Would President Trump Be Able To Save The U.S. Defense Industrial Base?

One of Republican Candidate for President Donald Trump’s main campaign themes is that he will make America a winner again. He will do so, he asserts, by negotiating better treaties, whether on trade or non-proliferation, reining in government oversight and intrusion in our lives, reducing the burden of regulations and taxation on businesses and individuals and supporting the efforts of the private sector to create millions of new, well-paying jobs.

Candidate Trump has promised to make the U.S. a winner in national security again. He has called for building a military so big, so strong and so great that no enemy would dare challenge it. He is not alone in expressing this sentiment. Virtually all his competitors have called for reversing the decline in the size and capabilities of the U.S. military. Several have called for the repeal of the Budget Control Act which cut $1 trillion from projected U.S. defense spending. Whether Donald Trump or one of his competitors, either Republican or Democrat, the next President will confront the need to save a military that is underfunded, overstretched, rapidly aging and less able to stay ahead of potential adversaries technologically.

But, regardless of his or her commitment to a strong national defense, the new President will face the problem of a declining U.S. defense industrial base. Since the end of the Cold War, the number of major defense companies, prime contractors, has shrunk to a bare handful. For many U.S. defense companies, sales to the Pentagon account for a declining share of their revenues. There are so few major new programs that defense companies have a difficult time making the business case for investing their own capital in research and development or even manufacturing capabilities. Today, few leap-ahead technologies are the product of DoD-sponsored research.

Given his background, it is worth asking how the author of The Art of the Deal would address the complex and often difficult relationship between the Department of Defense and the U.S. defense industrial base. No other sector of the U.S. economy is as heavily regulated and burdened by government oversight. The defense acquisition system is often and correctly described as byzantine. As a businessman, how would President Trump feel about being told by government bureaucrats how much profit his companies would be allowed to make? How would he react to the Pentagon’s demands that private companies provide it with certified cost and pricing data not only on unique military items but even on commercial items sold around the world? Would he consider it fair that one party to a contract could alter or even cancel the agreement at its convenience? As a manager, would President Trump think that it made any sense for the Pentagon to increase the number of civilian employees while cutting people in uniform?

In order to get a true picture of the magnitude of the problem, President Trump would be well-advised to have the entire portion of the Federal Acquisition Regulations devoted to defense carted out to the White House’s South Lawn. He might then do himself, the military and the American taxpayer a service by setting a match to the whole edifice – a proposal made some years ago by Arnold Punaro, former head of the Defense Business Board.

Donald Trump prides himself on being an excellent manager as well as a superb negotiator. But even his skills would be challenged by the Pentagon’s acquisition system.