The stability created by the two-year budget deal will help the defense industry make investments in research and development, Bill Lynn said last week.
Lynn, the former deputy defense secretary and current chief executive of Leonardo DRS, told Inside Defense in an interview from the company's Arlington, VA, office that a stable budget environment is key to ensuring a stable defense industrial base.
“That stability then helps industry decide where to invest, how to support the Pentagon, with some assurance the Pentagon is going to actually follow through on the plans because they have the budget to follow through the plans,” Lynn said.
Despite the planned return of budget caps in fiscal year 2020, Lynn said the Pentagon and industry are generally optimistic stability will continue beyond the existing agreement.
“There's always risk, but I think one of the things you got out of this agreement is there's fairly strong bipartisan support for defense spending,” he said. “That hasn't always been the case. There's always these political fights, [but] the political fights haven't tended to be over defense at this point.”
However, Lynn said the defense industry still has to adapt to a changing environment.
“The concern of the future of the industry in my mind . . . is how well do we translate commercial technologies into military applications,” he said. “We have a fairly traditional defense industry that's been very successful, but more and more we are relying on commercial technologies, which I think is going to stretch that industry.”
“The question is: Can this industry meet that stretch or does it need to change the model somewhat, have more hybrid commercial-defense companies?” Lynn continued. “I think the industry needs to adapt. It can be the existing industry itself adapts, it could be the structure of the industry changes to meet that adaptation, but I think if we fail to adapt -- that's what worries me.”
He dismissed a recent incident in which Google employees pressured the company to withdraw from a Pentagon program. Lynn said he “wouldn't read too much into the single instance.”
Instead, he pointed at the Defense Department's cloud program, which has received intense industry attention.
“You've got Amazon pushing very hard to win,” he said. “I'm looking at the broader picture, the fact that Amazon and all of its competitors are fighting hard for this is a good thing, I think, for the defense industry.”
Meanwhile, Lynn said Leonardo DRS is focused on the Air Force's T-X trainer program and is readying for an award announcement.
He said the company feels confident about its proposal, arguing it is a low-risk option.
“There's much more emphasis on contractor performance and delivering what you've promised when you've promised it for the price you promised it,” he said. “This is a mature product. We're going to upgrade it, but we know how to build this.”