WASHINGTON — Formal acquisition orders from the Pentagon are needed before the defense industry can ramp up production to respond to sudden demand surges, officials from some of the world’s biggest contractors said Tuesday during a panel discussion on Ukraine at the Association for the U.S. Army’s annual meeting in Washington.
Executives from Raytheon Technologies, Lockheed Martin and Elbit Systems of America discussed how Russia’s invasion of Ukraine and the West’s weapons supply to Kyiv are forcing government and industry leaders to rethink acquisition practices. A more consistent and long-term schedule for orders, these industry executives said, could help going forward as the war in Ukraine continues and potential conflict emerge elsewhere.
“I think the one thing that needs to be worked is that if we don’t have things on order, on contract, the expectation that we will maintain surge capacity or capabilities just in case something happens is not realistic,” Raanan Horowitz, president of Elbit Systems of America, a unit of Israel’s Elbit Systems, said during the discussion.
Elbit Systems, based in Ramat HaSharon, Israel, is the world’s 31st largest defense contractor, according to the latest annual ranking by Defense News. The company makes land-based systems and products for armored and other military vehicles, artillery and mortar systems.
Horowitz pointed to legislation introduced by U.S. Sens. Jeanne Shaheen, D-N.H., and Thom Tillis, R-N.C., that would create a Critical Munitions Acquisition Fund. The goal of the CMAF would be to “ensure the U.S. has sufficient critical munition stocks to support allies and partners in a crisis without depleting U.S. military stocks,” while also keeping demand more consistent, according to a statement from Shaheen.
Another issue raised at the discussion revolved around guessing and trying to predict industry orders. That, the company leaders said, made it difficult to get quotes from their own suppliers, some of whom have forgone giving prices on hypothetical orders from the industry all together. At times, Horowitz said, they were told to come back only once they have a concrete order to place.
“I think the first thing we need is orders,” Thomas Laliberty, president of land warfare and air defense at Raytheon Missile and Defense, said. “We need insight into the demand, and once we understand the insight into the demand and we understand the willingness of the government to pay for additional capacity ... that then helps us go plan for what it will take for us to actually increase production.
Raytheon is the world’s second-largest defense contractor by revenue, trailing only Lockheed.
Zamone “Z” Perez is a rapid response reporter and podcast producer at Defense News and Military Times. He previously worked at Foreign Policy and Ufahamu Africa. He is a graduate of Northwestern University, where he researched international ethics and atrocity prevention in his thesis. He can be found on Twitter @zamoneperez.