I wanted to publish a recent Wall Street Journal article titled "New Pentagon Priorities Reshape Defense Business. Smaller Contractors Benefit Amid Shift From High-Tech Weapons to More-Basic Arms Meant for Quick Deployment"
By AUGUST COLE
GREENVILLE, Texas -- In a cavernous hangar here, L-3 Communications Holdings Inc. is working around the clock to turn ordinary turboprop aircraft into spy planes that hunt insurgents.
The so-called Project Liberty program delivered its first batch of the aircraft to Iraq this summer in less than a year -- a breakneck pace for the defense industry.
"This program went from contract to combat in about eight months," said Michael Strianese, L-3's chairman and chief executive. Plans call for more of the modified Hawker Beechcraft Corp. planes -- which cost around $20 million apiece -- to be sent to Afghanistan this winter.
Pentagon chief Robert Gates, visiting L-3 Communications' Greenville, Texas, plant in August, told workers the best solutions are sometimes the fastest.
Department of Defense
Pentagon chief Robert Gates, visiting L-3 Communications' Greenville, Texas, plant in August, told workers the best solutions are sometimes the fastest.
Pentagon chief Robert Gates, visiting L-3 Communications' Greenville, Texas, plant in August, told workers the best solutions are sometimes the fastest.The fast tempo is a sign of changes sweeping some parts of the defense industry. Early this year, Defense Secretary Robert Gates began overhauling the Pentagon's proposed $634 billion fiscal 2010 budget, slashing many high-tech weapons systems that had been under development for years and spending more on basic weapons that could be deployed quickly in Iraq and AfghanistaThe shake-up has begun to alter the way many defense contractors do business. During the Cold War, contractors and the Pentagon spent as much time and money as they needed to perfect new weapons systems. Now, in a reflection of the new defense priorities, some contractors are scrambling to meet tight cost ceilings and deadlines.
The Pentagon and the defense industry were "completely divorced from economic reality," said James Hasik, chief of defense consulting firm Hasik Analytic LLC. "That is slowly giving way to a more vigorous effort on the part of the industry to get ahead of the Pentagon's problems."
Mr. Gates tried to drive home the importance of quick turnarounds during a recent visit to the L-3 factory here. He told workers that "the best solution isn't always the fanciest or the most expensive," but often the one ready for the battlefield fastest.
Oshkosh Corp., based in Oshkosh, Wis., is hiring hundreds of employees as it races to produce blast-resistant all-terrain armored trucks to protect soldiers in Afghanistan against roadside bombs. It won the Pentagon contract for the vehicles in June, beating out bigger rivals such as BAE Systems Inc. and General Dynamics Corp., for what has so far been $2.3 billion in orders. By the end of the year it aims to be churning out 1,000 trucks a month.
Many of those trucks will be tracked by armed, unmanned planes made by General Atomics Aeronautical Systems Inc., which has accelerated production in recent years of its Predator and newer Reaper drones, which ply the skies over Iraq and Afghanistan. It is gearing up to sell as many as 375 of the $10 million to $12 million Reapers to the Air Force.
Mr. Gates's reordering of the Pentagon budget has improved the fortunes of many smaller defense companies, which account for many of the department's nuts-and-bolts technologies, as well as weapons systems used on the ground in Afghanistan and Iraq. Smaller companies focused on a narrower range of products can often react more quickly than the industry's giants, in part because they tend to be less bureaucratic.
" Smaller companies have been more responsive; that puts pressure on the big companies," said Jeffrey Roncka, a vice president at Charles River Associates, a consulting firm that advises defense contractors. At the same time, some of the cutting-edge weapons systems designed by the industry's biggest names are being sidelined as irrelevant and too costly.
The F-22 Raptor, for example, is considered the most advanced fighter ever built, and has earned bragging rights for its maker, Lockheed Corp., the largest defense contractor by sales. Lockheed and subcontractor Boeing Co. began work on the F-22 in 1991, and 16 years elapsed before the fighter became combat ready in 2007.
But Mr. Gates has insisted that the Air Force not buy any more of the $143 million fighters. As a result, Lockheed says its advanced assembly line that builds the fighter in Marietta, Ga., could shut down after 2011.
Meanwhile, Lockheed and some other big contractors have joined in the bidding to fill the Pentagon's more-immediate needs. Boeing and Lockheed are pursuing a $5 billion, 10-year logistics-and-services contract to support the U.S. Special Operations Command by performing tasks ranging from helicopter and weapons maintenance to supplying bases.
Lockheed is also joining forces with Hawker Beechcraft, which plans to bid on supplying the Air Force with an armed version of the small Hawker turboprop planes used to train military pilots. The government may order 100 of them as soon as next year, with deliveries expected possibly within 24 months, according to a preliminary contracting document.
Dennis Muilenburg, who heads Boeing's defense unit, said the company must deliver on big, existing contracts, while being responsive to the Pentagon's urgent needs. "Business agility is one of our keys for the future," he said.
