Defense Industrialist

Why Defense Bulls May Be Disappointed

Signs of spring abound. The forsythia is in bloom. The crack of opening day resounds. And the DoD Comptroller’s “Green Book” issues forth. The National Defense Budget Estimates for FY 2017, or Green Book, so-called by its seasonally-toned cover, is a 300-page volume of dense tables expressing to the nearest millionth dollar every obligation, authority, and outlay associated with the defense program each Administration submits to Congress in February. And yet, I confess to welcoming the tome’s publication no less than the morning skylark’s April twitter. Ah, spring!

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NATO doesn’t need more guns, money, or aircraft. It needs them where they’d count.

Two data sets stood out in my news flow this morning. Byron Callan, a member of the Atlantic Council and the senior defense investment analyst at Capital Alpha Partners, observed in note that global fixed-wing fighter and attack aircraft inventories have dropping for some time. Citing data from the International Institute for Strategic Studies' Military Balance, he noted that numbers worldwide have fallen 27 percent since 2003, from 20,845 to 15,280. Quantities are down more sharply for most European air forces, but the comparative counts for the five largest are revealing:

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The Third Offset must address NATO’s local numerical inferiorities.

As Inside Defense reported earlier this month, current events have the US Army questioning its organization, wondering if it’s otherwise destined to be perennially late to the game. The Russian Army, after all, has gotten rather good at showing up unannounced on short notice. It would be bad enough, as Sydney Freedberg wrote for our Art of Future Warfare project, to find “Tallinn Burning” with the Chinese simultaneously causing trouble. That’s because the really ugly anti-access problem, a former Pentagon official assured us here the other day, would be getting back into Tallinn or Riga or Vilnius after a Russian invasion. So, as we should want to avoid needing to eject dug-in Russian troops from NATO territory, what more could be done? Rushing more troops forward faster may not be as useful as devising labor-saving means of seriously slowing the enemy’s advance. And the technical advances required to do that are entirely the sort of thing we should expect from the Pentagon’s Third Offset initiative. 

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A new “island strategy” for reaction forces could make carrier and amphibious groups less essential.

On Monday, the American Hellenic Institute hosted a luncheon with Greek Defense Minister Panos Kammenos on the occasion of the rollout of a paper by Dan Gouré's of the Lexington Institute on “Souda Bay: NATO’s Military Gem in the Eastern Mediterranean”. I appreciated the free lunch, and some of the discussion that followed. Loren Thompson reminded his colleague, with a useful softball question, to talk about how the base would be a good location for half a dozen V-22 Ospreys and a pair of KC-130 Hercules tanker-transports. That’s the composition of the composite air squadron within a handful of those new model, shore-based air-ground task forces of the US Marine Corps. Benghazi, he noted, is easily within range and an hour’s flying time of the NATO airfield at Souda Bay. Not much further away are Egypt, Israel, Lebanon, and Syria—if anyone were keen to go there kinetically. To this end, Crete would be a seriously useful island. But if so, then so would be Mallorca, Sardinia, Sicily, and Cyprus. And if those places in the middle of the midland sea are so useful, what does that say about the importance and future composition of naval forces?

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The Pentagon is making progress with better-faster-cheaper, just on a small scale.

In January 2015 at the Atlantic Council, Air Force Secretary Debbie James delivered an address on “Bending the Cost Curve,” emphasizing that her department needed to get off the path towards Augustinian singularity. The initiative she outlined had three parts: enhancing communication with industry, expanding competition, and accelerating development processes. The secretary specifically wanted to look for opportunities where small adaptations and innovations could yield big improvements in capabilities. So how has Defense—and not just the Air Force—been doing lately? For a challenging reform effort, it’s a reasonable report card, but we have a long way to go.

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Mac Thornberry’s “Acquisition Agility” bill is a good start—but just a start—towards greater experimentation and prototyping.

Congressman Mac Thornberry’s “Acquisition Agility” bill is 32 pages long, but its intent can probably be summarized thus. Thornberry (R-TX) fundamentally wants the military departments, not the centralized bureaucracy of OSD AT&L, in charge of the day-to-day business of military procurement. Specifically, he wants the Army, Navy, and Air Force Departments to hire companies with commercial interests to prototype new components for current platforms. He’s offering to safeguard those companies’ intellectual properties, as long as they’re willing to work within modular and open architectures. He wants new wholly new programs begun only with mature technologies, and for relatively short-term needs, with the modularity and openness bought as hedges for long-term upgradability. This last point will be hard to enforce for big platforms, but the rest of Thornberry’s proposals might bring forth components and smaller systems faster, which is at least a good start.

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Transferring military technology takes time, teams, and money—for now.

Technology transfer and national security—everyone talks about it, and most everyone needs it. This week the Atlantic Council hosted a discussion with some European diplomats on just how to make it happen, and afterwards, we jotted down some further thoughts. Transferring or co-developing technologies effectively demands more than running blueprints through the photocopier, or cyber-stealing some source code. Assimilating know-how across national borders and commercial boundaries means cooperating with potential competitors—a challenging task for both contractors and military forces. In effect, military technology transfer and co-development today are full-contact, team sports, requiring serious managerial attention. But developments in two important technological fields could change that, and with potentially deleterious effects on the security of more technologically advanced states.

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How more of “Economics 101” would slowly restructure the US armed forces

Senator John McCain has a penchant for what the late Phil Hartman of Saturday Night Live might have called Simple Caveman Economics. As I review the pronouncements from his perch at the Senate Armed Services Committee, McCain seems to hew markedly to four basic principles which any first-year economics student would recognize. They aren’t remarkable nuanced interpretations, but hey, this isn’t the year for nuance in politics. So what are these views, and what would the policies flowing from them produce?

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The business of defense under President Donald J. Trump

Now that we’ve had a super Tuesday, it’s Groundhog Day. Perhaps Hillary and The Donald are seeing their shadows, and we’ll have another six weeks before the big parties’ nominees are absolutely known. And yet, I’m feeling a sense déjà vu after reading another round of anguished editorials: the front-runners are still the front-runners. As Clinton's defense plans can be more-or-less assumed, it’s worth ruminating now about the prospective policies of a possible President Donald J. Trump. We’ve heard few specifics from him, but his affection for dealmaking and disposition for business-like solutions suggests that he might take some radical approaches to managing the Pentagon.

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What if all development contracts were fixed-price?

Senator John McCain, chairman of the Senate Armed Service Committee, is hopping mad about the bomber formerly known as the Long Range Strike Bomber. The B-21, as Air Force Secretary Deborah James named the LRS-B today, is to be developed by Northrop Grumman under a cost-plus-incentive-fee contract. McCain told the Defense Writers Group over breakfast yesterday that “I will not authorize a program that has a cost-plus contract—and I told them that.”  While I have previously written with my colleague Rachel Rizzo that cost-plus development funding may make sense in this case, it’s easy to understand why McCain finds the continued practice “infuriating”. Waving his iPhone 6, he has often been heard to state how plenty of iconic American companies take huge risks in new product development without any government funding. But whether defense should be different, defense has been different, and for a long time, so it’s worth asking how fixed funding would change things. I foresee three effects: an informational one for the government, a financial one for industry, and even a structural one for the military itself.

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