The State of the Defense Industry Is Strong But…

Things are looking up for defense CEOs. A two-year budget deal recently struck by Congress and the White House should give Pentagon contractors a respite from the fiscal cliffs that have been the norm during the Obama administration. And despite unprecedented outreach to the commercial tech sector by the Pentagon, Silicon Valley is not likely to pose any real competitive threat to established weapon makers. Not a bad place to be, compared to the gloom and doom that beset the industry when sequestration budget cuts hit in 2013.

Industry chatter, interviews and comments by senior leaders Nov. 7 at the Reagan National Defense Forum, however, suggest there is lingering angst about how the industry will adapt to new demands and Pentagon expectations.

House Armed Services Committee member and pro-defense lawmaker Randy Forbes, R-Va., highlighted a central challenge for the industry: It is in good enough shape today, but can it rise to meet emerging and “beyond the horizon” crises that could require nontraditional responses? Anyone who wonders whether the U.S. defense industrial base is strong needs to qualify the question, “strong enough to do what?” Forbes asked during a panel discussion.

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