Pentagon contractors push for industrial base policy

Facing flattening Pentagon budgets after a decade of historic growth, defense industry officials are pushing the Obama administration to create an industrial base policy that outlines which technologies and capabilities it deems critical to national security.

The policy, which has been discussed over the last several years by administration and industry officials but never actually written, would help defense firms grappling with tighter defense dollars determine which business areas the Pentagon will fund for years to come. Such a policy also would answer the question of whether the administration considers a strong industrial base to be crucial to defending the United States, Jim Albaugh, president and CEO of Boeing Commercial Airplanes.

"Let's make sure we're all putting our money in the right areas," Albaugh, also chairman of the board for the Aerospace Industries Association, told reporters at a briefing Wednesday. "Without a road map, we're guessing where we need to put the [research and development] funds that we have."

Across the board, defense companies leery of defense budget cuts undoubtedly will be choosy about where they invest their research and development dollars.

"There's a lot of uncertainty now, I think, on the military side," Albaugh said. "I think companies will take a real hard look at where they want to make their investment."

Albaugh, who previously served as the president of Boeing's expansive defense business, acknowledged that traditional platforms -- such as the aircraft that have been central to the aerospace giant's government business -- may not be high on the Defense Department's priority list. But other areas, such as unmanned aerial vehicles, cyber capabilities, situational awareness, and command and control, could be ripe for industry investment.

"There would be some indications that platforms are not going to take as much of the acquisition budget" as they have in the past, Albaugh said. "It's pretty clear."

While recognizing the potential for changing defense priorities, Albaugh also raised concerns about declining investments in several areas, including the lack of plans for a new manned aircraft program to follow the F-35 Joint Strike Fighter, which is now in testing. Other areas of concern, he said, include the ability to design and produce new space shuttles and communications satellites without any plans for specific programs in those areas.

"Certainly our industrial base has had a lot to do with our success," Albaugh said. "We want to make sure that doesn't get destroyed over time."