As the transition continues for the incoming administration, BAE Systems looks forward to working with the new US national security team as it establishes its priorities. During this period, I am confident the US aerospace and defense industry will demonstrate agility and remain resolute in helping to meet the needs of military and intelligence agencies.
Amid numerous global security challenges, there are three key issues we must address to ensure a strong national defense that is fully prepared to protect vital US interests here and abroad.
Outlook 2017: Perspectives from global thought leaders
First, there must be a clear commitment to robust and stable defense budgets. We are hopeful that the support for a strong military voiced during the campaign season translates into a more predictable defense budget. Sequestration was thankfully put on hold by the budget agreement enacted in 2015, but those caps could reemerge if action is not taken soon. It is time to end the impact of sequestration and return to budgeting based on current and future threats and not the arbitrary spending caps of the Budget Control Act of 2011.
Furthermore, the uncertainty associated with long-term defense spending impacts not only the military's capabilities and readiness but also industry's ability to invest its resources in the cutting-edge technologies necessary to maintain our military superiority. We encourage the new administration to work with Congress to ensure the fulfillment of an adequate, long-term commitment to funding for procurement, research and development, and readiness.
Second, while there have been meaningful improvements to the acquisition process, there is opportunity to further improve and streamline the system. In response to declining budgets in recent years, the industry has effectively realigned organizations, reduced staff, and restructured to ensure an efficient and effective industrial base. These market-driven initiatives were essential for us to remain competitive and accountable to shareholders.
Similarly, the Department of Defense must rationalize its structure and operating practices and carefully examine the regulatory regime that could free up resources to invest in equipment, force structure and readiness. Importantly, reducing the money spent on regulations will provide greater investment by industry into the next generation of defense technologies and capabilities — at the heart of the "third offset strategy."
Lastly, we must enable collective security through our strategic alliances. One of the consistent themes in our recent presidential election was encouraging allies and partners to do more. In order to equip them to do more, we must prioritize programs designed to allow the United States to share its technological advantages with key allies and partners around the world.
Such export initiatives strengthen key alliances, improve interoperability with our international partners, enhance bilateral defense relations, support coalition building and are essential to deterrence in the era of great power rivalry. In addition, these provide the Pentagon with greater buying power through economies of scale and increase capital investment for defense technology and modernization programs. We look forward to working with the incoming administration on ways to prioritize these efforts.
Credible deterrence demands certainty. By demonstrating a clear commitment to defense, streamlining acquisition policies that encourage innovation and strengthening strategic alliances, the United States can ensure the certainty that future global security demands. Industry understands the important role we must play in delivering that certainty, stability and security, and we welcome continued partnership with both the executive and legislative branches in 2017 and beyond.
Jerry DeMuro is the president and CEO of BAE Systems, where he leads company operations in five countries.
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