Let us examine how countries go about producing critical defence equipment. To produce defence equipment every country must have its own industrial base. Let us look at the different types of industrial bases and need of our military.,
In India we have industry in the private sector, the public sector and the government sector.
The capability of a country to take on an adversary is dependent on the type of weaponry it produces and maintains. Thus sustaining of the equipment is essential during both peacetime and during wartime.
Let us look at the manner in which countries develop, create and produce new weapon systems. To create a weapon system a country must have educational institutions which teach the essentials of technology needed to develop such systems. We in India have wide ranging institutions for teaching the essentials of engineering in the many aspects needed for development and production of new weapon systems.
However, institutions specifically oriented towards bringing together the technologies needed to develop weapon systems, are few in number and these are largely available within the government sector. Research and development of new weapons systems can be done both within and outside of the government.
Our government institutions have successfully created new technologies and integrated and designed complex weapon systems.
Private side
The ability to bring together such research is now also available in India in the private sector.
In other countries a large part of this research and development is available within the private sector. Many countries follow the model of competing in the private sector to produce cutting edge technologies.
Developing technologies to create weapons needs first and foremost the human resource. Countries where this development is taking place in the private sector or countries where it is being done in the government sector, all of them have the essential spectrum of engineers and scientists required for the development of weapon systems.
The research which is done in the private sector is aimed at succeeding in a project awarded for a specific aim and eventually winning a contract to produce that equipment. The returns of a successful contract go to the shareholders of the private company and it is in the interest of the private company to succeed because only through such success will the shareholders really stand to gain.
As compared to this in the case of the research being done in the government sector the incentives are different. Here it is the self-incentivization of the engineers and the scientists which comes to the fore and also the recognition given by the public. The incentive is to be able to produce something which will help in protecting one’s nation.
We may group nations broadly into those, where the majority of development work is done in the government sector, and those, where the major portion of the development work is done in the private sector.
Breakthrough technologies appear to be coming out more from the countries where the research and development work is happening in the private sector. But then, we must also keep in mind that in these countries, there is a willingness on the part of the government to commit large amounts of money to encourage competition for developing new technologies by private companies.
Ironically, either way, whether you are doing the research and development in the government sector, or you are doing it through the private sector, the funding is from the taxpayer though the ‘Expenditure to Results Ratio’ will differ.
Military view
It may be argued that the use of taxpayer money through the private sector may result in better technologies being produced because of the need for survival of the private companies committed to the defence industry. The push from the shareholders to succeed is one way in which the incentive is being produced for production of technology. On the other hand in the government sector, it is more of self-incentivization.
On the face of it, it looks like the former. that is the push by the shareholders may be more forceful. However, the caveat is that this sum of money which is needed to produce such an incentive when we are operating through the private sector may be so huge that it may preclude some countries from doing so. Especially when their industrial base is weak and their economy is not yet that big. In such situations, most of the development will have to happen through the government sector.
Once the research and development has taken place and new systems are developed and they are accepted by the user, we have to go on to the mass production. In the case of the government sector the production will have to be given to an industrial base within the government or outside while in the case of the private sector the company which has developed the technology will fiercely guard it and produce the equipment at scale to meet the requirement of the user. The fierce guarding of the developed technology is obvious because that is what is giving the company its competitive advantage.
The system once produced has to be then improved upon and also sustained. So, over here the focus shifts from the manufacturing industrial base to the sustaining industrial base again in sustainment there are a number of options. Certain systems may carry on being maintained by the government sector while others may be given to the private sector.
The equipment which is most suited to be given to the private sector is where the manufacturer of the equipment is a large enough company which can carry on producing similar equipment and at the same time provide the spares needed and the expertise needed to sustain the equipment.
If, on the other hand, the equipment once produced from the government sector or from the private sector loses the backup of the manufacturer because the manufacturer has moved away then the challenge of ensuring the supply chain of the spares needed to sustain, arises.
Capabilities matter
In many situations, it happens that the country has to import major equipment from abroad and the manufacturer has to be contracted with for the lifetime of spares. In such situations, it may be argued that it will be suitable for maintenance, repair and overhaul to be done in the government sector. As in this situation the need for ensuring the availability of the equipment in the crisis is paramount. And the assurance of profitability to a private concern sustaining the equipment over a prolonged period of time may not be possible.
It would be critical to ensure that your ability to sustain the equipment does not melt away. This again can only be done in the government sector because here the money is coming from the taxpayer and it is a cost which the country must carry to ensure that the systems and the equipment are available when a crisis arises.
At this point it is worth reiterating that the capabilities once created have to be sustained.
If the capability of a country degrades, then its ability to respond in a crisis also diminishes. So, a balance has to be made especially if a country is not having a very big economy and is not able to spare large amounts of money. Then the ability to sustain varied systems has to be retained by the government sector.
However, as a country’s economy becomes larger the industrial base becomes larger. A time comes when certain companies in the private sector produce equipment whether directly or through collaboration. They become the single source of supply for the entire system. In such situations it would be beneficial that equipment special specific lifecycle sustainability contracts we signed with such companies.
Every country has to create its own ecosystem based on its strengths and decide how they can best. ensure the sustainability of their equipment.
It must be noted here that normally defence equipment tends to last for long periods of time. For example, in the case of tanks, we find that initially a tank which has been produced and is expected to last for 30 odd years, sometimes through upgrades it lasts for almost up to 50 years. It remains within the inventory of the armed forces of a particular country, and it has to be sustained.
Every country has to create its own ecosystem based on its strengths and decide how they can best. ensure the sustainability of their equipment.
Here we come to another aspect. It is the paperwork involved in this complete process. In the private industry the money is being spent by a company which is designing and manufacturing major systems. The decision-making rests within the company and by its board. Now typically in a board, you have got expertise of all types sitting in one room and the decisions get taken very quickly. For example, the designer, the production person, the finance person, the HR person, everybody is sitting in the same room and a decision gets taken.
It is different when you are dealing in the government sector there the only efficient way of doing it is through a bureaucracy.
Because taxpayer money is being used, certain checks and balances have to be kept in place to ensure the most efficient and effective use of the money. Various rules and procedures have to be put into place.
Bureaucracy and more
The flip side of this is that the decision making gets more complex and slows down due to the intricate process controlled by various procedures and rules. Fine tuning of such processes needs brilliant minds who do not lose sight of the importance of ensuring that the defence equipment is always available.
If the complexities are not clear and if the bureaucracy or the decision makers become segregated then the jointness of the decision making gets weakened. There can be loss of focus.
For example, take an equipment developed with a lot of difficulty by a self-incentivized group of people who are working in the government sector. They produce something with a lot of hard work, and the equipment attains a certain level of technology. It may happen that at the time when it is sent for acceptance the people who are looking at it and checking it for its value may not accept the equipment because they were expecting something better.
So, then an ‘Expectations Gap’ appears with what can possibly be made within the resources of a country and what is acceptable to the person who is looking for the equipment.
The expectation gap is to be seen for what it is, and the overall focus maintained at the appropriate level. The appropriate level is where the decision maker is looking at both the people who are accepting and the people who are developing.
This expectation gap can be detrimental to production of higher technology because if the developed equipment is not accepted, then that self-incentivized person or the self-incentivized organization gets a setback. It then has to then again pull itself up and self-incentivize to produce even better equipment. And this process can carry on as the people again who are looking at accepting the equipment may want something even better the next time something is produced.
The expectation gap is to be seen for what it is, and the overall focus maintained at the appropriate level. The appropriate level is where the decision maker is looking at both the people who are accepting and the people who are developing.
At that level the focus has to be brought back and only then will it succeed when you’re moving through the government sector.
This same thing plays out in the case of where sufficient funds are available and you’re allowed, and you can make a variety of companies compete. There, the company which fails to win can be incentivized by being contracted to make a part of the successful system, and thus benefit in spite of having lost out on the contract.
The bottom line here is that the cost of not succeeding to develop new weapon systems leads to a diminishing capability which leads to a loss of comprehensive national power which obviously cannot be allowed to happen
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-This story earlier appeared on www.mrodigestforums.com
