Canadian firm and heavily disrupted the supply chain for new transmissions, and disrupted the entire Block III program. I suppose they could’ve put in legacy transmission and replaced in the field, but the Boeing solution was to take out the RDS-21 from completed helicopters and put it back into the production line to build up fleets of helicopters without transmissions.

We’re not at wartime, so these completed machines will just sit there and wait until the supply chain disruption is ameliorated.

For anyone who read the GAO report about the Ford-class carrier, there was a tidbit about “developer valves” being replaced with stand-in parts due to supply disruption; and they had to go in and replace the stand-in part at costs unanticipated to the government and the primary contractor.

What took the govt so long to take this seriously? I guess vertical integration isn’t sexy.

Once you let the industrial base collapse under wanton outsourcing this is what you get. At least if you build maquiladoras under NAFTA you can still kind of trust your product won’t be spiraled to someone else’s military. Once you start making helicopter engines in China and they pinky-promise they won’t use them in military hardware…spare me the BS.

Yeh they bought 2 bad LCS ships. Everyone else better fend for themselves.

The Pentagon is all about the defense contractors. Now there’s a news flash.

Other wise DoD quit winning and make do with what you have let industry evolve on its own.

The Pentagon is stepping up efforts to pick and choose the winners and losers of the U.S. industrial base as sequestration continues into 2014 by assessing vendor political connections, dictating mergers and acquisitions, and analyzing the supply chain as it relates to producing political advantage.

Rather than worry about outsourcing and the private sector defense base, the Pentagon should just buy these capabilities and take them in-house. The workforce should be cross-trained in multiple skills so they can be fully employed doing a number of related low-demand critical functions. That way we preserve the capabilities for our military, without paying exorbitant prices. But the current batch of Pentagon bureaucrats are incompetent, which is why we should just fire them (as part of the sequestrations cuts).

Didn’t you hear, Government Owned, Contractor Operated is communism.

We’d have Obamatanks, Obamaphones (though the program kicked off in the ‘80s), Obamacruisemissiles, Obamamortars,Obamachainguns…

There are a number of capabilities that exist in the free market, but if you want to continue making them in America then you need to intervene in the free market, as the free market wants to go to Mexico or the People’s Republic.

We’ve see this path before — its a planned economy and it will end the same way — quality will plummet and costs will go up until the whole thing implodes.

Fixed multi-year contracts are just another name for 5 year plans. Consolidation just another name of industry champions and all the time the apparatchiks will rail against the impossible contradictions of the capitalist system.

The Boeing transmission solution is not about industry disruption its about project and supply chain mismanagement and covering it up with Potemkin aircraft.

The cost of this to the American economy is not only direct through higher taxes but indirect as the personal from failed military companies spread out and infect other industries.

“The Navy chose to have one half of each Virginia-class boat built at Newport News Shipbuilding owned by Huntington Ingalls Industries in Newport News, Virginia, and another section built by Electric Boat, a division of General Dynamics based in Groton, Conn. This strategy was done, in part, to preserve the highly specialized, technically-skilled workforce that works on submarines” GMAFB!!!!!! what was the work force at EB div. of GD in 1992???? 27K and what is it now?????? 4.5K, & this article really is decieving, b cuz when there was 1 boat per year, they “finished” one boat at NPN the off year one @ Groton, BUT the article fails to mention WHERE the EB built section is really constructed.…hint.…not @ EB, when it was EB’s turn then the “Finished ” product was “Built” @ Groton.…Now that we’re buildin’ 2 per year its the same, one section here one section there each one slapped 2 gether… how much $$$$ does this 1/2 1/2 methodology really cost when logistics is concerned, this whole sceme was 2 maintain the workforce @ NPNSB!!!! @ EB Div.‘s expense…period, I remember when JUST the Groton facility had 25K workers, did NPNSB take a hit & lay-off 20K workers.…. I think not… this type of smoke & mirrors is EXACTLY what POTUS E WARNED us about!!!!!! .

Brad:
The bottom line is that with the USN @ 287? ships & shrinking where are the RIF’s at the NSY’s, the civilian workforce at the NAS’s, Bases, Support Facilities, etc.… I’m all 4 a STRONG unified defence strategy, but give me a break, how can this “Overhead” be justified, when the uniformed armed services are being FORCED to reduce their respective end-strenths??? but the civi’s remain untouched???? its bass ackwards, its INSANE.… you’ll have facilities shortly which will have more civilians than uniformed members!!!!! we need a REAL HONEST BRAC if we are going to down size “The Force” not this last round of B.S. joint base jones/smith where the GAO calculated that in most cases it cost MORE that way, than keepin the services seperate.…man o man casey jones…where is this train agoin’???? sorry 4 the rant.… out here!

brad:
As far as PNSY.…. man I think there’s a curse on that yard.…. the U.S.S. Saquelos 1940 (sp?), she went down on trials, but 40 some odd crewman rescued in 400′ of water, then the U.S.S. Thresher on charlie trials, then that guy with a double-digit i.q. starts a fire “so they would send us home early” causing the scrappin’ of the Miami, while she was under-going re-fuel & refit.…I just don’t know.…..

…yeah, DITTO for what “blight-” and “oblatt1” said…

…if the so-called “Free Market” was TRULY FREE, it would want to stay in the land of the FREE, wouldn’t it…???…
How “free” can ANY market BE, that CHOOSES to go to Communist China…???…

Rant on, COL…you make more sense than the “normal ones”…
I’m assuming that with the LPD’s, for example, Navy is going for more versatile and adaptable ships, instead of more numbers of mission-specific ship types…

PNSY is my “hometeam”…that’s all…and, it’s also Bath Iron Works, too, sorta…
Look for a book called “The Yard”, about Bath, and the DDG’s, etc…GOOD READ…
Miami was a Sequester victim, but I still think Navy will miss out on valuable lessons in repairing large-scale damage…

Years ago our Congress supported President Ronald Reagan’s Star Wars Program. Now I believe he is looking down and shaking his head in disgust at the spectacle of military sequester by certain factions within his Grand Old Party.

Got bored and dug through the list of submarines lost.
http://​en​.wikipedia​.org/​w​i​k​i​/​U​S​S​_​S​q​u​a​l​u​s​_​(​S​S​-​192)

They gave weird names to submarines back then.

…“squalus” is a genus of dogfish sharks, and “squalus” is also Latin for shark…
I know what you mean…I’m building a model of the Snook, which was built in WW2 at PNSY, and, after 17 Jap ships sunk, went out on patrol, and was never heard from again…
Try the site “Eternal Patrol”, and enjoy…
More than once, a crewman was lost when the sub crash-dove, leaving the poor guy up on deck…
There’s even a few fatalities from swimming accidents on shore liberty, and a whole group who died at Pearl, after drinking wood alcohol hooch…
I get the feeling that most of the *idiots* who post nasty comments here, really DON’T KNOW much about the WHOLE Navy history…I mean, debate is great, but why drag *politics* into everything…???…
…bitchin&moanin’ over and out…
Thnx 4 the link, blight_.…

*required

NOTE: Comments are limited to 2500 characters and spaces.

By commenting on this topic you agree to the terms and conditions of our User Agreement

AdChoices | Like us on , follow us on and join us on Google+
© 2014 Military Advantage
A Monster Company.