Toward the end of December, Lockheed Martin CEO Marillyn Hewson met with Donald Trump at Mar-a-Lago. By Hewson's account, the two leaders had a "very good conversation." Yet within hours Trump's tweet suggesting a F-18 alternative to the F-35 went viral. How could the CEO of the world's largest defense company so completely misread such an important meeting? Decision-makers within industry have to realize it's not going to be business as usual under a Trump administration.
There has never been a president-elect like Donald Trump. He is not an ideologue, nor does he strictly care about policy. His world view is transactional in nature. It's about looking at the world through business and media lenses. Every issue is distilled down to financial terms and placed in the context of a traditional business transaction and the positional role Trump chooses to play.
Observers know that turning an F-18 into an F-35 would be a wasted endeavor that would add billions of dollars and years of development to the country's ambition for fielding a sizable fleet of fifth generation fighters. Yet Trump's goal is not to set new directions in military procurement, rather it is to implement current policy at a fraction of the price. To realize that objective, he will use his positional powers as negotiator-in-chief to exact the best possible deal for the tax payer — all while exploiting the situation to illustrate his pivotal role.
American presidents have historically remained above the fray when it came to individual procurements. This is unlikely to be the case under the Trump administration. Our next president will involve himself in major acquisitions just as he does now in the management of his business empire. Industry will have to get used to the fact that procurements are going to take place with a degree of visibility that is unprecedented and selling the Pentagon will not be equivalent to selling the President.
The same is true for the mix of procurements in the next Department of Defense budget. Navigant's analysis of Trump campaign promises and statements suggest as much as a 15 percent boost in overall defense spending with the lion's share of increases flowing to Air Force and Navy procurement accounts. Why? Trump sees Navy and Air Force assets as pawns in a giant chess game to be employed alongside international trade as levers in the pursuit of U.S. national interests. The same cannot be said for the Army. Trump believes in the importance of an end-strength boost, but there is no indication he sees the need to invest in Army platforms which he considers tactical and of little importance in the broader strategic context.
While Trump is interested in making Air Force and Navy platform-centric investments, it is clear he is far less interested in science and technology programs. In his mind, research is too far-afield to be useful in the here and now. The focus in a Trump DoD budget will be on platforms that provide meaningful capability increases and where production lines are hot. So while Trump can boom and bluster about the F-35, he knows that it is the airplane we need and he will maneuver to not only get it at a good price, but to get a lot of them. Navigant anticipates larger, multiyear block buys, but at steep discounts.
Such is not the case for the long range strike bomber. Trump will want to make an impact now, not in 15 years. Longer-term programs will be bill-payers for his near-term priorities. The same is true of training, infrastructure and sustainment investments that don't have the visibility that he craves. As for the Navy, the Littoral Combat Ship program will be curtailed for the same reasons Trump will vigorously pursue the F-35. LCS has limited offensive and defensive capabilities, mission modules that don't work or continue to struggle through development, and significant maintenance and engineering problems. Trump will demand an improved small surface combatant, but such a ship is too distant to make a near-term impact so Trump will push for a more substantial multiyear buy of Flight III Arleigh Burke-class destroyers instead.
These are merely examples of what is to come. The bottom line for industry is this: Old norms have changed. Increasingly, procurement policy will be driven by chaotic-appearing, but fundamentally logical, top-down dictums, financial efficiencies that positional power can bring, and a media tycoon's view of his own brand and that of the nation.
John Walker is managing director of defense and national security advisory at global professional services firm Navigant.
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