U.S. Moves to Nationalize Defense Industry!

The world of the Lead System Integrator (LSI) has moved yet again — backward abutting the theater of the absurd.

LSIs are those large defense contractors that honcho complex projects, much like a general contractor would in building a house. But they have become a scapegoat in defense contracting for the past year. In early 2007, program disasters like the Coast Guard’s Deepwater and the Navy’s Littoral Combat Ship program became public. If one cares to engage in the blame game, there is plenty to go around, though most fingers point toward the LSIs — more often than they should.The 2008 Defense Authorization Bill struck a huge blow to the LSI concept, ending the position of LSI (at least as we know it) starting in 2010.The downward spiral continues. In targeting vertical integration, DoD now has prohibited the LSIs having “a stake in any single piece of hardware going into a new military platform,” according to Gannett defense tell-all, Defense News.More bad news for the big boys? Stepping back, one source is not so sure. He maintains the services still do not have the people they need to manage complex programs. DoD has admitted as much and confesses it will be years before they will have such a cadre. (Though we think they never will have the expertise necessary.) Our source also explained that vertical integration is not a slam dunk for an LSI. The contract process for each piece of gear on a project is transparent. If the bidding is close, an LSI like Lockheed Martin might forego a contract to avoid any negative perceptions. Regardless, the service approves each contract awarded on a project.

So, we’re baffled. Why get rid of the LSI? Why continue to erect barriers to legitimate business practices? Does Congress see itself as muckrakers cleaning up defense contracting? More importantly, if DoD needs congressional assistance in protecting it from big, bad contractors, can DoD run large, complex programs? Probably not.

LSIs are an easy target in this climate. Keep pushing and maybe they will find more lucrative business opportunities elsewhere, leaving a dearth of competitors for DoD wares.Given the trend in recent legislative initiatives, why not just nationalize the defense industry (a la France) and be done with it.







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