|
Server : Apache/2.4.62 System : FreeBSD fbsdweb2.web.rcn.net 14.1-RELEASE FreeBSD 14.1-RELEASE releng/14.1-n267679-10e31f0946d8 GENERIC amd64 User : www ( 80) PHP Version : 8.3.8 Disable Function : NONE Directory : /domains/roger.dnai/96Book/ |
Upload File : |
<!DOCTYPE HTML PUBLIC "-//SoftQuad//DTD HoTMetaL PRO 4.0::19971010::extensions to HTML 4.0//EN"
"hmpro4.dtd">
<HTML>
<HEAD>
<META HTTP-EQUIV="Content-Type" CONTENT="text/html; charset=iso-8859-1">
<META NAME="GENERATOR"
CONTENT="Mozilla/4.04 (Macintosh; U; 68K) [Netscape]">
<TITLE>Under Secretary of Defense Dr. Paul G. Kaminski ...A U.S.
Perspective on Defense Industrial-Base Trends</TITLE>
</HEAD>
<BODY>
<CENTER><FONT SIZE="+4">A U.S. Perspective on Defense</FONT></CENTER>
<CENTER><FONT SIZE="+4">Industrial-Base Trends</FONT></CENTER>
<CENTER><FONT SIZE="+3">Under Secretary of Defense Dr. Paul G. Kaminski</FONT></CENTER>
<CENTER><I><FONT SIZE="+2">U.S. Under Secretary of Defense for
Acquisition</FONT></I></CENTER>
<CENTER><B><FONT SIZE="+1">EVOLUTION OF WESTERN DEFENSE AND COMMERCIAL
INDUSTRIES </FONT></B></CENTER>
<P>The Polish born Nobel laureate Madame Curie once said, "One never
notices what has been done; one can only see what remains to be done."
My sense is that it is important to stop and think about what has been
done in order to see clearly what remains to be done. </P>
<P>In that vein, I would like to take a look at the evolution of our
commercial and defense industries over the past 50 years. Exactly 48 years
ago on June 21, 1948 Columbia Records released the first long playing 33
1/3 rpm record or what we call an "LP" in the United States.
People who grew up listening to LPs now have to take their own children to
a museum to see one. And as they go to the museum, all the children seem
to be listening to portable compact disc players. </P>
<P>The breathtaking advances in the U.S. and Western European commercial
economies have been spurred by technological advances like the leap from
LPs to CDs. These technologies have been spurred by ever increasing
investment in research and development. The nature of this growing
investment has shifted, however. Defense spending used to be the driving
force for technology innovation in the U.S.; today, the commercial sector
has replaced it. In aggregate terms, the U.S. commercial industry
surpassed the Department of Defense (DoD ) in research and development
spending back in 1965, and the disparity between them has been growing
wider ever since. </P>
<P>Over the past 30 years, the changes in the industrial base that supports
the U.S. defense establishment have been as dramatic as the changes in the
world order since the demise of the Soviet Union. U.S. and Western
European defense purchases have declined while commercial markets have
expanded. The rapid growth of the commercial industrial sector has been
driven by a commercial market flourishing quite independently of the
defense sector. This underlying trend in the economies of the NATO nations
is nothing new. The collapse of the former Soviet Union has led to defense
budget reductions that have helped speed this already well-established
trend. </P>
<CENTER><B><FONT SIZE="+1">FUTURE INDUSTRY CHANGES</FONT></B></CENTER>
<CENTER><B><FONT SIZE="+1">THAT MUST TAKE PLACE</FONT></B></CENTER>
<P>Now that I have outlined the past trends, I am going to talk about what
we must do in the future. First, we must continue to move from separate
defense and commercial industrial sectors to one integrated industrial
base. Second, we must continue to pursue defense industry restructuring
and consolidation. Finally, we must expand the opportunities for armaments
cooperation, and use that cooperation to better integrate and rationalize
our industries. </P>
<CENTER><B><FONT SIZE="+1">Dual-Use Strategy</FONT></B></CENTER>
<P>While the United States still has a very strong defense industrial base,
the Department of Defense increasingly relies on commercial or dual use
technologies, products, and processes as budgets decline and defense plays
a smaller role in the U.S. economy. In some leading edge technologies
critical to success on future battlefields including electronics,
computers, information processing, and communications the commercial
sector certainly has the advantage. </P>
<P>Today's global economy also allows everyone, including potential
adversaries, to gain access to the same commercial technology base. To the
extent that commercial technology can enhance military capability, the
military advantage will go to the nation with the best cycle time to
capture commercial technologies, incorporate them into weapon systems, and
field new operational capabilities. </P>
<P>For these reasons, the DoD is pursuing a dual use strategy to break down
the barriers between the commercial and the defense industries; to realize
the benefits of commercial military integration in both research and
development and in manufacturing; to increase the pace of innovation in
defense systems; and to reduce the cost of such systems. The bottom line
is that we have no choice but to move from separate industrial sectors and
marry the momentum of a vigorous, productive, and competitive commercial
industrial infrastructure with the unique technologies and systems
integration capabilities provided by our defense contractors. </P>
<P>One of the principal objectives of our acquisition reform program is to
open the defense market to commercial companies and technology not only
the prime suppliers, but the sub tier suppliers as well. Our acquisition
reforms have also increased the opportunity for international armaments
cooperation. A good example is our policy favoring internationally
recognized commercial specifications over DoD unique military
specifications. As part of this policy we are adopting the ISO 9000
commercial series of standards as an alternative to the more restrictive
military standard, the MIL Q 9858. </P>
<P>Our Joint Direct Attack Munitions program (JDAM) is one illustration of
how effective our acquisitions reforms can be. Before we began our program
of reforms, we released a work statement for JDAM, which is a program to
upgrade with precision guidance systems the thousands of gravity bombs
still in the U.S. inventory. The original work statement was 137 pages
long and had 87 military specifications. The best bid we got predicted an
average unit cost of $42,000. After we began our new program, we re
released our work statement. This time it was two pages long and contained
exactly zero military specifications. The contractor we chose will be
producing the guidance kits at an average unit cost of $14,000, and a year
ahead of schedule. </P>
<CENTER><B><FONT SIZE="+1">Mergers and Consolidations</FONT></B></CENTER>
<P>At the same time that the DoD is reforming and adopting commercial
practices, our industry itself is changing significantly. I think we are
all dealing with excess capacity in our industrial bases, and are having
to rethink the fundamental structures of our defense industrial complexes.
In the U.S., we are seeing many mergers and combinations of companies. In
many countries in Europe, aerospace firms with long and distinguished
histories have been privatized, merged, or even closed. Industrial base
considerations are more and more important to our national and
international security postures. </P>
<P>In the United States, we rely on the private sector to supply our
defense goods and services, so we do not often insert ourselves into the
industry. However, we have assessed some sectors of the defense industry
to determine what capabilities are essential to support our defense needs,
whether or not those capabilities are truly unique, and whether or not
they are "endangered." To date, we have completed studies of the
industry supporting conventional ammunition, tracked combat vehicles,
bombers, helicopters, destroyers, nuclear power plants for submarines,
expendable space launch vehicles, the D 5 missile, and torpedoes. These
studies indicate that, although DoD programs will not be sufficient to
sustain all of the <I>companies</I> currently engaged in defense related
businesses, the scale and mix of the DoD programs will adequately sustain
nearly every required industrial <I>capability</I>. There are virtually
no sectors whose capability we determined to be endangered and that needed
the Department to take direct action to preserve it. </P>
<P>Despite these successes, I believe we are not yet done with defense
sector restructuring and consolidation. The U.S. draw down is nearly
complete with the fiscal 1997 budget, and so, from fiscal year 1998 on, we
plan to increase our investment to sustain the modernization of our
military forces. However, because of our full funding policy, our
investment outlays what industry actually receives lags budget authority
by two to three years. The industry is actually working now on dollars
appropriated for fiscal year 1994, and we will need to deal with a further
contraction of funds of about 10 percent over the next three years. </P>
<CENTER><B><FONT SIZE="+1">Armaments Cooperation</FONT></B></CENTER>
<P>In my opinion, U.S. national security and the national security of our
friends and Allies as well will increasingly rely on getting the most for
our defense investments. This means more bi and multi lateral armaments
cooperation. It also means giving greater importance to the economic and
industrial considerations of material acquisition programs in the future.
The convergence of two trends the increasing likelihood of committing
forces to coalition operations and reduced defense budgets makes the case
for greater armaments cooperation with friends and Allies. Deploying our
forces in coalition operations will also place a high premium on
interoperability ensuring that U.S. and allied systems are compatible and
can be sustained through a common logistics support structure. </P>
<P>In such an environment, it is clear to me that we will have to leverage
the technology and industrial base of all our nations to modernize the
equipment of our defense forces at an affordable cost and to obtain the "best
value for the money." We will need to avoid duplicating each other's
capabilities, and instead build on developed capability where possible. To
do this, we need to better harmonize requirements from the start and
increase the incentives for teaming of our industry including removing the
barriers to international teaming and barriers to commercial industry as
well. We must start doing this much earlier in the very initial stages of
our new programs. </P>
<P>To help promote new cooperative arrangements, we have initiated four
International Cooperative Opportunity Groups (ICOGs). The goal of these
groups is to plan in advance to create opportunities earlier in the
acquisition process. The ICOGS are chartered to identify individual
programs with high potential for international cooperation in one of three
areas: </P>
<UL>
<LI>Major Systems (in their early phases)</LI>
<LI>Science and Technology Programs</LI>
<LI>Advanced Concept Technology Demonstrations (ACTDs), in which
technology has already been developed, but application is the issue</LI>
</UL>
<P>Each ICOG has compiled a list of programs nominated by our military
services and by our embassies around the world. These lists are available
for review by our friends and Allies, and I encourage our Allies to
develop similar lists. </P>
<P>While considerable work is already under way to develop armaments
cooperation now, it is apparent to me that we also need to look ahead 5,
10, or 20 years and envision the international environment of the future.
To address this challenge, the Defense Science Board (DSB) Task Force
began work on future international armaments cooperation in October 1995.
The task force is specifically chartered to identify: </P>
<UL>
<LI>A model for 21st century armaments cooperation that preserves
effective competition</LI>
<LI>Methods for preserving effective two way access to critical military
technologies</LI>
<LI>Methods to assure maximum leveraging of the commercial industrial
base</LI>
<LI>Approaches for maximizing the involvement of the commanders in chief
in international cooperative efforts</LI>
</UL>
<P>This forward thinking is an essential component of ensuring future
success in international cooperation. While the task force's efforts are
still in progress, their deliberation is focusing on a model that promotes
international cooperation and maintains competition throughout a program's
life. Cooperation on common mission problems is central to this new model,
and should focus on such coalition security needs as extended air defense,
combat ID, coordinated logistics, and interoperable communications. The
task force believes, and I agree, that greater involvement by
international industry teams is crucial to the model for 21st century
cooperation. There also needs to be more involvement in subsystems and
components. </P>
<P>Effective industrial cooperation with the former Warsaw Pact nations has
created some challenges. In many cases, their defense industries are
operating at a fraction of their capacity, are in need of work, but
produce products incompatible with Western standards. These problems are
further exacerbated by the state of the Western defense industry, an
industry that is also in the process of shedding its excess capacity.
Consequently, the willingness of the Western defense industry to invest
capital and technology in Central and Eastern European production capacity
has been significantly limited. </P>
<P>Now, as the economic reforms in this region are starting to show some
significant success, and there is a promise by the region's militaries to
invest in NATO compatible systems, the situation is changing. American and
Western European companies are becoming more willing to invest capital and
technology in areas where they can identify an excellent opportunity for
long term success for joint ventures. Some of our Workshop industry
speakers will describe the decision making process and their rationale for
entering into cooperative ventures in Central Europe. </P>
<P>On the government side, the strengthening of our political relationships
with the nations of the former Warsaw Pact over the past six years has
caused us to open new opportunities for all concerned. The industrial
partnerships that are forming are enabled by this emerging relationship.
</P>
<P>Bosnia and IFOR have also made a difference in how we view
interoperability with our friends in the Central and Eastern European
region. Even before IFOR, our Warsaw Initiative was aimed at improving
interoperability of command and control systems with the nations of
Central Europe. IFOR has now demonstrated that this need was real. </P>
<P>Fundamentally, our command, control, communications, intelligence, and
logistics systems must all be interoperable. Generally, we are achieving
this in IFOR by setting common standards, for example, in our supply
coding system and in our grading and classification of fuels. We are also
achieving this by encouraging the teaming of our industries. We are
releasing hundreds of standards that provide the information necessary for
manufacturing NATO standard equipment. We have also invited the NATO
Partners to join the CALS effort so that they can move toward a common
single use data system for defense armaments. </P>
<P>One program that I am very optimistic about is the Regional Airspace
Initiative, or RAI. The goal of RAI is air traffic control and air
sovereignty systems that are interoperable region wide to include NATO
nations. Using commercial off-the-shelf technologies and commercial
standards, RAI will help the Czech Republic, Hungary, Poland, Slovakia,
and Romania modernize their systems. </P>
<P>In short, we are providing the tools Partner industries need to convert
to modern systems and standards. But it is a long and difficult road, and
one that needs to be paved with the successes of Partners who have
traveled the road before. The industries in the United States and in NATO
Europe must continue to reach out to the best and the brightest of their
counterparts. Their success will cement friendships, and help build
bridges to broaden relationships. </P>
<CENTER><B><FONT SIZE="+1">SUMMARY</FONT></B></CENTER>
<P>I know it will not be easy. Defense industrial sectors on both sides of
the Atlantic are downsizing. In the U.S., we still face another 10 percent
reduction and we will continue to face pressures to reduce our defense
budget. To deal with this, the U.S. Department of Defense is implementing
a dual use strategy and a broad program of acquisition reforms to better
integrate our defense and commercial industrial base </P>
<P>We are also taking steps to create an environment in which international
partnerships can flourish. I believe we all recognize that we must reach
out and exploit technological advances being made at home and abroad.
However, unilateral policy changes by the DoD will not be sufficient to
fully engage international industry in the U.S. defense market. </P>
<P>In addition to international partnerships, industry to industry
partnerships must play a key role, since they form the underpinning for
international cooperation. Creating these partnerships will be central to
the defense trade in the future. This new approach must include
cooperation at earlier stages of the acquisition cycle. </P>
<P>Because of their research and development investment patterns, many
industries in both NATO and Partnership for Peace countries have developed
a superior comparative advantage in particular areas and can fill needs at
the major component and subsystem level. To engage these firms, we must
all continue to make U.S. companies aware of these industry pockets of
excellence. </P>
<P>Armaments cooperation true cooperation is a complex and challenging
business that will require our best thinking and perseverance to see it to
full fruition. I believe we can provide these requirements, and that we
can be successful by bringing together the best talent in government and
industry from each of our countries. </P>
<P><A HREF="Kaminski.htm">Go to top of page</A> <BR><A HREF="Workshop96.htm">Return to Warsaw '96</A> <BR><A HREF="../index.html">Return to Home Page</A> </P>
</BODY>
</HTML>