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Pentagon Industrial Base Chief Predicts Pain

Apr. 29, 2013 - 03:45AM   |  
By PAUL MCLEARY   |   Comments
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WASHINGTON — We’re from the government, and we’re here to help. Except when we won’t.

That was the message the Pentagon’s chief for industrial base and manufacturing policy, Brett Lambert, conveyed April 25 during a speech sponsored by the Center for Strategic and International Studies in Washington.

Lambert offered a somewhat grim assessment of the near-term future of the military industrial base, one in which the Pentagon must identify the most critical aspects of the base that it will need to keep warm as it buys fewer platforms.

For the moment, the days of clearing the fiscal decks to be able to spend $50 billion on 20,000 MRAPs and building and fielding Stryker brigades on the fly are over, Lambert said. He also acknowledged that over the past decade of war, “industry surged because we asked them to surge,” and now that the workload has slackened, the DoD is looking for ways to help cushion the blow.

A big part of the effort involves the ongoing “Sector-to-Sector, Tier-to-Tier” (S2T2) reviews of procurement programs that Lambert’s office has rolled out.

The idea behind S2T2 is that every major program review conducted by DoD now also includes a detailed look at how any potential cancellation or schedule delay might affect the prime contractor and its supplier base.

The studies aren’t being undertaken only to justify keeping programs running, however.

“We should make no illusions,” Lambert said, “we will identify critical key suppliers that will go under because we will have made the assumption, based on our strategy moving forward, that that is no longer a critical capability to our future force.”

In the coming months and years, “there’s going to be a lot of bad news that’s given out to companies,” he added.

And while doling out the bad news, Lambert also warned that no contractor should rest easy as the armed services search for the next gee-whiz technology, and the best deal.

“Just because you are vital to one company or one capability,” he said, “we may have alternatives. We may want to invest in the next-generation technology or it may very well be a decision that we can’t afford to support that particular effort.”

There’s a delicate balancing act to be undertaken as the armed forces move from wartime production to sustainment, Lambert also said, but this has to be done while “making sure that our organic capability is robust but not competitive to the nonorganic [private sector] base.”

This means that work will have to be spread among government-run depots and private facilities, and he suggested that more public-private partnerships will be forged to take advantage of the relative strengths of both.

One very successful private-public partnership is between the Anniston Army Depot and General Dynamics, which harvests parts from old Strykers and uses them to build new, double-V-hull (DVH) variants. In its FY14 budget request, the Army asked for $395 million to build a third brigade combat team of V-Hulls.

GD officials told Defense News late last year that the program drives costs down from $2.4 million for a new DVH to $1.6 million, which in turn would reduce the cost for a third brigade set from $617 million to as low as $370 million if the Army agrees to other cost-saving measures the company has identified.

On a somewhat lighter note, Lambert also dropped one of the funnier metaphors concerning the current switch from wartime funding to peacetime budgets.

“It’s like having a kid that, for 10 years, you gave nothing but doughnuts,” he said, “and you woke up one day and said: ‘Hey, this kid’s really big. I’m not going to feed him again until he gets small.’ ”

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