Most recall that Charles Dickens began his masterpiece, A Tale of Two Cities, by writing that “it was the best of times; it was the worst of times.” As we assess the defense outlook for 2015, it looks like that now. Few recall what Dickens wrote next in his famous first sentence: “It was the age of wisdom; it was the age of foolishness.” It looks like that, as well.
On the best of times and wisdom front, we are fortunate. The new leadership of the Armed Services and Appropriations Committees will build on the already strong bipartisan record of supporting a strong national security. Chairman of the House Armed Services Committee, Rep. Mac Thornberry, R-Texas, is known for his measured, thoughtful and bipartisan approach to legislating. His Ranking Member, Rep. Adam Smith, D-Wash., has a positive working relationship that puts national security first. The Senate Armed Services Committee Chairman, Sen. John McCain, R-Ariz., and Ranking Member, Sen. Jack Reed, D-R.I., are both veterans. Senators McCain and Reed are known for reaching across the aisle on national security matters and for their very thorough grasp of the details of national security policy.
Among them, these leaders have 98 years of combined experience at the authorizing committees and have dealt with increases and decreases in budgets, previous drawdowns, numerous conflicts and wars, five different administrations, 10 secretaries of defense and 10 chairmen of the Joint Chiefs of Staff.
Acquisition is one area where McCain and Thornberry have common cause — both have expressed a strong desire to reform acquisition policy because, as everyone knows, the current system does not provide the bang for the buck it should. The National Defense Industrial Association, led by Jon Etherton, has been assisting their efforts and has just published a report recommending significant acquisition improvements. Combined with the efforts of Under Secretary Frank Kendall and Better Buying Power 3.0, we have cause for optimism that 2015 will be a year for major improvements.
These new leaders also give us reason to hope that the grave error of budget sequestration (which gives rise to the age of foolishness label and the worst of times) will be reversed in the coming year. While the Murray-Ryan Bipartisan Budget Act gave the Pentagon partial relief from sequestration for fiscal years 2014 and 2015, the Defense Department faces another serious funding shortfall beginning in fiscal year 2016. We can expect another pitched battle over government spending, although leaders of the congressional defense committees have announced their plans to bring sequestration to an end.
While it is difficult in January to see a clear, deficit-neutral path to increasing the defense top-line, the commitment and courage of these leaders will drive the necessary compromise that will flow from the consideration of the administration’s budget request — expected to be $144 billion more than the sequester caps allowed for fiscal years 2016-2020. Even if sequestration is not fully repealed, some reasonable increase and budget stability will go a long way toward improving our war fighting readiness to deter the threat of violent Islamic extremism, a revanchist Russia and a rising China.
The recent report on defense contracting trends by the Center for Strategic and International Studies confirmed what those of us in industry already knew — that sequestration cuts fell heaviest, and disproportionately, on our modernization accounts. This reality is known to Pentagon leaders, who have announced a new Defense Innovation Initiative to reverse the hollowing out of our industrial base.
To maintain the world’s finest military, we need three things: high-quality personnel, realistic and constant training, and cutting-edge technology. The Pentagon knows what we also know — you cannot have the last without a strong and well-funded defense industry. Defense Secretary Chuck Hagel and Deputy Secretary Bob Work recognize this as well and have initiated a “beyond offset” strategy designed to keep the U.S. technologically ahead of our competitors. Incoming Secretary Ash Carter is a real proponent of a vibrant industrial base as evidenced by our Eisenhower Award. He is a true believer in the two-way street relationship that was so successful in putting world-class technology in the hands of our troops on the battlefield.
NDIA recognizes the critical role we must play in these deliberations. We have recruited some top leaders to take NDIA into a new era. Craig McKinley starts this month as our new CEO and president and his battle-tested leadership comes at a consequential time. He is well known and respected in our industry, on the Hill and in the halls of government. We congratulate Larry Farrell for his successful tenure and welcome Craig’s forward-looking leadership. He is joined by Terri Swetnam as NDIA’s chief operating officer who brings decades of proven experience in financial management.
In addition to the Etherton report on acquisition reform, NDIA is also in the midst of a major study of the defense industrial base led by former Deputy Assistant Secretary of Defense Brett Lambert. This study will enable our association to make a significant contribution to the discussion we must have about the future of our industry. Our new head of policy Will Goodman and his team have revitalized our association’s outreach to Congress and the executive branch — including legislative breakfasts and a distinguished speaker series — so that members have an opportunity to get insights directly from policymakers. We’re also undertaking a comprehensive strategic review. We have one of the most respected outside firms specializing in this area helping us map our future course.
There is a chance that Dickens’ phrase “the age of wisdom” will come to characterize the current era in defense. We are fortunate that today’s defense leaders understand what the nation needs and are ready to work together to achieve it. And as your association, NDIA will continue to show the way for a safe and secure American future that is grounded in the strength of the defense industry, working to secure the best of times, just as we have done since our founding in 1919.