Pentagon Industrial Policy Rooted in 'Market Economics'

Article excerpt

The Defense Department's determination to keep the "winner take all" acquisition strategy on the Joint Strike Fighter (JSF) and the decision to not allow the country's only two nuclear shipyards to merge underscore the Bush administration's aproach to industrial policy, said Suzanne Patrick, deputy undersecretary of defense for industrial policy.

"There are three major tenets that we consider when we make industrial policy decisions affecting major weapons systems or warfare areas," she told National Defense. "These criteria are equally relevant to acquisition policies on major programs as they are to proposed corporate restructuring initiatives."

The first tenet is a "strong commitment to the principles of market economics and our confidence that these market forces and companies' responsibilities to shareholders will generally result in cost-effective, innovative behavior," she explained.

Second is the "importance we place on the operational requirements process as the best way to field weapons systems to war fighters in a timely, cost-effective manner."

The third tenet is the ability "to look as far into the future as practical, to assess our decisions" and make sure that they reflect the Defense Department's "transformation" goals.

In the case of the JSF winner-take-all strategy and the source selection, "it was important that we not engage in 'bait and switch' practices in the end game," Patrick said. "We were also confident that the competitive award process had captured all of the best that our fighter aircraft industry could encapsulate in two very exciting designs."

Members of Congress had pressured the Pentagon to make the winner of the JSF contract, Lockheed Martin, share some of the work with the losing bidder, Boeing. But the Defense Department rejected that notion, on the basis that it was a fair competition and that the rules of the game should not be changed arbitrarily.

However, Patrick said, "if Lockheed judges it appropriate now or in the future to bring onto the team design or systems innovations from other manufacturers, we are confident that they will do so. …