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 October 2008 

Lawrence P. Farrell Jr.Defense Priorities High On the Agenda for Next Administration

October 2008   

By Lawrence P. Farrell Jr.

The next administration will have a lot on its plate. Some of the more pressing issues such as the mortgage and credit crises, the federal budget deficit and the wars in Iraq and Afghanistan might claim primary attention, but sooner or later critical defense issues will rise up and demand consideration as well. 

Most defense issues are almost always connected to larger national concerns, so a comprehensive approach should work to the benefit of all.

Following are some of the topics and major points that should eventually get significant high-level attention.

Defense spending priorities are a key concern, especially given the current financial state of the nation. There is no free lunch in defense — or anywhere else for that matter. A world-class force is expensive. The administration also should be clear about the effects of policy and strategy on the health of the force. It takes a long time to build such a force, but a much shorter time to tear it down.

The military services are confronting enormous financial challenges. Even though the United States is spending close to three-quarters of a trillion dollars a year, that is still $100 billion a year short of what the military has said it needs. The Army and Marines face huge expenses associated with the recapitalization and refurbishment of war-damaged equipment. The Air Force and Navy, meanwhile, face large and under-funded modernization needs. On top of this, the nation is up against huge — and worsening — shortfalls in most federal accounts. Many civilian program budgets are projected to grow faster than defense accounts.

The administration also must figure out how to address future emergency supplemental funding requests. The supplemental appropriations cover a lot of fault lines in the defense budgets. If removed too quickly or clumsily, many of the services’ programs will suffer. After the war winds down, defense will require at least three to four years of continued robust funding.

The defense industry is another area of concern. It is small and fragile. The market capitalization of the top 10 defense firms is less than the market cap of many single Fortune 500 firms. Most defense firms do only defense work. They are captive of year-to-year appropriations for their survival. When their appropriation is cut, they leave that line of work, never to return.

The acquisition system is broken. There is a need to fix accountability and restore the human capital expertise characteristic of previous years when the uniformed acquisition corps made the major decisions. The Federal Acquisition Regulations also need to be cleaned up — again. The FAR is one of the most misquoted documents in the world.

The nation’s leaders must also find ways to increase basic science and technology budgets. Although the Pentagon has a robust $80 billion a year R&D budget, only $11 billion of that amount is for basic and applied research. Most of the money goes to upgrades of existing systems. The S&T funding is critical to boosting innovation and the nation’s global competitiveness.
Additional investments are needed in manufacturing technology both for the Defense Department and on a national level.

Defense is a global enterprise. Much of the underlying technology in weapon systems has a global source, and in many cases that source is foreign. This is the reality. To ensure competition and to gain access to the best technology, we must leverage the global enterprise. A major task is to streamline the export-licensing laws and regulations.

Industry needs to interface and converse with government. Lately, government has been tightening down on access and participation at events. Application of ethics rules by government counsel is inconsistent between organizations and within organizations. It is essential that government and industry continue to have legal and ethical forums for these conversations.

Energy is both a national and a military problem. A national program to address future energy sources and infrastructure needs must involve the defense community.

The status of the United States as a superpower has rested on a robust, world-class defense since World War II. It has taken many years to build it up. It will be expensive to fix it after the war and to keep it equipped with leading-edge technologies. It shouldn’t be viewed as an optional expense. In the next administration, defense should not be a bill payer.

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