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The QDR’s Missing Dimension

By Marion C. Blakey
No responsible defense planner would devise a strategy that far exceeded the available forces. Any plans that relied on the spontaneous appearance of a million troops or twenty extra aircraft carriers would be laughed off the table as irrelevant and wishful.

For some reason, that same logic has never applied to the industry that provides the systems that give American forces their asymmetric advantage. Since World War II, the U.S. defense industrial base has been a critical part of America’s economic and military elements of power. However, the Defense Department has traditionally made decisions on its strategic postures – what kind of wars to prepare for and how to prepare for them – with the belief that the defense industry would be able to support whatever course DoD set. This belief is no longer valid.

A significant gap has developed between DoD’s view of industry as an always-ready supplier of military capabilities and how industry actually makes decisions on what capabilities it can offer. And that gap is widening.

In a new report titled “The Unseen Cost: Industrial Base Consequences of Defense Strategy Choices,” the Aerospace Industries Association looked at the implications of leaving industrial capabilities out of strategic planning. We found that while the impacts varied according to the strategy and industry sector examined, strategic choices DoD makes today could have a lasting effect on industry’s ability to support future strategies. This would require any prudent planner to include industrial impacts and capabilities when developing strategies in order to avoid winding up without strategic options down the road.

To be sure, the overriding goal of America’s aerospace and defense industry is to develop dominant capabilities and turn them into systems that give our warfighters complete advantage on any battlefield. Maintaining technological dominance has been a key U.S. national security policy for decades, and our nation’s success has resulted from a strong partnership between industry as a supplier of capabilities and the dedicated men and women who take those products into battle.

I am concerned that this partnership has been weakening and that our very success has led defense planners to take industrial capability for granted. That can be seen in a seemingly casual approach to defense industrial policy and it is a major concern as the current Quadrennial Defense Review proceeds.
The QDR is meant to be a thorough consideration of how our military will organize, train and equip to meet the challenges of the future. But in the current QDR, as in all previous versions, an increasingly vital piece is missing.

That piece is consideration of the capacity of industry to support the resulting strategy with the technological advantage America’s military has relied upon in the past. The possibility of a significant shift in strategy could break our partnership — if the real industrial effects of new strategies are not included in the Pentagon’s deliberations.

This matters to DoD because without considering and understanding how industry will react to strategy decisions and what industrial capabilities could be lost as a consequence, decisions made during and after this year’s Quadrennial Defense Review may significantly reduce the options available to future decisionmakers.

This hasn’t always been true. Military technologies used to be much more closely related to civilian technologies. They even used common production processes. But because DoD is today the sole customer for industry’s most advanced capabilities, the defense industrial base is increasingly specialized and separate from the general manufacturing and technology sectors. That means even a healthy general economy will not necessarily help underwrite the industrial capabilities DoD most needs.

DoD says it relies on market forces to ensure a healthy industrial base, yet the market forces DoD creates are often not the most significant ones acting on industrial companies. DoD buys decreasing numbers of systems, often with shorter production runs than anticipated. At the same time, industry has an obligation to increase efficiency and maximize shareholder value, which often drives industry to eliminate unprofitable assets. The less demand DoD has for military-unique capabilities, the more likely they are to be shut down, sold off or otherwise eliminated. This elimination can be accomplished in weeks, yet the lost capabilities can take years to recreate.

That doesn’t mean industry cannot or will not recreate them. But it does mean that DoD has to understand the long timelines and daunting costs of bringing industrial capabilities back on line.

Finally, the health of the defense industrial base has implications beyond our borders. As the U.S. defense budget shrinks, sales to our allies and partners and use of international supply sources can result in lower unit costs and price and performance efficiencies for our products.  At the same time, we have to be vigilant against reflexively protectionist acts that would direct DoD spending solely to U.S. sources. The ability to compete internationally will not only demand that our products are superior, but that they are cost competitive on the global marketplace and reasonably easy to procure. That calls for a defense industrial base that is both strong and nimble.

A DoD that makes its plans for the future without both including industry as a partner in the planning process and understanding the forces that drive industry decisions is liable to find itself in a new world of declining industrial capabilities and far fewer employable weapons. That’s not anywhere a responsible planner – or a responsible nation – wants to be.

Marion Blakey is the President & Chief Executive Officer of the Aerospace Industries Association