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 "We're at another tipping point in the evolution of the defense
industry," said former U.S. Deputy Defense Secretary William Lynn,
who co-chaired a task force that helped shape the report by the
Center for a New American Security.
"If we’re going to maintain our technological edge, we need to
ensure that our industrial strategy and our acquisition structures
take account of these commercialization and globalization forces,"
said Lynn, who now heads DRS Technologies, a unit of Italy's
Finmeccanica SpA.
U.S. military spending is falling, but China, India and other
countries are spending more and making strides in development of
satellites and other advanced technologies. To maintain revenues,
Lockheed Martin, Boeing and other big U.S. firms are increasingly
turning to overseas sales and hunting for opportunities in
non-defense markets.
Lynn told Reuters the CNAS report was intended as a "warning bell"
on the need for changes like those that swept through the auto
industry decades ago.
 The report said the U.S. weapons industry moves too slowly to adjust
to current trends. For example, the Pentagon has switched from
taking the lead in developing technologies like GPS satellites and
now looks to commercial players for innovations like 3-D printing.
It said industry and government need to invest more in new
technologies and remove regulatory and acquisition barriers that
hinder U.S. firms.
For instance, export controls have limited the ability of U.S. firms
to sell unmanned planes overseas, allowing Israel to become the
leading exporter of drones.
Export controls have also hampered commercial sales of infrared
technologies developed for the U.S. military, Lynn said. "Our not
exporting it doesn't mean it's not available. It just means U.S.
companies aren't getting the business, and U.S. jobs aren't being
put to use," he said.
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The report called for reforms to allow more U.S. and foreign firms
to participate in the U.S. weapons market, greater communication
about the Pentagon's technology needs and measures to safeguard
private intellectual property.
At the same time, it said arms makers need to invest more in new
technologies, or acquire companies that already developed them; make
greater efforts to design products for export from the start, and
encourage more international collaboration.
Former Raytheon Co chief engineer Andy Lowery said cost pressures
were prompting shipbuilder Huntington Ingalls Industries and other
defense suppliers to adopt virtual reality technologies to cut
production costs and improve quality.
Lowery, who is now president of DAQRI, which develops virtual
reality software, said smaller, more commercially oriented firms,
like privately held Space Exploration Technologies, are quicker to
adopt such technologies. "The big companies are interested, but they
have a natural propensity to crawl, walk, run," he said.
(Reporting by Andrea Shalal; Editing by Dan Grebler)
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