A recent Pentagon report called for more arms manufacturers to bolster competition in the shipbuilding-, aerospace- and defense-industrial base. Citing examples of the reduction of suppliers over the past 20 years for major weapons categories, the report laments the drop in tactical missile suppliers from 13 to just three; fixed-wing aircraft falling from eight companies to three; and satellites tumbling from eight contractors to four.
Given the sorry state of industry, it is all the more surprising that there’s one glaring omission from the solution set: buying more equipment.
Yet, buried deep in the document is the admission that “opportunities for new programs can be limited.” You don’t say?
Another gem states that “consolidation in the U.S. defense industry historically increases under budget reduction pressures.” Huh, really?
Given these truisms, the solutions the Pentagon proposes do not align with the full scope of the problem. All the flexible contracting authorities in the world won’t be enough to solve the simple economies of scale necessity.
And it’s not as if there is no need.
The U.S. military is deep in the “Terrible ’20s” — a decade where the bulk of conventional and nuclear systems need to be updated after decades of use, technological advancements have made systems irrelevant, and general wear and tear has occurred from war.
Currently, the military is facing a massive spending spike to pay for modernization bills across the Army, Navy, Air Force and Marine Corps that have been ignored, deferred or inadequately considered. This modernization crunch is the result of decades of defense investment decisions — including delayed equipment recapitalizations from the end of the Cold War, the dominance of short-term spending priorities during the wars in Iraq and Afghanistan, the legacy of the 2011 Budget Control Act, and competing federal spending priorities.
Turns out, you can buy your way out of some problems. Competition is one of them.
But the track record is dismal for both the Pentagon and Capitol Hill. Take the Navy proposing in 2005 and again last year what is essentially a “one shipyard” acquisition strategy for destroyers. Buying just one of these ships (or buying more and down-selecting to one builder) is a “winner take all” approach between the two yards building destroyers that would permanently put one shipbuilder out of business.
Both times, Congress had to save the Navy from itself.
The most recent defense policy bill calls the Navy’s plan troubling for violating the current destroyer contract and delaying higher ship counts “during a period of increasing demand, particularly in countering threats from China and Russia.”
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Another time, however, it was Congress that rejected competition in deciding to not pay for an alternative engine for the F-35 Joint Strike Fighter in fiscal 2010. Members accepted this short-term “out” to President Barack Obama’s massive defense cuts, even though it would mean only one type of engine available for a plane that will constitute 90% of all U.S. fighter jets in 2035.
Then-Secretary of Defense Robert Gates said at the time: “We feel strongly there is not a need for the second engine.” Feelings aren’t facts, as the saying goes.
The Joint Strike Fighter is a single-engine plane. At the time of congressional debate, there were warnings that if something went wrong with the engine, it could lead to a systemwide grounding of every aircraft until the problem was identified and fixed — unless there was an alternative available.
Fast forward a decade, and the Joint Strike Fighter fleet has been repeatedly grounded for engine troubles. These fleetwide standdowns could have been easily avoided had the modest investment been made to continue the F136 program, which at the time of cancelation was already 70% complete — a sunk cost and wasted taxpayer money.
It gets worse. Last year, there was an engine shortage for the Joint Strike Fighter, causing a “serious readiness problem” for the U.S. military. Engine problems were one of the main maintenance issues found to degrade F-35 mission-capable rates, a Pentagon official said at the time, which sat at just 69%.
Higher and more efficient production rates for military fleets and inventories helps to restore economies of scale and cut unit production costs. In a separate report, the Pentagon’s cost analysis office admits as much, stating: “Any decision to change the quantity of a good or service estimated will affect its total cost, whether due to government effects (e.g., budget limitations), contractor effects (e.g., capacity limitations), or any other cause.”
The Defense Department calls competition “vital” in its latest report for “improved cost, schedule, and performance for the products and services needed to support national defense.” But the procurement dollars must flow first. The military must start buying in bulk again and pay a little extra up front for that competition, which ultimately keeps costs down later.
Mackenzie Eaglen is a senior fellow at the American Enterprise Institute. She served as a staff member on the congressionally mandated National Defense Strategy Commission. She also previously worked in both chambers of Congress, at the Pentagon, and on the Joint Staff.
