Pentagon calls a truce with march of globalisation
Tuesday, 17 July 2007
Demetri Sevastopulo
THE Pentagon is having to face a new set of challenges and opportunities as the defence industry heads along the path of globalisation.
In crafting industrial policy, the Pentagon has to tread a difficult line between obtaining the best defence technologies, regardless of origin, and ensuring that buying foreign products does not compromise national security by eroding critical sectors of the US defence industrial base.
"Globalisation is here whether we like it or not," says Gary Powell, assistant deputy undersecretary of defence for industrial policy. "[We have to] leverage the benefit and minimise the risk".
Mr Powell stresses that the Pentagon needs to protect its supply chain as it acquires military technologies from overseas, particularly in the case of certain commodities, computer software and micro-electronics.
The Pentagon is increasingly having to rely on importing software and micro-electronics from non-US companies, which raises the potential for foreign governments to tamper with critical technology. The Defence Science Board, a Pentagon advisory group, is currently conducting a study to determine the national security implications of the use of foreign software in US military technology.
Another area of debate involves US export controls. While the Pentagon wants to ensure that foreign governments do not obtain sensitive military technologies, there are also concerns that overly restrictive controls are hurting US industry. The Institute for Defence Analyses concluded in January that "the current US export control system appears to be out of step with today's world of global manufacturing, technology developments and capital flows".
"If [we] want industry to stay strong, we would like them to be able to compete worldwide," says Mr Powell.
He agrees that the list of technologies subject to export controls is outdated, but says the Pentagon's office of defence research and engineering is now trying to modernise the list.
The Pentagon faces legislative constraints when it comes to buying the best technology, or ensuring the supply of critical components. The so-called Berry Amendment, for example, requires the Pentagon to procure food, clothing, fabrics and speciality metals from domestic sources.
While Congress last year provided some flexibility to exempt certain goods, Mr Powell says the Pentagon would ideally like Congress to jettison the amendment. Earlier this year the Pentagon availed of the looser restrictions to allow it to buy fasteners containing foreign-made speciality metals.
"If we cannot buy a C-17 aircraft because it contains fasteners made from speciality metals . . . we have lost a kingdom for want of a nail," says Mr Powell.
The Pentagon also faces efforts by some members of Congress to pass "Buy America" legislation, championed by Duncan Hunter, the top Republican on the House armed services committee, which would further restrict the ability to buy foreign defence goods.
"[Congressman] Hunter fundamentally believes that the US should be self-sufficient," says Mr Powell. "I don't believe it is possible. We cannot be the best in everything."
Mr Powell points out that the US defence and aerospace sector is one of the few areas of industry where America still enjoys a positive balance of trade. US defence exports averaged $11.5bn (euro8.5bn, £5.75bn) a year between 2000 and 2004, while imports averaged $1.8bn, according to a study conducted last year.
Mr Powell says the Pentagon is looking into whether it should be concerned with the increased consolidation of the US defence industry. He also says the Pentagon needs to take a closer look at mergers to make sure the US industrial base is not being dangerously eroded.
Under syndication arrangement with FE
THE Pentagon is having to face a new set of challenges and opportunities as the defence industry heads along the path of globalisation.
In crafting industrial policy, the Pentagon has to tread a difficult line between obtaining the best defence technologies, regardless of origin, and ensuring that buying foreign products does not compromise national security by eroding critical sectors of the US defence industrial base.
"Globalisation is here whether we like it or not," says Gary Powell, assistant deputy undersecretary of defence for industrial policy. "[We have to] leverage the benefit and minimise the risk".
Mr Powell stresses that the Pentagon needs to protect its supply chain as it acquires military technologies from overseas, particularly in the case of certain commodities, computer software and micro-electronics.
The Pentagon is increasingly having to rely on importing software and micro-electronics from non-US companies, which raises the potential for foreign governments to tamper with critical technology. The Defence Science Board, a Pentagon advisory group, is currently conducting a study to determine the national security implications of the use of foreign software in US military technology.
Another area of debate involves US export controls. While the Pentagon wants to ensure that foreign governments do not obtain sensitive military technologies, there are also concerns that overly restrictive controls are hurting US industry. The Institute for Defence Analyses concluded in January that "the current US export control system appears to be out of step with today's world of global manufacturing, technology developments and capital flows".
"If [we] want industry to stay strong, we would like them to be able to compete worldwide," says Mr Powell.
He agrees that the list of technologies subject to export controls is outdated, but says the Pentagon's office of defence research and engineering is now trying to modernise the list.
The Pentagon faces legislative constraints when it comes to buying the best technology, or ensuring the supply of critical components. The so-called Berry Amendment, for example, requires the Pentagon to procure food, clothing, fabrics and speciality metals from domestic sources.
While Congress last year provided some flexibility to exempt certain goods, Mr Powell says the Pentagon would ideally like Congress to jettison the amendment. Earlier this year the Pentagon availed of the looser restrictions to allow it to buy fasteners containing foreign-made speciality metals.
"If we cannot buy a C-17 aircraft because it contains fasteners made from speciality metals . . . we have lost a kingdom for want of a nail," says Mr Powell.
The Pentagon also faces efforts by some members of Congress to pass "Buy America" legislation, championed by Duncan Hunter, the top Republican on the House armed services committee, which would further restrict the ability to buy foreign defence goods.
"[Congressman] Hunter fundamentally believes that the US should be self-sufficient," says Mr Powell. "I don't believe it is possible. We cannot be the best in everything."
Mr Powell points out that the US defence and aerospace sector is one of the few areas of industry where America still enjoys a positive balance of trade. US defence exports averaged $11.5bn (euro8.5bn, £5.75bn) a year between 2000 and 2004, while imports averaged $1.8bn, according to a study conducted last year.
Mr Powell says the Pentagon is looking into whether it should be concerned with the increased consolidation of the US defence industry. He also says the Pentagon needs to take a closer look at mergers to make sure the US industrial base is not being dangerously eroded.
Under syndication arrangement with FE