DEFENSE CONVERSION/TRANSITION

AND THE INDUSTRIAL BASE:

REP ORT OF THE 1993

AUSA/ ADPA JOINT PANELS

Sponsored by the

ASS OCIATION OF THE UNITED STATES ARMY

AUSA -Institute of Lan d Wmfare

2425 Wilson Boulevard

Arlington, VA 22201

(703) 841-4300

and

AMERICAN DEENSE PREPAREDNESS ASS OCIATION

ADPA - "The Voice of the Industrial Base"

2101 Wilson Boulevard

Suite 400

Arlington, VA 22201

(703) 522-1820

April 1994

FOREWORD

The A s s ociation o f the United States Army (AUSA) and the American Defense P reparedness Association (ADPA) sponsored a series o f pane l s / conferences i n 1993 to addres s some of the problems as sociated with maintaining an adequate defense indus trial and technological base for the pos t-Cold War wor l d . The panels were a follow-on e f fort to AUSA's 1991 I s sue Conferences and the joint AUSA/ADPA Seminars in 1992 that examined the individual sectors of the civi lian industrial base .

With the exception o f the first panel, which covered the spect rum o f defense conversion/ transition i s sues , each panel was devoted t o a specific topic -- acqui s i t ion reform, depot maintenance, and the conventional munitions base . Generally, panels were limited to a group of 20-30 in order to facilitate discuss ion and encourage interaction among the parti cipants . The selection o f parti cipants and speakers was des igned to provide a mix o f senior gove rnment and industry representatives knowledgeable about the i s sues under discus s i on . The format for the panel meetings con s i s ted o f s everal presentations, followed by general discuss ion and ques tions .

The goal o f AUSA and ADPA in sponsoring these sess ions was to identify critica l actions that need to be taken and to develop an approach to influence these actions . We s trongly bel ieve that the defense conversion / transition process is too important to our national security to be igno red or subjected to a l a i s s ez-faire approach.

This report on our j oint panels provides a summary o f the panel discuss ions , details the actions initiated, and ident i fies critical matters for c ons ideration .

Jack N . Merritt General, USA Ret . Pres ident Association o f the

United States Army

���� Lawrence F. Skibbie Lieutenant Genera l , USA Ret . President Ame rican Defense

Preparedness Association

CONTENTS

FOREWORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

SECTION I

SECTION II

SECTION I I I

SECTION IV

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

THE PANELS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Defense Convers ion/Trans ition Overview . . . . . . . . . . . . . . . . 3

Acqu i s i tion Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Depot Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

The Defense Munitions Base . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ACQUIS ITION REFORM WORKING GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . 17

OBSERVATIONS AND CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

APPENDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

A . Attendees , Defense Convers ion/ Trans ition Panel . . . . . . . . . . . . . . . . . . . 23

B . Attendees, Acqu i s i t ion Reform Panel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

C . Attendees , Depot Maintenance Panel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

D . Attendees , Munitions Industrial Base Panel . . . . . . . . . . . . . . . . . . . . . . . 2 6

E . Member s , Acqu i s i t ion Reform Working Group . . . . . . . . . . . . . . . . . . . . . . . . 27

F . Selected References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 8

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DEFENSE CONVERSION/TRANSITION AND THE INDUSTRIAL BASE: REPORT OF THE 1993 AUSA/ADPA JOINT PANELS

SECTION I: INTRODUCTION

The overall purpos e o f the AUSA / ADPA effort was to develop approaches to address concerns about retention o f critical production and technology development cap�b i l i t ies as the U . S . defense industry undergoes a dras t i c and painful downs izing . Both AUSA and ADPA have expressed s t rong reservations about the continuing decline of the industrial bas e . As AUSA President General Jack N . Merritt s tated in testimony before the House Armed Services Commi ttee Panel on Structure of the U. S . Defense Indus trial Base in 1992, " The A s s o c i ation o f the United States Army has concerns for the long-term viab i l ity o f the indus t r i a l base to support the national security s trategy o f the United States . " The continued downward trends in research, development, and procurement funding "could jeopardize the technological and indus t r i a l b a s e capabi l ities that produced our overwhelmingly succe s s ful mili tary forces in Desert Storm . "

Dome s t i c economic and polit ical pressures and the des i re for a "peace dividend" have resulted in a s teadi ly declining defense budget . One o f the cons equences has been a precipi tous drop in procurement funding . President C l inton's F i s ca l Year 1995 Budget proposes defense procurement spending o f $43 b i l l i on, which i s $1 b i l l ion less than for the current yea r . In real terms , the Department of Defense (DoD ) budget has decl ined more than 6 0 percent s ince 1985 . The Army has seen i t s own research, development and acqu i s i t i on funding p lunge from a high of $20 . 3 b i l l i on in 1987 to $12 b i l l ion in Fiscal Year 1994. As a result of the defense budget reductions , experts bel ieve that more than one million workers in the defense-related indus t r i a l arena will have been disp laced by the time the defense convers i on / t rans i t i on process is completed.

In the National Defense Authorization Act of 1933 (P . L . 102-484 ) , which added a new section to Title 10, USC, Congress demonstrated i t s concern about the e ffects of defense down s izing and clearly set forth the defense pol icy objectives for the nation ' s technological and indus trial base .

Section 250 1 ( a ) , Title 10 , USC :

" I t i s the po l i cy o f Congress that the national technology and indus t rial base be capable o f meeting the fol lowing national security objectives :

( 1 ) Supp lying and equipping the force s t ructure o f the Armed Forces that is necess ary to achieve :

A . the objectives set forth in the national security s trategy report . . . ;

B . the policy guidance o f the Secretary o f Defense . . . ; and C . the future years defense program submitted to Congress

( 2 ) Sustaining production, maintenance, repai r , and logistics f o r mili tary operations o f various durations and intensities .

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( 3 ) Maintaining advanced research and development activi t i e s to provide the Armed Forces with sys tems capable of ensuring technological superio rity over potenti al adversaries .

(4) Recon s tituting within a reasonable period the capability to develop and p roduce supplies and equipmen t , including technologically advanced sys tems , in sufficient quan t i t ies to prepare fully for a war , national emergency, or mobi l i zation o f the Armed Forces before the commencement o f that war , national emergency, or mobilization . "

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SECTION II: THE PANELS

Defense Conversion/Transition Overview -- June 18, 1993

The first panel was chaired by General (USA Ret . ) Glenn Otis , an AUSA Senior Fellow. The speakers were Mr. Darrold Griffin, Army Materiel Command; Mr . George Krikori an, Defense Sys tems Management College; Mr. George Price, Sikorksy Helicopter; and Mr. Marty Suydam, BMY. ( See Appendix A for l i s t of p anel participant s . )

Background and Issues

This initial conference was devoted to defining the terms and parameters of defense convers ion/ transiti on, identifying the effects of reduced procurement budgets on the private sector of the industrial base, and developing the key is sues that should be addres sed by the follow-on pane l s .

There has been a subtle, but dis tinc t , change in the real meaning of a "vi able" industrial base . This change reflects the difference in perception between the types of base capabilities needed to meet the requirements of mobilization and the base capabilities needed for reconst itution requirements . It is not clear that the long-term implications of this changed perception i s being fully considered in the defense conversion / transition proces s .

The roles of government arsenals, laboratories and depots as part of the indus trial base need to be examined. The industry perception is that the government is protecting the depot workload at the expense of the private sector.

U.S. Army Materiel Command Viewpoints

The United States Army Materiel Command ( AMC) is reshaping itself i n order to become more efficient b y consolidating maintenance support functions and eliminating nonessential in-house capabilit ies . AMC currently operates three arsenals , eight ammunition plants, eight test centers and 13 supply and maintenance depot s . By 199 7 , the civilian and mil itary workforce will have dropped 34 percent from the 1989 manning levels, and only five maintenance depots will still be operating .

AMC i s attempting to change its working relationship with the private sector. The goal i s to establish a more profess ional, cooperative relationship instead of the current arm's - length relationship with contractors . As part of its efforts , AMC is working to improve the Request For Proposal (RFP) process , encouraging cooperative research and devel opment agreements, promoting partnership arrangements with private industry, and attempting to change the contract auditing relationship that exists today .

A major AMC initiative to maintain industrial base facilities i s the Armament Retooling and Manufacturing Support ( ARMS ) program. This program i s des i gned t o allow private contractors t o use government-owned facilities in exchange for the maintenance of the buildings and manufacturing equipment. The contractor may subcontract the facilities to others and use the exi s t ing government environmental permits . The potential benef its to the community

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include saving or creating new job s , increasing the tax bas e , and attracting new industry. The government is able to reduce operating costs and, at the same time, retain an operating facil ity for use in an emergency . The contractor has the opportunity to improve profits through the reduced operating cost of an existing faci l i ty .

Status of Industrial Base Sectors

In 1992 , AMC , in conjunction with private industry representatives conducted a joint asses sment of the maj or industrial base sectors . The asses sment revealed that five of the 13 cri tical sectors were in s e rious troub le -- sma l l mi s s i les, tracked vehicles , aviation, chemical-bi o logical, and ammunition. O f the five, the conventional ammunit ion sector was j udged to be in the wo rst shape, because o f its abs o lute dependence on the DoD market . In fac t , as foreign mili tary sales opportunities dec line, the condition of the conventional ammunition sector is bound to worsen unless action is taken to p reserve capabilities. In the tracked vehicle s ecto r , the tank base wi l l remain in acceptable condition through 1997 due to the upgrade of the M1A1 and projected sales to Southwes t Asian a l l ies . The aviation sector wi l l find i t s e l f in jeopardy if Black Hawk production i s terminated and the Comanche program is curtailed .

In gene ral , industry representatives stated that the industrial sector asses sment was overly optimi stic . In their opinion, none o f the indus trial sectors are in a s t rong condi tion and mos t o f them are moving towards the weak or lower-range acceptable category.

The "Section 800 Panel"

The DoD Advis o ry Panel on St reamlining and Codifying Acqui s i t i on Laws , the " Section 800 Panel , " was estab l i shed by the Defense Authorization Act for for F i s cal Year 1991 ( P . L . 101-510) and charged to review procurement laws "with a view towards s treamlining the defense acqui s i t i on p roces s . " The panel reported that companies often avoid the DoD market or wi thdraw from it because of the ass ociated costs and excess ive regulatory burden . In fac t , a survey o f 206 companies doing business with DoD revealed that 8 6 percent o f them segregate their c ommercial and DoD sales because o f the unique accounting and contracting requirement s , exces sive oversight, and increased overhead costs associated with their DoD busines s .

The goal s o f the Section 800 Panel were to:

o prepare a proposed code of acquisition laws;

o identify acquisition laws that are unnecessary for the e s tab l i shment of buyer and s e ller relationships;

o ensure the continuing financial and ethical integrity o f DoD procurement programs; and

o protect the best inte rests o f DoD.

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laws. The panel estab l i shed 10 objectives to guide i t s review of acqui s i t i on

o Acquisit ion laws should cover broad policy and fundamental requi rements . The detai led implementation o f these policies should be covered in the acqui s ition regulations .

o Acquisiti on laws should promote financial integrity in ways that are s imple, not unduly burdens ome, and encourage efficient procurement practices.

o Acqu i s i tion laws should estab l i sh a balance between an e ff i c ient proces s , full and open access to the procurement sys tem, and s oc i o-economic pol icies .

o Acquis i t ion laws should fac i l i tate the purchase of commercial products and services at commercial prices.

o Acquisition laws should enable companies to integrate the production of both commercial and government products wi thout altering the i r commercial accounting o r business practices .

o Acqui s i tion laws should , wi thout altering commercial accounting or business practice s , faci litate government access to commercial technologies .

o Acqui s i tion laws should promote the development and preservation o f an industrial base .

o Acqu i s i ti on laws should provide the means for fair resolution of p rocurement di sputes through uniform interpretat i on o f laws and implementing regulation s .

o Acqu i s i t i on laws should encourage s ound judgement on the part of acqu i s i t ion pers onne l .

o Acqui s i t i on laws should, when generating reporting requi rements , permit the use of exist ing data wi thout impos ing additional admin istrative requi rements .

The Section 800 Panel identified and examined more than 600 laws affecting the defense acquisit i on process , recommending the repeal of 124 laws and sugges ting major amendments to 163. The panel recommended major changes affecting contract formation and admini s t ration , use of commercial i tems and practices , and the es tab l i shment o f a higher, s imp l i fied acqu i s i t i on threshold of $100 , 000 . Two of the mos t important recommendations with the greatest potential impact were:

o raising the simplified acquisition threshold to $100,000. Rais ing the thresho l d from $25 , 000 to $100, 000 will affect approximately 5 4 percent o f DoD's prime contracts. The $100, 000 threshold was successfully used during Desert Shiel d / S torm in order to fac i l i tate overseas purchases of critical i tems .

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o easing procurement of commercial and nondevelopmental items. Exempting commercial items from the provi s i ons o f the Truth in Negotiations Act ( 10 USC 2 3 06a) would make i t easier to purchase commercial items .

Helicopter Industry Concerns

Whi le the overal l s ize o f the helicopter market i s expected to remain at the same level over the next 1 0 years , the composition o f the market has changed dramatical l y . The ratio o f civil and international mil itary sales t o U . S. mi l itary sales has doubled. As a result , the viability of the rotary-wing indus trial bas e will be increasingly dependent on the ability to compete in the international mi l i tary and civil ian markets .

The civil ian market will not sustain the technologies needed for mi l i tary aircraft sys tems. Mil itary rotary-wing ai rcraft requi re unique and crit ical techno logies to survive in the combat envi ronment . I f the dual-use concept i s to succeed, there mus t be incentives to develop dual-use p roducts . There should be some as surance tha t , in the future, DoD will cons ider ai rcraft des igns that attempt to incorporate features and attributes that wi l l be desi rable for civilian us e .

Current p o l icy allocates mos t modification and upgrade work for new ai rcraft to government depots and limits private industry to work on o lder model s . The change in market composition makes modi fi cation and after-sales work much more important to industry prime contractors.

Conversion and Dual-Use Implications

BMY made the dec i s i on early on to attempt the dual-use route in the defense conve r s i on / tran s i t i on process . But defense products and production fac i l i t i e s are not necessarily eas i ly converted to c ivil ian use. Despite the success o f BMY's Ohio plant -- the abi l ity to produce buses and tact ical wheeled vehicles alternately, or at the same time -- there were s t i l l prob lems . Converting military five-ton trucks to civil ian use was difficult because of the emi s s ion standards for civilian vehicles .

A l l owing defense companies to merge or consolidate makes i t eas i e r to convert fac i l i t i es and products to dual use. However , DoD mus t provide better support to companies attempting to cons o l i date. The current antitrust c l imate i s too restri ctive and does not take into account the special problems of many defense companies.

Matters for Consideration

The maj o r i s sues o f defense conversion/ trans i t i on include determining the appropriate government role in support of international military sales and the c on s o l i dation o f defense indus tries; deve loping and impl ementing p o l i cies to sustain critical sectors of private industry; determining c r i tical core capab i l i ties and the role of government depots in providing these capab i l i ties; determining practical ways to support dual-use technologies and applications; and acquisition refo rm.

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Not a l l companies are eager to do away with defense contracting rules and regulations. In fac t , those companies that are very good at the defense contracting p rocess are reluctant to see some of the less demanding commercial practices adopted .

The critical factors in a successful defense conversion effort are:

o identification of critical and dual-use technologies; o national strategy to coo rdinate effort; o p rotection from political manipulation

It was agreed that foll ow-on panels should address acquisition reform and depot maintenance issues in more detai l . Further, because o f the extreme weakness o f the munitions sect o r , there should also be a session devoted to munitions industrial base problems .

Acquisition Reform -- August 11, 1993

The panel on Acquisition Reform was chaired jointly by ADPA President L t . Gen. (USA Ret. ) Lawrence Skibbie and Lt. Gen . (USA Ret. ) Richard West, Vice President for Education, AUSA. The panel participants are listed in Appendix B. The speakers were Mr. Ric Sylveste r , Office o f the Under Secretary of Defense for Acquisition; Ms . Cathy Garman , House Armed Services Committee; and M r . Alan Chvotkin , Sundstrand Corpo ration.

Background and Issues

Acquisition reform is not a new idea . There have been a myriad o f studies b y special commissions , the Congress, the Defense Science Board, " think tanks" and universities confirming the shortcomings o f the existing acquisition system. However , there seemed to be no real incentive to reform the system until the Ber lin Wa l l collapsed in 1989.

The current defense drawdown and the corresponding decrease in the defense budget have given increased impetus to efforts to reform the de fense acquisition process. There is a sense of purpose within the Department o f Defense, Congress , and private industry that there i s a need to streamline and consol idate the existing l aws and regulations, which impose unnecessary restrictions and cumbersome procedures on the acquisition process .

The report o f the DoD Advisory Panel on Streamlining and Codi fying Acquisi t i on Laws provides a real basis for implementing changes in the acquisition process.

Both the Carnegie Commission and the Defense Science Board have issued reports recommending radical revision of the current acquisition system. In 1989, the Defense Science Board issued a report on the Use of Commerc i a l Components i n Mi l itary Equipment that recommended the use o f commercial spec i fications and standards for mili tary procurement and the establishment o f p i l o t programs to test the concept. The fact that one of the authors o f the report i s now the Secretary o f Defense should give added impetus to the adoption of commercial p ractices . In 1991, the Defense Science Board Task Force on Acquisition Streamlining issued two reports examining the costs o f

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acqui s i tion oversight and identifying barriers to implementing reforms . The task force concluded there was a s ignifi cant cost as sociated with the exi s ting acqui s i t i on sys tem and that current acqui sition laws and ingrained acqui s i t ion practices precluded the use of commercial acqui s i t i on practices .

In Apri l 1993, the Defense Science Board was tasked to define the scope and method to implement necess ary modifications of the defense acqui sition process and spec i fically, to review the recommendations o f the Section 800 Panel for both immediate and long-term actions. The task force generally concurred with the panel's findings and recommended that DoD imp l ement the panel' s recommendations by changing acquis ition regulations , where possible, and that DoD support the proposed legis lative changes.

DoD Acquis ition Reform Actions

The current DoD acqui s i t i on sys tem cons ists o f a conglomeration o f procurement rules and regulations that have evolved from a complex s et o f acquisit ion laws des i gned t o protect the government's interes ts , establish competit ive fairnes s , and further socio-economic obj ectives . DoD is committed to acqui s i tion reform, because it believes the current sys tem is outdated. William J. Perry , then Deputy Secretary of Defen s e , s tated in an appearance before the Senate Armed Services Committee in 1993 that acqui s i tion reform is an essential aspect of a succes s ful defense conversion e ffort.

The estab l i shment of the pos ition of Deputy Under Secretary of Defense for Acqui s i tion Reform is an indication of DoD' s determination to re form the defense procurement proces s . That o ffice will be responsible for a l l matters pertaining to acqui s i t ion reform and will be charged to reform these acqui s i t i on system ' s organizational and management s tructures which are no longer relevant in today's defense environmen t .

DoD recognizes that the body o f acqui sition regulations and laws are obstacles to the integration of the commerc ial and defense industri a l bases as they hinder the use o f normal commercial practices and commercial products . However , DoD initiatives to imp lement 800 Panel recommendations have been hampered by the requirement to coordinate their actions with the large number o f agencies involved in the C l inton administration ' s defense convers i on proces s .

Congressional Actions

The primary difficulty in p a s s ing meaningful legislation a f fecting acqui s i t ion reform is the large number o f congress ional committees with jurisdiction or interes t s in d i fferent areas of DoD acqui s ition prac t ices . There are 107 commi ttees and subcommittees in Congress that exercise s ome degree o f over s i ght on defense acqui s i tion. Many o f these are involved in the s o-cal led socio-economic aspects o f acqui sition .

During the past year, the House Armed Services Committee was ab le to make only minor and noncontroversial changes in acqui s i t ion law in the Fiscal Year 1994 Defense Authorization B i l l . This was due in part to the reluctance of other c ommittees to waive "referra l , " which is the proces s by which legis lation is referred to committees having jurisdiction over matters a f fected by the proposed legi s lation.

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Most o f the subs tantive leg i s lative efforts on acquisition reform have taken place in the Senate. Senators Jeff Bingaman (D-NM) and Carl Levin ( D-MI ) are sponsoring a b i l l to s treamline federal acqui s i tion practices, which is expected to be introduced in October 1993 . This b i l l is a joint product of the Senate Government Operations and Armed Services Committees .

The Industry View of the "Section 800 Panel" Recommendations

Whi l e private industry views the recommendations o f the Section 8 0 0 Panel favorably, i t does not regard them a s the total s o lution, a s the panel was not chartered to examine the acquisition s tructure and procurement regulations . Industry believes that in the area o f commercial practices , the panel did not go far enough . The recommended changes do not preclude the es tablishment of government-unique regulations for commercial acqui s i t ions and do not exempt commercial procurements from such overly burdensome s tatutory requirements as the Buy America Act and the Truth in Negotiations Act .

The industry position is that the compet i tivenes s o f the commercial market provides an adequate protection of the government' s intere s t s . There i s no justi fication to e s tablish uniform terms and conditions that would inevitably be amp l i fied by regulations that are contrary to standard commercial practices .

The Truth in Negotiations Act i s considered by many to be the b i ggest obstac le to the procurement o f commercial products . Most private companies do not have the resources to e s tablish the accounting sys tems to provide the data required by government regulat ions . The Buy America Act , which requires that 5 0 percent o f the cost o f the components of an item be produced in the United States , is an anachronism for a company competing in today' s world economic.

Industry is also concerned about the question o f technical data right s . I t contends that contractors should not be required t o give up these rights to the government as a matter o f cours e , but that they should be the subject o f contract negotiations .

Industry associat i ons support a package called " 8 0 0 Plus . " The package includes a more comprehensive commercial practices s ection; a modified s imp li fied acquisition threshold; regulatory reform; and reform of the military s t andards and specifications proces s .

Matters for Consideration

I t i s c lear that the pace o f acquisition reform is much s lower than expected, despite the overwhelming consensus among a l l parties about the need for improvc�ents in the acquis i tion process .

The panel believes that i t i s important to expedite the acqui s i tion reform proce s s and decided to form a special working group, under the auspices of AUSA and ADPA, to develop strategies for energizing acquisit ion reform efforts .

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I t was agreed that the working group would hold an init i a l meeting within two weeks to es tablish goals and objectives . The activities of the Acqu i s i t i on Reform Working Group are covered in Section III of thi s report . The members o f the working group are l i s ted in Appendix E.

Depot Maintenance -- October 8 , 1983

The Depot Maintenance Panel was chaired jointly by Lt . Gen . (USA Ret . ) Richard Wes t , AUSA ' s Vice Pres i dent for Education and Lt . Gen . (USA Ret) Lawrence Skibbie, Pre s ident of ADPA. The panel consis ted o f representatives from the Department of Defens e , Army Materiel Command, and the House Armed Services Commi ttee. ( S ee Appendix C . ) The speakers were Lt . •Gen . Leo P igaty , Deputy Commander, Army Materiel Command; Mr. John Gi lbride, Boeing Helicopter Company; and Mr . B i l l Mogan, Tal ley Defense Sys tems.

Background and Issues

Government arsenal s , depots, and p l ants have p layed important roles in developing and maintaining weapons, muni t i ons and other equipment for the the services s ince 1 7 7 7 , when the Spring field Armory was estab l i shed in Mass achusetts to support the Continental Army . However, over the past 5 0 years private defense industries have become the major developers and producers o f advanced weapons sys tems and munitions , and the need to maintain government fac i l i t i e s has dec l ined. As an examp l e , the Army operated more than 220 ammunition p l ant s , arsena ls, and maintenance depots at the end o f World War I I . Today, thi s number has dropped to jus t three arsenals, seven maintenance depots , and eight ammunition p l ant s . By the end o f 199 7 , there wi l l be only five operating maintenance depots.

The reduct i on in defense spending for res earch, devel opment and acquis it i on has led to increased pressures from private industries to reduce the number of government-operated depots , laboratories and p l ants and to l imit the maintenance workload levels at depots . Private industry representatives argue that it is more sens ible to adopt policies that would preserve the full-service capab i l i t ies existing in the private sector instead of protecting government fac i l i t ies with l imited capab i l it ies. The servi ces , on the other hand, believe that i t i s necess ary to retain a responsive core depot-level maintenance capabi l i ty in order to meet emergency operational requirements and, at the s ame time, serve as a means of cost contro l .

The Fiscal Year 1994 Defense Budget contained approximately $13 b i l l ion for depot-level maintenance, o f which $ 1 1 b i l l ion was a l l ocated for Air Force and Navy maintenance activities . An additional $9 b i l l ion was authorized for equipment upgrade work. Most of this amount goes to government depots . Under the current provi s ions o f law ( 10 USC 2466 ) , DoD i s prohibited from contracting out more than 4 0 percent of government depot work loads to the private sector.

Maintenance depots perform overhaul and rebu i l d , mod i f ications , convers i ons and upgrades to extend service l i fe o f sys tems. Al though s ome depot work i s too speci alized or too low in volume to be performed economically in the private s ector, the preva i l ing industry view i s that government fac i l i ties are retaining more than a reasonable share of the maintenance workload in a time of general defense downs izing .

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The 1993 Joint Chiefs of Sta ff's "Depot Maintenance Consolidation Study'' concluded that exi s ting DoD depot capacity exceeds future requirements by 25 percent to 5 0 percent and that there is a need to s treamline and consol idate the exi s t ing depot sys tem. The study further recommended that a l l depot level maintenance activities be conso l i dated under a s ingle authority . The study, in commenting on the future course for government depots, observed that "we recognize that fu l l contracting out of depot maintenance functions to commercial industry i s also a long term pos s ib i l i ty . " I t also recognized that there would be a pos s ible economic impact i f this course of action was adopted: "With the el imination of organic depot capab i l ity, there is a dis tinct probabi l i ty that the commercial ization proces s would become a sole source environment with potentially higher costs . "

DoD has attempted to initi ate p i lot procurement programs that woul d give long-term major maintenance respons ibi l ities to private industry instead of to government fac i l i ties . However , there has been s t i ff res i s tance from the congress ional "Depot Caucus . " ( A provis ion in the Fiscal Year 1994 Defense Authorizat ion B i l l [H . R. 2 4 0 1] prohibiting any long-term shifts of maintenance respons ibil ity to private industry was changed to a " sense of Congress , " which does not have the effect of l aw, during the House/ Senate conference . )

The AMC Perspective

The basic underpinning o f the Army Depot System i s the Arsenal Act [10 USC Sect i on 413 2 ( a ) ], which has not changed s ince i t was enacted in 192 0 . The act provides that "the Secretary o f the Army sha l l have suppl ies needed for the Department o f Army made in factories or arsenals owned by the United States , so far as these factories or arsenal s can make those supplies on an economical bas i s . "

Des pite the mis givings of private industry that government depot fac i l i t i e s are being protected at their expense, AMC has undergone a substantial downsizing. The civilian and mili tary workforce has been by 3 3 percent and 4 3 percent , respectively, over the past four years. end of 1997, when the 1993 Base Rea l i gnment and Closure Commi s s ion recommendations have been implemented, the Army Depot System wi l l have five maintenance depots and eight ammunit ion p l ants in operation.

reduced By the

only

The Army con s i ders the emergency response capab i l i ty provided by its depots to be a key factor in determining their eventual role . During the Gulf War, nearly 1, 0 0 0 personne l from the various depots were sent to Saudi Arabia to estab l i sh forward depot faci l i ties . The depots also provided a s s i s tance teams to units preparing to deploy and provided quick response equipment modificat ion packets for units already deployed. Depots a lso provided emergency response teams for natural disasters . Supply a s s i s tance teams, a long with water purification and power generator equipment and operators, were dispatched to s tates during Hurricane Andrew and the "Great FJood .::.f 1993 . "

General ly, the Army contends that its depots are vital to meet operational requirements because of their emergency response capab i l i t ies . Government depots can increase output or change priorities without contractual problems and they are a guaranteed source of work when the private sector i s not intere s te d .

11

The solution for the future may be one in which industry and the depots team to do the type of work best suited to their capab i l i t i es . Some successful examples of this approach are the Ml modernizat ion program, in whi ch General Dynami cs teamed with Anni s ton Army Depot and the M1 09A6 (Paladin) modernizat ion, which was performed by Letterkenny Army Depot and FMC . In both instance s , each performed the tasks for which they were best suited.

Industry Perspectives

Many private companies view depot maintenance and rebu i l d activities a s an alternative opportunity t o sustain their own production and res earch capab i l i t i e s at a t ime when military procurement i s severely limited . They bel ieve that shift ing more of the maintenance workload to private indus try i s the best way to pres erve the industrial bas e . Major defense contractors have deve lopment, des ign and production capabili t i e s , which are norma lly not present in depot fac i l ities . Limited production contracts make i t difficult for industry to economically justify the retention of soph i s ti cated res earch and tes t fac i l ities un less there i s a substantial amount of rebu i l d or upgrade work ava i l able to offset expenses .

Industry representatives believe that government fac i l it i es are taking work away from the private sector, especially when depots compete with private industry for maintenance work . In their opinion, public vs. private competit ions are skewed in favor of the public fac i l ities because they use different cos t accounting factors.

Congressional Concerns

The congressional Depot Caucus has consis tently supported the military depot maintenance sys tem and i s extremely skeptical about DoD's attempt to divert work to the private sector. In previous years , they have succes sfully p laced provis ions in the defense authorization b i l l establishing workload_ levels for government depots and limiting a l location of work to private industry by prohibiting the transfer of more than 40 percent of the maintenance workload to the private sector . The Depot Caucus believes that the 60/40 split i s about right for the present time .

In 1993 , the Depot Caucus was ins trumental in including prov1s1ons in the Fis cal Year 1994 Defens e Authorizat ion B i ll (H . R . 2 4 0 1) prohibit ing the Secretary of Defense from consolidating the depot sys tem under a s ingle entity; imp lementing a new procurement policy giving long-term, major maintenance responsibi l ity to private industry; and establishing a Defense Depot Task Force . (The first two provis ions were modified during the House/Senate conference . )

The Defense Depot Task Force i s to determine which functions and activities should be performed by government faci l ities and which would best be performed by the private s ector . As part of i t s evaluation the task force will also examine performance levels , work rates and prices , and how core capab il i t ies and requirements are determined.

12

Base Realignment and Closure Commission

DoD has already closed or reduced the s i ze of about 3 0 percent of its fac i l ities as the result of recommendations from the previous commis sion s . However, there were many indications that members of the 1993 commi s s ion were receptive to the argument that diverting work to private industry by closing government facilities would be a viable approach to maintaining the private sector industri a l bas e .

Matters for Consideration

The s ervices must realistical l y determine the m1n1mum required core capabi lities and workload levels needed to meet emergency requirements . At the same time , they must consider what types of work would best be performed by private industry and how to preserve critical civilian industrial base capabilities . In the absence of a realistic determination , the 1995 Base Rea l i gnment and Closure Commis sion is almost certain to con s i der depot facilities as candidates for closure even if they are not included in the Secretary of Defense's list of bases recommended for closure .

The Defense Depot Task Force , which i s charged to determine how maintenance functions should be a l located between government facilities and private industry, will be faced with an extremely difficult task . If the Depot Caucus i s not convinced that the recommendations of the task force are sound, then little will be accomplished .

The Defen s e Munitions Base December 10, 1993

The panel was chaired by Lt . Gen . (USA Ret.) Lawrence Skibbie, Presi dent of ADPA, and was comprised of repres entatives from OSD, Department o f Army , Army Materiel Command, and the major private companies in the ammunition sector . ( See Appendix D for list of attendees . ) The speakers were Mr . Richard Palaschak, Director of the Munitions Industrial Base Task Force; Brigadier General Wi l l i am Holmes , Deputy Chief of Staff for Ammunition; ; and Mr . George Kopscak, Deputy Director , O ffice of the Under Secretary o f Defens e for Acquisition and Technology .

Background and Issues

The conventional munitions bas e , which is totally dependent on DoD, is one of the industrial base sectors most s eriously threatened by the defense drawdown . The conventiona l ammunition base consists of government owned and operated ( GOGO) , government owned and contractor operated (GOGO ) , and privately owned and operated (COCO) plants . It includes production and research facilities for electronic fuzes and advanced warheads, but excludes torpedoes and mis siles .

The DoD ammunition procurement budget for Fiscal Year 1994 is $ 1 . 9 b i l l ion , wh ich is approximately 22 percent o f the Fiscal Year 1988 amount . Since 1988, the Army ammunition procurement budget has declined from $2 . 3 b i l l ion to $ . 7 3 4 bil lion, with the largest decreases fal ling in the categories of war reserves and training ammunition . There is no relief in sight, as the outlook for the next three years is for continuing decreases in ammunition procurement .

13

The comb ination o f decreased ammunition procurement and l imited opportun i t i e s for foreign military s a les has serious ly damaged the economic viab i lity o f p rivate sector ammunition producers . Major members of the ammunit i on industry are dropping out, companies have released 3 0-50 per cent of thei r ammunition workers , and many sma l l contractors who provided propellants , shell cas ings , bomb lugs, etc . , are leaving the business, forcing ammunition producers to find new suppliers o r develop their own capabilit ies .

Munitions Industrial Base Task Force

In an e f fort to counter the damaging trends in ammuni t i9n procurement, many o f the companies making up the munitions indus trial base joined together to establish the Munitions Industrial Base Task Fo rce. The Task Force, operating as a nonprofit organizati on, is charged with the respon s i b i l i ty o f making the case for maintaining the capabilities for ammunition surge production and supporting a continuing conventional ammuni t i on research and development e f fort . The fact that competitors have joined together in this effort is an indication o f the seriousnes s o f the s i tuation in the eyes o f the indu s t ry .

The Loss of Surge Capability

In the opinion o f many of the private sector members of the munitions indus t r i a l bas e , it is highly unlikely that the exis ting industrial base of today could provide the s ame degree of support as it did to meet Operation Desert Storm requirement s . In fact, it is questionab le as to whether the indus trial base could provide the amounts and types of conventional ammun i t ion needed to support one, let alone two, nearly simultaneous contingency operations .

During Desert Storm the munitions industry could not meet the demands for 25mm ammunition for the Bradley, 3 0mm for helicopters and fighter aircraft , fuzes, and mines. Currently , it is es timated that Desert Storm demand leve l s for mo s t munitions could not be met in six months and many critical ammuni t i on items would require as much as 12 months' lead time .

War Reserves and the Ammunition Stockpile

As a result of the drawdown of our forces in Europe , ammunition s t ockpi l e d there has either been returned to the states or transferred to foreign governments . Currently, there are approximately three million short tons of ammunit ion in our s tockpil e . Howeve r , much of this is older, or outmoded, ammunition . I t is es timated that only 323,000 short tons are the "go-to-war" mun i tions o f choice .

Our ammuni tion procurement po licy has a l s o changed. It is no longer based on mob i l ization requirements , but is one of buys to replenish s tocks a s they are consumed. However, ammunition consumption h a s dropped because o f lower operating tempo leve ls , which are, in p a r t , a result o f budget shortf a l l s caused by unprogrammed peacekeeping expenses.

14

Foreign Military Sales and Industry Consolidation

Ammunition producers believe that DoD has been one of their biggest competitors in the foreign military sales arena . It has disposed of exce s s ammunition either a t "fire sale" prices or a s outright gifts t o foreign governments, which deprives the ammunition indus try of potential customers. While these actions provide a short-term, immediate benefit to the government , they do long-term damage to the munitions industrial bas e . Industry executives contend that they are further hampered in competing in the foreign military markets by legal const raints that do not affect other countries.

Industry officials believe that there mus t be s ome consoli dation if the munitions base i s to remain viable . However, there is little , if any, support from DoD when companies attempt to cons olidate . As an example, a planned merger of Olin and Alliant was disapproved by the Federal Trade Commis sion . The disapproval was attributed , in par t , to a lack of effective support from DoD for the merger of the two companies.

Matters for Consideration

The Munitions Industrial Base Task Force believes that there are s ome acceptable options that DoD could pursue to help s tabilize the production bas e . These options include establishing a program to inventory and examine the condition of mun i tions in the stockpile; adopting a demilitarization program f o r older munitions instead of selling or giving it to other countries; and es tablishing a revolving fund to finance fo reign military sales.

The task force requested the assistance of ADPA and AUSA in publicizing the problems facing the munitions base and the impact on go-to-war readiness . AUSA and ADPA agreed to help in this effort and developed a joint action plan that includes:

o a r ranging for munitions base speakers at association functions;

o publication of articles on munitions base issues in their respec tive journals;

o supporting a congress ional lobbying effort;

o providing witnesses for congres s i onal hearings; and

o propos ing s olutions to the problems of the munitions to s enior DoD officials .

15

SECTION III: ACQUISITION REFORM WORKING GROUP

The AUSA/ADPA Acqu i s it i on Reform Working Group met for the first time in August 1993 to develop a working strategy and an implementation plan. The members of the working group are l i sted in Appendix E.

The group agreed that the overall objective o f acqui s it ion reform should be radical change of the defense acqui s i tion system that would:

o e l iminate or reduce the estimated 25-50 percent cost penalties a s soci ated with exi s ting defense procurement pract ices;

o remove the impediments and barriers to achieving an integrated civil ian/mi litary indus trial base;

o ensure access to military and civil ian technological advances;

o maintain viable civi l i an manufacturing capab i l ities and critical s k i l l s to meet the national security requirements in the future;

o promote national economic security and competition in the post-Cold War environment.

Three major priorities were identified for acqui s it ion reform efforts the estab l i shment of a s imp l i fied acquis ition threshold of $ 1 0 0 , 0 0 0 , the estab l i shment o f a s ound commercial items procurement process, and the reso lution o f the technical data rights question . Substantive changes in these three areas could do much for the accomp l i shment of the reform objectives l i s ted above .

In order to accomp l i sh these objectives , DoD mus t actively support the Section 8 0 0 Panel's recommendation and, as much as possible, use its existing authority to make changes in the acqui s ition regulations . At the s ame time , Congress must be encouraged t o move aggres s ively on a b i l l t o enact major acquis ition reforms . Fina l l y , private industry, both large and sma l l , must present a united front and support the recommendations of the Sect i on 8 0 0 Panel .

The working group met twice in September 1993 to develop special briefing packets for industry and government offici a l s . The packets , " Industry and Acqui s i t i on Reform" and "Defense Acqui s i t i on Reform: The Post Cold War Imperative, " were des i gned to present the case for acqui s ition re form from the industry and DoD perspectives . As part of the effort t o provide in formation on acqui s it ion re form i s sues and concerns, AUSA i s sued an AUSA Background Brief, "Acqui s ition Reform, " in October 1993 . (NOTE: Copies of thi s background bri e f may be obtained from AUSA . )

In 199 4 , as Congress con s i ders acqui s i t i on reform leg i s l ation, ADPA, AUSA and industry association representatives will initiate a comprehens ive e ffort to gain support for meaningful reform measures , espec i a l ly in the priority areas of a s imp l i fied acqui s ition threshold and commercial izat i on . The effort wi l l be spec i fi c a l ly directed toward key congre s s i onal p l ayers and their staffs , industry executives and DoD o fficial s . The p l an i s to stress the importance o f acqu i s it i on re form to DoD, private industry and the country . Industry representatives will a l s o attempt to enl i s t sma l l bus ines s and Section 8 ( a ) business i n support o f reform init i atives .

17

SECTION IV: OBSERVATIONS AND CONCLUSIONS

The current pres sure to downsize the Department of Defense and the lack of a managed approach to protect essential indus trial base capac i t i e s i s almost certain to ensure that the "Arsenal of Democracy , " as we know i t, wi l l no longer exi s t . Both AUSA and ADPA believe that there mus t be a p l an to manage the defense convers ion / t rans it ion process in order to retain a viable, b a l anced, private sector and government industrial base capab i l i ty to meet the nat ion's defense needs in the post-Cold War wor l d . In the absence of such a p l an , much of the private industrial s ector capabi l ity may s imply disappear a s a function of economic pressures .

Acquisition Reform

There have been s i x major s tudies exam1n1ng the management of the department in the 46 years of its exis tence. The mos t recent was the Presi dent's Commi s s ion on Defense Managemen t , known as the Packard Commi s s ion . The commi s s ion, in its 1986 report , concluded that "defense acqu i s i tion today is impos s ibly cumbersome. "

Despi t e the general acceptance and acknowledgement of the conditions c i ted in the Packard Commi s s ion report, there has been no concerted effort to implement any of the proposals . Eight years later, after s everal reports by the Defens e Science Board and the detailed recommendations of the DoD Advisory Panel on Streamlining and Codifying Acqu i s i t ion Laws , there has been very l i t t l e real progres s .

The prospects for rap i d congres s ional action on real acqu i s ition reform are not particularly promi s ing . The Federal Acqu i s i t ion St reamlining Act of 1993 ( S . l58 7 ) , which was introduced in October 1993 , lost some of its biparti s an support when i t was modified to eliminate provis ions opposed by labor and sma l l business interests. In its present form, the b i l l does not make substantive changes in government auditing and over s i ght pract i ces and does not make i t much eas i e r to adopt commercial purchasing pract i ces. I t i s not clear a t this time whether the House will introduce i t s own b i l l o r adopt the Senate version . The eventual approach may be to fold acqui s i tion reform into the defense authorizat ion b i l l. If this occurs , comprehens ive changes in exi s ting laws wi l l be more d i fficult. It will require a concerted e ffort by DoD and p r ivate industry to secure meaningful reform.

In the report on the Bottom-Up Review, the defense acqui s i tion system i s described a s outdated and an ob s tacle t o the integration of the defense and civi l i an industrial bases . DoD has estab l i shed short-term priorities, which include:

o s imp l i fying acqui s i t ion of items under $ 1 0 0 , 000;

o removing impediments to purchase of comme rcial items and s ervices;

o developing p i lot programs;

o res t r i cting the use of mili tary standards , except when required; and

o s imp l i fying outdated and unnecess ary acquisit ion s tatutes.

19

Defense Industry Consolidation

Many companies in the defense indus trial base see cons o l idations and mergers as the best ava i l able option to maintain a s trong indu s trial base during a period of general defense downsizing. Unfortunately, antitrust actions by the Justice Department and the Federal Trade Commi s s i on are s tumb l ing b l ocks that are preventing merges and acqu i s i t ions in the defense indus try . Lt . Gen. (USA Ret . ) Lawrence Skibbi e , Presi dent of the American Defense Preparedness Association, stated in the February 1994 i s sue o f National Defense News, s t ated that DoD needs t o play a bigger role in this proces s and support indus try reorganizations that will s t rengthen the defense indu s tr i a l bas e . It is inconceivable that during the severe drawdown the defen s e industrial base is experiencing , routine antitrust con s iderations are s t i l l being applied to defense indus tries seeking to merge and consolidate.

The Depot Maintenance Problem

The determination o f required depot capab i l i ties and the proper a l location of workloads between government depots and private industry faci l i t i es wi l l be the mos t chal lenging i s sue facing the Defense Depot Task Force . C learly , both government and private industry capab i lities are needed. The ult imate solution may be to determine the type o f work each does best and then a l l ocate workloads according to this determination.

The Sec retary of Defense i s inclined to favor an approach that would reduce the role of government depots , and it appears that the Navy will not oppose th i s course of action . In January 199 4 , Vice Admi ral Wi l l i am Bowes , Naval Air Systems Command , announced that the Navy was con s i dering shifting more of i t s aircraft maintenance workload to private industry and reducing the avi ation depot structure . Of course, thi s c annot be done unless Congress removes the present restrictions, which l imit private industry to 40 percent of the depot maintenance workl oad .

The Defense Depot Task Force was not organized unt i l January 1994 . This leaves s lightly more than two months for the task force to complete i t s work and i s sue a report . There are indications that members of the Depot Caucus are concerned that DoD wi l l use the task force as the vehicle to promulgate i t s own views on the a l locat i on of maintenance work between government and private industry . In any event, i t i s unlikely that the Depot Caucus wi l l support changes t o the exis ting 6 0 / 4 0 percent split, un less they are convinced that a reduced work load for gove rnment depots i s jus t i fied .

The Munitions Industrial Base

A viable munitions industrial base is es sential to meet our national security requirements . However, reductions in ammunition budgets have weakened the munit ions base to the point where we would be s igni ficantly short o f mos t critica l munitions after a very short period o f combat and woul d not have a surge capab i lity to meet requirements for prolonged contingency operations .

If the private mun i tions base were a llowed to col lapse, we could eventual ly be forced to es tabl i sh s ome form of nationalized muni t i ons product i on capab i l ity . The cost to do s o , coupled with the loss of critical

20

s ki l l s , technological development capabilities and surge production capabilities , would far outweigh the cost to sustain the existing bas e . One simp ly c annot go to war without ammunition .

Final Thoughts

Defense drawdowns are not a new experience . We went through them after World War I , World War I I , Ko rea, and to a limited extent , after Vietnam. However , despite good intentions , we have never done it very well and there have been many mistakes and miscalculations . Unfo rtunately , the armed forces have often paid in blood for these mistakes . I f the United States is to maintain its position as a world powe r , we must maintain a viable defense industrial base to sustain our national defense strategy in this uncertain wo r l d .

2 1

APPENDIX A APPENDIX A

ATTENDEES

AUSA/ADPA DEFENSE CONVERSION / TRANSITION PANEL

18 June 1993

SPEAKERS

Mr . Darold Griffin Mr . Marty Suydam M r . George · Kriko rian M r . George Price M r . Pete S c rivner

PARTICIPANTS

M r . James Armour M r . Paul Goncz D r . Robert Beckstead Mr . Al Ferzacca M r . Frank Gicca Dr. John J ohns M r . Robert Ke ltz Col . B i l l Larsen Col . John Mountcas t l e Mr . Glenn Wever Lt . Gen . (Ret . ) Donald M . Babers D r . Robert Sasmor Mr . George Riedel Mr . Eugene Davidson Co l . Thomas Voll rath M r . Tom Whittaker

AUSA

Lt . Gen . ( Ret . ) Richard L . West L t . Gen . ( Ret . ) Richard G. Trefry Maj . Gen . ( Ret . ) Edward B . Atkeson Gen . ( Ret . ) John W . Foss Gen . ( Ret . ) Glenn K . Otis Mr . Jos eph P. Ho l l i s Col . (Ret . ) James D . Blundell Mr . Austin E. ( Bud) Mi l le r

ADPA

Lt . Gen. (Ret . ) Lawrence F . Skibbie

Prin Deputy (Acqui s i t i on ) , AMC VP Bus iness Developmen t , BMY ADPA Cha i r , Def Sys Management Col lege Dir Adv Res , Sikorsky Aircraft VP Legis lative Affairs , ADPA

Pres ident , AM Gen Dir Washington Operation s , AM General NDU ( ICAF) D i r Army Programs , Martin Marietta Presi dent , GTE Dean o f Acadamic Affairs , NDU ( ICAF) Prin Deputy (Log ) , AMC AWC Dir Strategic Studies Institute, AWC Dir Army Programs , Hughes Aircraft C o Presi �en� , . Cypress International Inc . Adv. Research Proj ect Agency VP Gov ' t Rel ations , ITT Defense Washington Rep, Armtech RADA VP Washington Opns , A l l iant Techsystems

Managing Di rector, ILW Senior Fellow Senior Fellow Senior Fellow Senior Fellow

D i r , Industry Affairs Di r , Programs , ILW Research Fellow

Pres ident , ADPA

23

APPENDIX B APPENDIX B

ATTENDEES

AUSA/ ADPA ACQUISITION REFORM PANEL

August 1 1 , 1 9 9 3

SPEAKERS

M r . Ric Sylve s t er Ms . Cathy Garman M r . Alan Chvotkin

PARTICIPANTS

Ms . Judy Morehouse M r . Bob Spreng M r . Robert Goff Mr . Bob Gantt M r . Marty Suydam M r . Robert Hoefke M r . Wayne Tingle M r . Calvin Coo l i dge Ms . Meredith Murphy Lt . Gen . ( Ret . ) Donald M r . George Krikorian Dr . John Johns Dr . Robert Beckstead M r . Ron M l inarchik

AUSA

Babers

Lt . Gen . ( Ret . ) Richard L . West Gen. ( Ret . ) Glen Otis Gen . ( Ret . ) Maxwel l Thurman Gen . ( Ret . ) Louis Wagner M r . Austin E . ( Bud) M i l l e r

ADPA

Lt . Gen . ( Ret . ) Lawrence F . Skibbie Maj . Gen . ( Ret . ) Wi l l iam E i cher M r . Peter Scrivner M r . Bob Wi l l i ams

OUSD for Acquisit ion Reform House Armed Services Committee Sundst rand Corporation

Boeing Company 3 t1 Company 3 M Company Vitro Corporation BMY Harris Corporation Loral Vought Texas Instruments Northrop Corporation Cypress International Defense Sys tems Management Col lege ICAF ICAF Army Acqui s i t i on O ffice

Managing Di rector , ILW

President

24

APPENDIX C APPENDIX C

ATTENDEES

AUSA/ADPA DEPOT MAINTENANCE PANEL

October 8, 1993

SPEAKERS

L t . Gen . Leo Pigaty M r . John Gi lbride M r . Wil liam Mogan

PARTICIPANTS

M r . Paul Goncz D r . Robert Beckstead Mr . Richard Clemens Gen. (Ret . ) W i l l iam Tuttle, J r . M r . Robert Keltz Representative Glen B rowder M r . Victor Stern M r . Gerald Lethcoe M r . Cork Co lburn M r . Marty Suydam Mr . Herman Brooks M r . Joel Marsh Mr . Ronald Smith M r . S t even Hammer Mr . Marc Jartman

AUSA

Lt . Gen . ( Ret . ) Richard L . Wes t Gen . ( Ret . ) Frederick Kroesen Lt . Gen . ( Ret . ) Richard Trefry Mr . Austin E . ( Bud) Mil ler Mr . Joseph P . Ho l l i s

ADPA

L t . Gen . ( Ret . ) Lawrence F . Skibbie

Deputy Commander, U . S . AMC Dir, Boeing Co VP , Mktg, Talley Defense Sys tems

AM General NDU ( ICAF) BMY-Combat Systems Logis tics Management Institute AMC U . S . House o f Representatives Sikorsky Textron Lycoming General Dynamics Land Systems BMY Dyncorp United Technologies Grumman FMC UNC

Managing Director, ILW

President

25

APPENDIX D

ACQUISITION

CO-Chairmen

Lt . Gen . ( Ret . ) Lawrence F . Lt . Gen. ( Ret . ) Richard L .

Gen . (Ret . ) Maxwe l l Thurman Gen . ( Ret . ) Louis Wagner M r . Austin ( Bud) M i l l e r M r . Alan Chvotkin M r . Donald Campbel l Ms . Judy Mo rehouse Ms . Meredith Murphy M r . Peter S c rivner M r . Ron M l inarchik M r . George Krikorian M r . Jim B rown M r . Art Ros s i M r . Gene Steadman M r . L a r ry McCredy

Skibbie Wes t

AUSA/ ADPA REFORM WORKING GROUP

President, VP , AUSA

AUSA AUSA AUSA Sunst rand Centech Boeing Co. Northrop ADPA

ADPA

Army Acquis i t i on O f fice DSMC DSMC Vitro Celanese ADPA

26

APPENDIX D

APPENDIX E APPENDIX E

ATTENDEES

AUSA/ADPA MUNITIONS BASE PANEL

December 10, 1 9 9 3

SPEAKERS

M r . Toby Warson B r i g . Gen . Wi l l iam Holmes M r . Rich Palaschak

PARTICIPANTS

Mr . Ange lo Catani Mr . Bi 1 1 Mogan Co l . Roger Brown M r . George Kopcsak M r . Jack Apperson Mr . Mert Townsend

AUSA

Lt . Gen . ( Ret . ) Richard Trefry Mr . Aus t in E . ( Bud ) Mil ler

ADPA

Lt . Gen . ( Ret . ) Lawrence F . Skibbie Maj . Gen. (Ret . ) Wi l l iam Eicher M r . Harry Bai ley

Pres iden t , A l l i ant DCS for Ammunition Muni tions Indus trial Base Task Force

O l in Talley Office, Dep . Chi e f o f Staff Opns OSD, Tactical Warfare Programs Day & Z immermann Chamberlain

27

APPENDIX F APPENDIX F

SELECTED REFERENCES

U . S . Congres s House National Defense Authorization Act for Fiscal Year 1993 , H . Report 102-966 to Accompany H . R . 5 0 0 6 , 102nd Cong . , 2nd sess . , 1992 .

U . S . Congress House National Defense Authorization Act for Fiscal Year 1 9 9 4 , H . Report 1 0 3 - 3 5 7 to Accompany H . R . 2 4 0 1 , 1 0 3 d Cong . , 1st sess . , 19 9 3 .

U . S . Department o f Defens e , Report o f the Bottom-Up Review, 1993 .

U . S Department o f Defens e , Defense Systems Management College, Streaml ining Defense Acqu i s i t i on Laws : Repo rt of the DoD Acqu i s i tion Law Advis o ry Pane l , ­Washington D . C . : Government Printing Office, 1993 .

U . S . Department o f Defens e , O f fice o f the Under Secretary o f Defense for Acqui s ition, Defense Acquisition Reform: Repo rt of the Defense Science Board Task Force , Washington D . C . : 1993 .

B lackwe l l , James . Forecast for the U . S . Munitions Indus trial Bas e . Washington D . C . : S t rategic Asses sment Center, Science Applications International Corporat ion, 1993 .

Carte r , Ashton B . and Perry, William J . New Thinking and American Defense Techno l ogy . New York: Carnegie Commission on Sc ience and Techno logy, 1993 .

Dickson, B r i an and Sullivan, Leonard. A Comparative Asses smentof the Defense and Commercial Sectors . Washington D . C . : The Analytical Sciences Corporation , 1993 .

Pages , Erik R . Weathering the Defense Trans ition : A Bus iness Based Approach to Conversion . Washington D . C . : Business Executives for National Security, 19 9 2 .

Pages , Erik R . Next Steps in Business Conversion: Supporting Innovation and Entrepreneurship . Washington D . C . : Business Executives f o r National Security, 1993 .

Conver , Stephen K . "Defense Industrial Bas e : Shaping the Downs izing , " Armed Forces Journal Internationa l , March 1993 , p . 4 8 .

Skibb i e , Lawrence F . "Cutting Antitrust Chi l l Requires Aggressive Pentagon Leadership , " National Defens e , February 1 9 9 4 , p . 2 .

Warson, Toby G . "Ammo Execs Jawbone for Vital Sector Surviva l " , Nationa l Defens e , November 1993 , p . 2 2 .

Wi l l i ams , Robert H . "Dr . Perry Urges Radical Surgery for Acqui s i t i on , " Nationa l Defens e , February 1 9 9 4 , p . 1 1 .

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