Like DOD, defense contracting must shrink
As DOD spending wanes, money for contracting will too, and industry must prepare.
Growth in defense spending during the past decade of war spurred the expansion of industry to support wartime requirements, but as the Defense Department faces a drop in spending commensurate with the drawdown of military operations, the private sector must also expect to shrink.
According to Army Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, the average ratio of troops to contractors is now less than 1:1 – as opposed to during the Revolutionary War, when it was 6:1, a DOD release stated.
“It can’t keep going that way,” Dempsey said March 6 at Joint Operational Contract Support Leaders Conference in Washington.
According to a report from the Center for Strategic and International Studies (CSIS) released last May, spending on contract goods and services spiked during the past decade.
“Between 2001 and 2010, dollars obligated by the DOD to contract awards more than doubled, and contract spending far outpaced growth in other DOD outlays,” the report noted.
So what happens in the future?
Dempsey stressed the importance of making sure the institutional knowledge gained from 10 years at war isn’t lost for future conflicts, and the defense industry will have a role to play there.
Also, it will be key that DOD and its defense industrial base partners find the right balance in the public and private sectors. That’s an idea that was stressed in February by David Berteau, senior vice president and director of national security program at CSIS.
“It’s widely recognized by those of us in the national security community that we have a dependence on contractors unlike anything we’ve had in our lifetimes,” he said.
If there’s been overspending on contracted services and weapons systems over the course of the wars in Iraq and Afghanistan, both the blame and the solutions lie in both sides of the community.
“We don’t fix the problem by firing contractors; we fix the problem by better defining government requirements,” Berteau said, although he remained optimistic. “The reduction in the government will give us an optimistic reason to be sure that we’re going to do better because we’re going to have so much less.”