William C. Greenwalt
Chairman Moolenaar, Ranking Member Krishnamoorthi, and other distinguished members of the Committee, I would like to thank you for the opportunity to testify this morning on the need to strengthen America’s defense industrial base and workforce.
Restoring the “Arsenal of Democracy” is one of the most important tasks Congress and our nation can embark on in the coming years. This will not be easy as reforms of the last 30 years to address the defense industrial base have proven to be only marginally successful.
We have now reached an inflection point as our industrial deterrence is no longer credible. This is a far cry from the defense industrial base that facilitated our victory in the WWII. The Arsenal of Democracy industrial model, still active in the early Cold War period, may have been the most significant driver of innovation ever created. However, beginning in the early 1960s, the incentives and structure underpinning this approach were systematically destroyed.
How does one go bankrupt? Hemmingway succinctly wrote in “Two ways. Gradually, then suddenly.” Processes and ideas put in place in the 1960s and 1970s gradually and incrementally, like barnacles on a wooden ship, undermined our defense industrial base and innovation system over the course of multiple decades. These processes first dissolved the links to the underlying commercial industrial base, then shattered the importance of time constraints to innovation.
Once delinked, the commercial industrial base left the defense industrial base far behind. This was done through massive expenditures in R&D and appropriating the Pentagon’s discarded time-based innovation model.[1] DOD then lost the visibility and the ability to impact incremental commercial supply chain decisions, most notably those made when parts of the commercial market unwisely outsourced its production capabilities to China. The result of civil-military disintegration has undermined both national and economic security. As we survey our current situation, it is becoming clearer that we have squandered our longstanding defense and, in many cases, our commercial technological and industrial lead over the rest of world. We are suddenly facing the prospect of industrial bankruptcy.
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