Summary and Key Points: The U.S. defense industry’s overly cautious business culture is significantly hindering innovation and eroding competitiveness against China.
-Lockheed Martin’s Brian O’Connor argues that an excessive fear of failure and burdensome regulations prevent the rapid adoption of new technologies.
-Lawmakers agree, highlighting the overly rigid, bureaucratic acquisition processes that stall advancements.
-Additionally, the increasing reliance on Chinese-made components and semiconductors jeopardizes national security.
-A shift toward accepting controlled risks, reducing bureaucratic hurdles, and enhancing domestic production is critical.
-Without these reforms, the U.S. risks falling further behind China in critical areas like hypersonic weapons, shipbuilding, and advanced semiconductor manufacturing.
US Defense Industry’s Overly Cautious Approach to Business is Stifling Innovation
“If we’re really going to be innovative, we’ve got to accept failure,” said Brian O’Connor, Lockheed Martin’s (LM) Vice-President of Global Supply Chain. His comments were part of a meeting of Members of the US House Select Committee on China and military contractors in Huntsville, Alabama, focusing on how the United States can reform its defense industry to compete with Beijing.
The big defense OEMs and major subsystem enterprises “never want to fail,” he said, because it negatively affects their reputation and degrades the value of their stock price.
He added that this tendency to be overly cautious is not to the benefit of these companies, as it stifles innovation, mainly when they are working with new technologies.
Lockheed Martin is America’s largest defense contractor and is now best known for the performance of its long-range HIMARS systems and Javelin anti-tank guided missiles (ATGMs), which have been used to significantly affect the war in Ukraine. The company is also the prime contractor for the stealthy F-35 fighter aircraft. From the 1970s to the present, the company has also manufactured thousands of F-16 models.
Dialing back on a cautious approach to defense technology development does not mean being “negligent,” explained O’Connor. But it means saying, “We’re going to try [doing something], rather than spending six months analyzing it”. (What the Germans pejoratively refer to as spending excessive time and effort in “admiring the problem.”)
He also observed that many “really entrepreneurial” companies that have become well-known in recent years are those who “learn from failure, and it’s more acceptable.”
More Emphasis on Results, Less on Process
Rep. Carlos Gimenez, Congressman from Florida, bemoaned the laborious and almost impossible-to-overcome process of validation and approvals that is the Department of Defense’s (DOD) procedure for greenlighting new technologies. Making them available for use in any weapons program is so invasive and cost-intensive, he said, that it is comparable to undergoing a “rectal exam.”
“I think we’re the problem,” he said.
Assessing how America “ended up not being the innovators,” he continued, “We don’t innovate like we used to because the system’s too rigid.” Giving a nod to the ability of famous entrepreneurs like Elon Musk, he reminded everyone that the Trump senior advisor’s SpaceX vehicle has had eight launches in a very short time period.
“If that had been NASA,” Mr. Gimemez said, “We’d still be on the launchpad.”
Bringing up the example that there are now two-year delays in establishing military requirements for new technologies, another Congressman, Representative Robert Aderholt of Alabama, questioned, “Is the current system we have fundamentally broken?”
Defense experts at the conference identified the over-regulation of defense contractors as the cause of smaller firms leaving the industry, which has a knock-on effect on competition.
Parker Chapman, senior director of legislative affairs at the Aerospace Industries Association, stated that there has been a 40 percent decline in the number of mom-and-pop suppliers over the past decade. What ends up being a poisonous combination of a lack of competition and excessive red tape has created what is called the “Valley of Death”—a chasm between producing prototypes of new technology and then adapting it for an application by the military.
Eliminate Chinese Dependence
One of the other concerns addressed by this group was how to eliminate, to the degree possible, the US military’s supply chain dependence on China. At the same time, the US is falling behind Beijing’s burgeoning military complex in key technological areas, like hypersonic weapons, and China’s industry’s capacity for shipbuilding.
A January 2024 report by data analytics firm Govini reads, “US domestic production capacity is a shriveled shadow of its former self. Crucial categories of industry for US national defense are no longer built in any of the 50 states. With just 25 well-constructed attacks, using any of a variety of means, an adversarial military planner could cripple much of America’s manufacturing apparatus for producing advanced weapons.”
The same report also concluded over 40 percent of the semiconductors that sustain DoD weapons systems and associated infrastructure are now sourced from China. Secondly, from 2005 to 2020, the number of Chinese suppliers in the US defense-industrial supply chain quadrupled. Thirdly, between 2014 and 2022, American defense industrial dependence on Chinese electronics increased by a whopping 600 percent.
The Pentagon. Image: Creative Commons.
The vulnerability of US weapons systems and munitions due to Beijing’s supply and control can clearly be seen by the number of Chinese-designed and manufactured semiconductors they run on.
According to Govini, the US Navy’s newest Ford-class aircraft carriers depend on over 6,500 Chinese-sourced semiconductors to operate. Other US Navy ships and aircraft similarly operate using thousands of Chinese semiconductors. It creates a dangerous dependence that can compromise their function to act as instruments of US national defense and power projection.
About the Author: Reuben F. Johnson
Reuben F. Johnson is a survivor of the February 2022 Russian invasion of Ukraine and is now an Expert on Foreign Military Affairs with the Fundacja im. Kazimierza Pułaskiego in Warsaw. He has been a consultant to the Pentagon, several NATO governments and the Australian government in the fields of defense technology and weapon systems design. Over the past 30 years he has resided in and reported from Russia, Ukraine, Poland, Brazil, the People’s Republic of China and Australia.
