It said the Pentagon’s planned cuts would result in delays or a shutdown of production lines that would cost highly skilled manufacturing jobs.
Two defense analysts who spoke to reporters Wednesday at the Center for Strategic and Budgetary Assessments expressed similar worries. “The industrial base is not like Wal-Mart, where you can count on things being on the shelves when you walk in,” said Andrew Krepinevich, CSBA’s president. “The industrial base is a strategic asset, a weapon” that imposes enormous planning problems on potential enemies, he added, noting the British allowed their air and maritime industrial base to decline in the 1930s and again in the 1990s. “These companies trade on Wall Street, and eventually the money will go somewhere else.”
Todd Harrison, a senior fellow in budget studies at CSBA, said the number of prime defense contractors has shrunk from about 30 in the 1990s to five or so today, creating a near-monopoly in the industry. He predicted that severe cuts would prompt some companies to “get out of the defense business or consolidate, and you may see a reduction in capacity, in the number of factories.”
Kendall stressed the importance of leadership to create a cost-conscious acquisition workforce. But both defense analysts said they were skeptical that the Pentagon will succeed in its goals of achieving $60 billion over 10 years in savings through “efficiencies” in areas such as operations and maintenance. “It’s long been tried, but they don’t end up getting anywhere near what they’d hope for,” Krepinevich said.
The Pentagon’s initiative to insource more contractor work and build up the acquisition workforce, Harrison said, was a priority of former Defense Secretary Robert Gates, and might well become unworkable because of coming budget cuts. “We’re likely to see significant reductions in the DoD civilian workforce,” he said. “It’s hard to bring contractor expertise in-house when contractors have higher paying jobs.”