Challenges and Opportunities for U.S. Defense Companies in South Asia

By Hammond, Robert E. | DISAM Journal, Fall 2000 | Go to article overview
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Challenges and Opportunities for U.S. Defense Companies in South Asia

Hammond, Robert E., DISAM Journal

[The following is a reprint of Robert E. Hammond's speech presented to the Third International Acquisition/Procurement Seminar-Pacific in Singapore, September 18, 2000. This conference was co-hosted by the U.S. Defense Systems Management College and Singapore's Defence Science and Technology Agency.]

I am here today to provide the viewpoint of an American businessman actively involved in defense procurement. Although I work for Lockheed Martin and serve on the Board of the American Chamber of Commerce here in Singapore, my views and comments are my own. With those caveats out of the way, I will proceed with what I see as the Challenges and Opportunities for U.S. Defense Companies in South Asia.

My overall view is one of optimism. For the most part, South Asia and particularly the ASEAN Region have weathered the economic storm, which began in 1997. Major defense modernization programs and procurements to support them, which were put on hold, are again underway. Some nations in the region, particularly Indonesia, continue to face significant challenges but they are the exception.

The military modernization in Asia is driven by the similar factors, which have been underway in the U.S. and Europe. Military forces are faced with continued and some times increasing commitments, which recently also coincided with declining budgets. The result is a desire to modernize with new equipment, which is more reliable, maintainable and requires less manpower to operate. I do not subscribe to the argument that we are seeing a blossoming arms race in the region. I believe that our customers are trying to face national security challenges with modern cost-effective solutions. The only way you can do "more with less" is by working smarter and going for reliable high technology solutions.

The United States defense industry continues to demonstrate the quality and price competitiveness of our products. On a truly level playing field, we win a vast majority of the time. Our desire is that we be allowed to compete in a fair and open market.

Factors, which affect our ability to fairly compete, are basically in three areas:

* Corruption and bribery.

* A lack of visibility as to customer requirements.

* U.S. government-imposed obstacles.

First, corruption continues to exist although to a much lesser degree than in the past. All of us, both industry and government alike, need to push for its total elimination. Internationally accepted rules need to be established that punish not reward companies that pay bribes. Additionally, some supplier countries need to end the practice which allows bribes to be considered a tax-deductible business expense. The key to solving this is concerted international action.

Second, U.S. industry has developed practices that grew from supporting our U.S. government customer. We are in tune with open and systematic procurement systems. As a result, we are much more successful when we have a formal RFI/RFP system. We are also more successful in gaining early U.S. government support for systematic procurements. Our paradigm is often in conflict with the sensitivity of defense procurements in the region.

One of the major reasons that U.S. companies employ agents and consultants is to help us gain a clearer understanding of both the nature and timing of your defense programs. If you are as opposed to agents, as you often indicate, helping us understand your requirements directly mitigates the need for agents.

I fully understand the customer's need to keep their defense planning confidential. I suggest that we, both industry and U.S. government, have the means to protect that information. The more completely we can work with both customers and the U.S. government, the more likely we are to be able to develop cost effective solutions.

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