U.S. National Security: Does the Industrial Base Still Matter

As a nation, the United States is at a strategic inflection point. There are many difficult decisions ahead on dealing simultaneously with the U.S. economy, a national debt running into trillions of dollars, and both federal and state budgets. In that context, it is relevant to ask whether – with a myriad of such competing national priorities – a specialized Chemical, Biological, Radiological, Nuclear, Explosives (CBRNE) industrial base still matters.

National security is traditionally an area in which there is general bipartisan agreement. During and since World War II, the U.S. industrial base has been a remarkable and unfailing source of innovation, development, production, and field support. However, the American people usually have relied on market forces to create and sustain the technological and industrial capabilities required to meet national-security needs – including such specialized technological needs as those involved in CBRNE operations. For the most part, and in most circumstances, this approach has worked well. However, today’s circumstances are far from the “traditional” norm.

Today, what for more than seven decades was a major U.S. advantage in industrial capacity has largely evaporated. According to a December 2010 report by the U.S. Bureau of Labor Statistics, 99 of America’s 100 biggest markets today have fewer manufacturing jobs than they did 10 years ago. During the same time frame, over 42,000 factories, large and small, closed. Adding to the difficulties of this situation are a fragile economy and an increasing interdependence between government policy, spending, and both large and very difficult economic consequences.

Capability by Design or Default? The U.S. industrial base – particularly the sector that provides specialized CBRNE equipment and systems to everyone from first responders to both special and general-purpose military forces – is unique on several levels, especially in light of the following:

(a) Beyond its basic value in manufacturing capabilities, the industrial base is the primary source of the inventiveness, creativity, and technological innovation needed to maintain the U.S. competitive advantage against current and future threats. It is also the source of most of the specialized scientific and engineering talent distinctively focused on CBRNE capabilities and challenges.

(b) The CBRNE industrial base itself has never been particularly robust, with typically no more than two or three companies competing in any one area, frequently supported by only one second-tier supplier.

(c) The still relatively small CBRNE industrial base itself is largely the creation of the government as a monopsony buyer. Consequently, the government, as the only major buyer, virtually dictates the characteristics of the market.

It is the last characteristic – the government as monopsony buyer – that gives the government special responsibilities in the otherwise free marketplace. It is this same characteristic that keeps the nation’s private-sector CEOs (chief executive officers) awake at night worrying about what, as the Defense Science Board has repeatedly reported over the last 20 years, is “a highly unstable, complex business environment characterized by high risk, restricted cash flow, and low returns.”

In 1993, the U.S. Department of Defense Department (DOD) hosted a landmark meeting with senior executives from private industry. During that meeting, which later came to be known as “The Last Supper,” then-Defense Secretary William Perry gave fair warning to the companies represented that, in order to survive, they would have to both consolidate and restructure. Although that warning was extremely painful to industry, it did help maintain a still highly capable U.S. defense industrial base and resulted in what might fairly be described as controlled shrinkage rather than an outright collapse.

Implications & Difficulties, But One Clear Thing The Pentagon’s current acquisition chief, Ashton Carter (Under Secretary of Defense for Acquisition, Technology, and Logistics), was among those who attended the famous Last Supper. In a September 2009 Defense News interview, he commented that senior Pentagon officials “must weigh the industrial implications of major program decisions and may have to protect key niche areas.” However, Carter also noted that he had experienced considerable difficulty in “getting good analysis” from certain DOD agencies when he asked about “what to do to discharge the government’s responsibility to make sure it has a good industrial and technology base going forward.”

One thing is clear, though: There is certainly a major national-security interest in sustaining an adequate CBRNE industrial base over the long term. A weak or nonexistent CBRNE industry constrains almost all U.S. national security decisions, options, and actions. The government obviously should invest where the consequences of not investing could result in a specific loss of capability. In addition, the selection of capabilities itself should consider if and where there would be severe consequences of not investing – and/or underinvesting – particularly in preserving as much capacity and flexibility as possible. Of course, there remains a virtual “canyon” of expert opinion regarding what the government “should” do and what it probably “will” do.

Here it is important to understand that the preceding is not a clarion call for government corporate welfare. It is, rather, a call to recognize CBRNE as a “key niche area.” It is a call to stop the government’s policy of benign neglect, of leaving the industrial base to make whatever adjustments it might make on its own – and, therefore, of leaving future decision makers either constrained or, worse, with no viable options at all. It is a call to retain the technology and the creativity demonstrated so long and so well by the defense industrial base – and, of course, the people who make things happen.

“Necessary Interdependence” & a Consistent Long-Term Strategy It also is a call for recognition of the necessary interdependence between government spending and the resulting CBRNE industrial base – as well as the significant implications for the future. It is a call, moreover, for a candid, consistent, long-term strategy that government must share with industry in a timely fashion. In short, it is a call for the government to obtain what it needs by design, rather than by default.

In turn, industry officials must be candid with senior government officials about their businesses and how they personally – and collectively – foresee the future. Moreover, if such candor is to have any substantive effect, government officials must be able and willing to listen. As policy decisions and budgets shape and impact business decisions, industry leaders must be clear about their intent to invest, divest, or reduce their activities.

In short, the CBRNE industrial base clearly does matter to national security – and will continue to do so for the foreseeable future. What is at issue, therefore, is whether the future industrial base will be the result of unintended consequences and neglect, or the result of thoughtful planning and of meaningful government-industry collaboration in full recognition that the era of interdependence that started just prior to World War II and continued through the Cold War must continue for many years, and probably decades, to come.

______________________________ Major General Stephen Reeves, USA (Ret.), is a highly accomplished senior executive and an internationally recognized expert on both Chemical and Biological Defense and Defense Acquisition.  He has testified as an expert witness on multiple occasions before the U.S. Congress and has been interviewed numerous times by the national and international print and broadcast media. He also is a frequent speaker at both national and international defense and homeland security conferences. Experienced in leading and managing large, diverse, global, multi-billion dollar organizations, he established, and for seven years led, the first Department of Defense Joint Program Executive Office for Chemical and Biological Defense.  

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