Janes Defense
During the Farnborough International Airshow 2024, the head of Leonardo DRS and former top Pentagon official spoke to Jeremiah Cushman about the state of US defence industry.
The defence industry landscape has changed significantly since the Russian invasion of Ukraine in 2022. Battlefield lessons are being incorporated into defence plans and there has been a new emphasis on strengthening the US defence industrial base.
One of the key lessons from Ukraine, and more recently the conflict in Gaza and Houthi militant attacks in the Red Sea, is that the battlefield has become much more transparent, William J Lynn III, CEO Leonardo DRS, and US deputy defence secretary from 2009 to 2011, told Janes in an interview during the Farnborough International Airshow 2024 on 22 July.
“The ability of sensors today to find units, vehicles, even people on the battlefield is much, much greater than it’s ever been, and it has shifted, I think, the defence equation so that you can’t really defend at the perimeter anymore,” he said. Units and vehicles now require organic defences, including short-range air defences, counter-unmanned aircraft systems (C-UASs), and active protection systems.
Advances in drone and missile technology have enabled significant strike capabilities at a lower cost. The ability of Houthi rebels in Yemen to launch long-range missiles at Israel and shipping in the Red Sea demonstrates how such capabilities are available to a broader range of adversaries, Lynn noted. This has created new demand for industry to develop countermeasures, particularly as the United States considers potential conflicts with Russia and China, which possess sophisticated strike capabilities that the US has not focused on defending against since the Cold War, he said.
The war in Ukraine has also demonstrated that conventional conflicts can be drawn-out affairs. The US was “maybe overly influenced by the two wars with Saddam and how quickly” the conventional fighting ended, Lynn said. The conflict in Ukraine appears like it could go on for years, while any “Chinese action against Taiwan could potentially be very long term as well”, he said. The US Department of Defense (DoD) and industry have learned that they need much more capacity in addition to capability than previously thought.
While the DoD has recognised the need to be able to supply its forces for long-duration conflicts and acted in some areas, such as munitions, it has not put the same programmes and funding in other areas of need, Lynn said. Industry is not going to build additional capacity if DoD is not going to use it, he argued. The department faces the question of where “to divert resources towards this priority of resilience”, Lynn said. “DoD is still struggling with how do we address this issue within the funding that we have,” he said.
Mid-size companies are crucial as the US defence industrial base responds to these new requirements, Lynn argued. US defence industry is “somewhat overconsolidated at the top” with half a dozen or so large-scale, pure play companies, he said. This was a “logical reaction to the end of the Cold War and the reduction in defence spending and also the move in the financial world towards pure play companies rather than conglomerates”, according to Lynn. Mid-size companies are needed to ensure adequate competition across the various defence sectors that cannot be obtained by the top-tier firms alone. “You can’t really deconsolidate the industry, so you have to find competition in other ways and the mid-tier is I think an important avenue for that competition,” Lynn said.
These firms also provide an important route to get commercial technology into defence. Defence was a driver for technological innovation during the Cold War, where now the commercial sector is rapidly developing capabilities such as artificial intelligence (AI), autonomy, and quantum computing, he said. Mid-tier firms can play a significant role by “teaming with commercial companies or developing commercial technologies for military use”, Lynn said.
The mid-tier has also been an important space for new firms to get into the defence business. Companies such as Anduril Industries, BlueHalo, Kratos Defense & Security Solutions, and SpaceX have won significant contracts, expanding “the resources DoD can draw on to provide the technology needs for the force”, he said.
There has been pressure to accelerate processes within DoD and industry to get capabilities to the field faster. This is nothing new, Lynn said. It takes time to invent and develop high-tech equipment, build a production line, and move through DoD processes. While the department has shown that it can accelerate processes when there is an urgent need, there are other interests that limit how fast the DoD can go, he said. There is a desire to spend taxpayer money wisely and ensure competition, which takes time. “I think we’re always rethinking the balance between competing needs … people always want more speed, but they’re not quite willing to accept the consequences of what happens when you do that,” Lynn said.
The US defence budget presents another challenge. “It definitely hurts that we can’t get our spending done, not even on time, but not even really close. I mean, when you’re getting the bills four or five, six months into the year, it hurts in a number of ways,” he said.
The DoD cannot launch new programmes until the budget bill is passed. Once it is, the department is then forced to “spend the money in a much more constrained period of time, which creates inefficiencies in industry and in the department”, Lynn said. “People have been trying to solve this forever,” he said. “I don’t know how you fix it.”