The Defense Industry

Jn support of this claim the author formulates the issue in terms of underlying supply side economic factors such as the structure of the defense industry and factors of production; demand factors, and the resultant market performantce; defense research and development. and associated acquisition concerns affecting industrial mobilization capabilities; increasing concerns at the level of the many .s 'bcontractors and parts suppliers associated with defense contracting; and sectoral differences and multinational considerations associated with procu-ement and defense industrial base considerations. Examples of claimed decreasing economic efficiency and reduced strategic responsiveness at all Department of Defense (DoD) levels are cited in the first eight chapters of the book. A summary assessment of problems and future trends is presented in Chapter 9. A summary assessment of the approximate costs of current inefficiencies is highlighted. Among major needs cited are production competition, mnultivear funding, budget stability, automation, labor stability at plant level, standardization of systems and suibsystems across services, higher production rates, nonduplicated facilities and labor. and shorter more realistic developmient schedules. Gansler estimates that at least $3 billion annually inefficiencies result from neglect of these needs. The last three chapters of the text are d.evoted to definition of criter-ia for improvements to the present situation.approaches taken by other nations, and specific implementable recommendations that satisfy constraints imposed by social, economic, and political structure currently extant in the democratic priva.te enterprise system of the United States. Cjansler's claim is that there exist five meaningful criteria for effective use of the defense industry and that many contemporary problems result from independent optimization of a single criterion or an immature approach at simultaneouis optimization. He advocates maximization of production efficiency over a given planning horizon with constraints upon deterlent and battle capability, surge capability, technological advancement for future mnilitary advantage, adverse effects upon society., and the political process. This constrained optimization strategy is not selected without consideration of other approaches such as nationalization of the defense industry, treating it as a public utility, designating sources for each product, encouraging open competition, separating research and develop. ment (R & D) from production, combining civilian and defense business, having an interdependent multinational defense industry, structuring the industry for medium to long duration conflict, and oligopoly with little or no explicit government involvement with industiy structure. The final chapter of the book presents a number of specific recommendations for the future of the defense industrial base. The primary recommendations include: