The Army’s Organic Industrial Base: What is the Future for Depots and Arsenals?

Research Study

It may come as a surprise to many Americans that the U.S. Army owns — and in some cases operates — a number of industrial facilities employing nearly 20,000 people. Largely a legacy of World War II, this industrial base includes several manufacturing arsenals that date back more than a hundred years. The number of these industrial facilities has declined dramatically over the last few decades, beginning with the end of the war in Vietnam and culminating with the last official round of base closures in 1995.

The remaining elements of this industrial base — often referred to as the “organic base” — consist of an assortment of arsenals, maintenance depots and ammunition factories. They are operated, funded and modernized as one of the Army’s core activities, and governed by a series of legislative provisions beginning with the 1920 Arsenal Act.

Despite recent success in business management, such as adopting commercial practices and bringing in new tenants through partnerships with private companies, critics argue that by almost all accepted commercial standards these Army plants maintain too much capacity, inefficiency and overhead. Some argue for the wholesale privatization of the public base, turning over industrial functions entirely to the commercial marketplace where inefficiencies would soon be eliminated. This seems particularly attractive during periods when spending on weapons systems is stagnant or declining, putting public facilities in direct competition with private companies for scarce business.

The debate on the proper sizing and most efficient manner of operating the public facilities has been going on for decades. It involves a complex set of tradeoffs with implications that reach into the heart of America’s ability to equip, sustain and support troops in contingency operations and times of war, mobilization and surge; implications that are not always apparent in peacetime. Many common criticisms of the organic base do not account for the unique requirements of operating military installations during war. Operations in Afghanistan and Iraq have tested the limits of some sectors of the commercial defense base and highlighted the value of the flexibility, responsiveness and dedication inherent in the organic base. These operations have also revealed the extent to which the Army’s organic base has already evolved to suit the needs of a military operating in a new strategic environment, where maintenance, repair and upgrades are needed in real-time, in the theater of war.

The Defense Department, Congress and communities around the nation are preparing to debate the 2005 round of base closures (the Defense Secretary is required to submit a list of proposed closings to Congress in March 2005) that may include any of these Army industrial facilities. In this discussion over jobs, over-capacity and competition for defense resources, the overall objective of defining and preserving an industrial capability necessary for national defense must remain paramount.

The answer will not be found in black and white: private vs. public, arsenal vs. depot, over-capacity vs. efficiency, but rather in the continued evolution of the nation’s industrial base toward an integration that balances the best of what commercial companies and Army installations have to offer. Partnerships between the public and private sector need to be expanded and encouraged to an extent that transforms both elements. This will not be an easy task. It will require a shift in thinking among industrial managers — both public and private, and policy makers as well as legislators. The business environment must allow a genuine balance between the interests of the partners, so that both sectors see tangible, long-term benefits from the relationship.

The advantages of industrial partnerships have already been proven in several cases where they have been tried, but more needs to be done to encourage such arrangements. Congress has helped to create a more hospitable atmosphere for partnering over the past decade by passing legislation removing some barriers to long-term business relationships between the government and private companies. Other obstacles remain, however, including an overall reluctance to change, and most importantly, share work.

The continuing viability of the organic base, and ultimately the effectiveness of America’s defense industrial base as a whole, may well depend on whether these obstacles can be overcome. This is a challenge of transformation no less difficult and no less important than any other challenge facing the Army today.

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