Pentagon official: New defense industrial base review 'won't just be a one-time exercise'

January 22, 2018

By Marjorie Censer

The Pentagon's new industrial base review, spurred by an executive order, is on track to be delivered in April, the chief of the Defense Department's manufacturing and industrial base policy office said today.

Speaking at the Center for Strategic and International Studies, Eric Chewning said the effort is “progressing as we'd expect.”

“I expect this won't just be a one-time exercise,” he said. “There'll be a set of recommendations that will come out of this, and then we have to see those recommendations through.”

Answering reporters' questions after the event, he confirmed the review effort won't seek survey responses from industry, although contractors were initially notified they would be surveyed.

“If you think about the survey from a methodological perspective . . . you want to have confidence in the data,” he said.

When his office several years ago conducted an industrial base study known as the sector-by-sector, tier-by-tier, or S2T2 study, Chewning said, it relied on a survey.

“There was about a 50 percent collection rate, and then it took a one- to three-year process,” he said. “Given our desire to try and frame this issue strategically around, 'Hey, what are the underlying systematic causes of risk in the industrial base and how do we need to address those?' what I wanted to avoid was the phenomenon where everyone's focused on where's that one secret mom-and-pop business that's going to fail and bring the whole system down.”

Instead, Chewning continued, “let's take a step back, let's understand the systematic drivers of risk in the industrial base, understand how that manifested itself as particular risk archetypes and then talk about policy recommendations to address those.”

He said the Pentagon has instead relied on industry associations to provide contractor input.

John Luddy of the Aerospace Industries Association spoke at the same CSIS event and confirmed the association is working with DOD on the review.

“There will be a point, I'm sure, where we get the assessment and the recommendations, and there'll be a point within that where we part ways in some sense, in terms of maybe it doesn't go far enough here, maybe it's not touching on the right issues here,” Luddy said. “Then we'll continue to engage in dialogue.”

Chewning and Luddy spoke at CSIS as the think tank released a new report on the defense industrial base. Among its findings were that the industrial base saw declines as a result of the defense drawdown and the Budget Control Act. Over the study's time frame, according to CSIS, the number of prime vendors doing business with the Pentagon declined by close to 20 percent.

Chewning argued sequestration and the BCA have been just one of several key causes of risk to the industrial base.

“We need to be concerned with more than just sequestration,” he said, naming four other areas of concern.

He pointed to the “industrial policies of competitor states,” “the decline of overall U.S. manufacturing,” “growing human capital gaps in our [science, technology, engineering and mathematics] and trade-related workforce and skills” and “DOD business practices” as other key challenges.