Mitt Romney has been touting his experience at Bain Capital as a qualification for fixing Washington and the economy. Certainly there's one part of the federal government that desperately needs a president with business savvy: the Pentagon. Should they rise to the challenge, Mr. Romney and his defense-policy team can learn a lot from the last time businessmen took over from the bureaucrats in arming this country, in World War II.
Seventy years later, we need help again. Despite the hundreds of billions of dollars spent on defense over the last decade, our armed forces are desperately in need of modernization. Most of that money was spent fighting wars in Iraq and Afghanistan, not replacing fighters, helicopters, ships and submarines that often date back to the 1980s and '90s.
But that modernization isn't going to happen until the Pentagon reinvents how it buys the weapons and equipment it needs. This is especially true as defense budgets inevitably will shrivel over the next decade, with or without the automatic cuts of sequestration. If we're going to maintain our military technological edge over current and potential foes, it's time to take a second look at World War II, the most rapid and successful modernization of forces in history.
In just five years we went from being the 18th-largest army in the world—with an Air Corps full of obsolete planes and a Navy built around World War I-era battleships—to a military second to none in size and sophistication. And we did it while steadily lowering costs for every weapon system we produced.
We did it not because we spent a lot of money, but because the dollars spent followed four simple business principles.
* First, we recruited the most productive and innovative companies and manufacturers to help. In 1939, most weapons for the U.S. Army were built in government arsenals or by contractors in small batches—much as they are made by a handful of big defense contractors today. The war brought in car makers like General Motors and Ford, electronics firms like GE, RCA and Westinghouse, and companies like Boeing and Lockheed that still made their living designing and building civilian aircraft. Companies that had never made a tank or machine gun or bazooka ended up producing them by the thousands—and brought their engineering expertise to every step.
The future of military technology is the kind of high-tech engineering in which American companies already are the established leaders. So why not let the Air Force ask Apple to design an iFighter? Or let the Navy ask Google to design the software architecture to power its ships and submarines? That company's skunk-works innovation team, Google X, has now developed a car that drives itself on the streets of San Francisco. Why not tap that expertise for the Pentagon's future unmanned systems?
* We kept the loop between users and makers tight. Defense contractors in World War II never forgot that their ultimate customers weren't the Air Force or Navy, but the men sailing or flying them into harm's way. At Roy Grumman's factory on Long Island, pilots would stop by his office to make suggestions on how to improve his fighter planes. Out of that came the F6F Hellcat, which eventually shot down more Japanese planes than any other fighter.
Today, multiple layers of bureaucracy oversee every stage of major weapons system. Not to mention a Congress that feels free to dictate what's made and where, and even makes the Pentagon build weapons and maintain facilities it doesn't want—for instance demanding a second engine for the F-35 Joint Strike Fighter. By contrast, the success the Army and Marines have had with the mine-resistant ambush-protected vehicle or MRAP shows what happens when the Pentagon throws out the bureaucratic rule book and takes on a more World War II-style business model.
In 2007, then-Secretary of Defense Robert Gates responded to demands from the field in Iraq for a vehicle that could survive improvised explosive device, or IED, attacks by making production of the MRAP a top priority. The Pentagon didn't worry about a single common design and offered contracts to multiple companies, including some (like Oshkosh Truck) that had never made military vehicles before. By the end of 2008, more than 10,000 MRAPs were on the road in Iraq and Afghanistan. Casualties from IEDs plunged by 90%. The bureaucratic process had lost, but our men and women in uniform were the big winners.
* The MRAP example also demonstrates another key principle from World War II procurement: We didn't aim for perfection. The Hellcat, the P-51 Mustang, the F-104 Starfighter and other jets and weapons of the early Cold War were built by manufacturers to do the job at hand, with as few advance specifications as possible. (The initial one for the F-104 Starfighter was only a page and a half.) No one had time to devise the perfect weapon, which is supposed to do everything under all conditions—let alone do it for the next two decades. Today, this has become a Pentagon obsession. Witness the F-35 program, which began in 1996 but has had so many requirements piled on it that the jet still is not operational.
Successful commercial companies, on the other hand, innovate for today, not tomorrow. What will be successful in today's markets will point to the future on its own. It's what Apple did with the iPhone, and now the iPad—and what we should be doing at the Pentagon.
* We saved dollars the way a producer would, not a customer. Past efforts at acquisition reform have been aimed at trying to save the taxpayer money, usually by adding another layer of bureaucratic oversight. Instead, the Pentagon's goal should be lowering the manufacturers' costs, by helping them make weapons and war material better, faster and cheaper.
That means, for example, helping firms to develop highly efficient supply-chain and "smart" manufacturing processes to increase output, and to use the experience gained through larger-volume production to speed delivery—something the current acquisition system can't deliver. In 2009 alone, cost overruns on 95 major weapons systems came to more than $295 billion—a sum equal to almost half the current Pentagon budget.
The original father of our World War II "arsenal of democracy" was General Motors president Bill Knudsen, who used to say that "the better a thing is, the cheaper it is to make." That's a far cry from our current Pentagon business model. But it's one that will help it overcome procurement problems in the future, and a benchmark for a new arsenal of democracy for the 21st century.
It will also preserve America's military leadership before it's too late.