Military metamorphosis
Few people know more about or have been more involved in the military-industrial complex than Jacques Gansler. Currently an executive vice president of TASC, an applied information technology company heavily involved in defense work, Gansler has written two previous books on the complex: Affording Defense and The Defense Industry. In addition, he has spent time in the Pentagon, serving as a deputy assistant secretary of defense for material acquisition; worked for several companies with major defense contracts, including ITT, Singer, and Raytheon; and served on numerous government-industry advisory panels, including the Defense Service Board.
In Defense Conversion, Transforming the Arsenal of Democracy, Gansler turns his attention to how the military-industrial complex should adjust to the end of the Cold War. According to him, this nation faces a dual challenge in its defense sector. First, how will the United States maintain technological superiority and a strong industrial base with a greatly reduced defense budget? Second, how can we ensure that defense spending enhances rather than reduces this country’s international economic competitiveness? Gansler’s answer is to dramatically transform the defense industry into a fully integrated civilian/military structure.
Gansler makes a long, detailed, and logical case for his position He first explains why a total transformation of the defense industry is required, then describes what such a transformation would entail, and concludes by providing specific details on how to achieve this transformation by drawing on lessons learned from previous diversification/conversion efforts.
Gansler argues that there are two reasons a total transformation is required. First, with the end of the Cold War, this nation is not currently experiencing a cyclical defense budget decline, but a permanent one. But paradoxically, the end of the Cold War has increased rather than decreased the threats to our national security. The removal of the bipolar nuclear umbrella has unleashed regional, ethnic, religious, and nationalist conflicts on an accelerating worldwide scale. Second, the economic power of the United States is deteriorating rapidly. The United States has a huge and growing national debt, a growing trade imbalance, and a declining standard of living; it is experiencing adverse trends in industrial productivity as well as losing its technological position in many critical areas.
Transformation of the defense industry would entail converting the vast majority of individual firms and plants to either dual-use or commercial operations. Only a few plants would remain defense-unique, and they would mostly be engaged in the final assembly of large weapon systems.
Gansler maintains that to achieve the transformation, the Department of Defense (DOD) would have to take five specific steps. First, whenever feasible, DOD must buy products that are already available on the commercial market. Second, the Pentagon must use commercial specifications as opposed to government or military specifications. Third, the military must adopt buying procedures similar to those used by commercial buyers. Fourth, DOD should use contract administration procedures, such as quality control procedures, that are similar to those used by commercial buyers. Fifth, government contracts should use commercial terms and conditions.
Gansler knows that there will be formidable barriers to bringing about this integration through transformation. Therefore, he argues that the transformation can be accomplished only by vigorous government action. He lays out a three-part strategy for the government to follow. It involves removing many of the current barriers to integration and providing guidelines and incentives for industry to achieve the desired objectives; ensuring industrial technological leadership in critical areas by encouraging the rapid application of state-of-the-art product and manufacturing technologies; and providing greater human resource development (education and training) at all levels of the work force.
According to Gansler, if his prescription is followed, the results will be wondrous. Defense budget savings will total about $45 billion per year. Moreover, U.S. defense and civilian industries will be the world’s technological leaders, and growth in real wages will return to the levels of the 1960s and 1970s. But if the Gansler plan is not adopted, the outcome will be catastrophic. If this nation continues on the present path, we will end up with a small, highly subsidized, inefficient, noncompetitive, and technologically obsolete defense industrial base that has no capability to meet the surges in demand produced by crises and provides no civilian benefits to the nation from defense expenditures.