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Lynn: Defense Industry Needs Longterm Investors, Not Gordon Gekkos

Deputy Defense Secretary William J. Lynn III, Photo: Defense.gov

Deputy Defense Secretary William J. Lynn III said the Defense Department needs the defense industry to take the long view as Pentagon budgets are expected to be cut.

“Those of us in the department, like most of you in this room, are in this for the long haul,” he said at an Aerospace Industry Association dinner, part of the Paris Air Show. “And we need industrial partners and financial backers who think and act likewise.”

In other words, DoD wants to work with Warren Buffetts, not Gordon Gekkos, as Lynn put it, according to an American Forces Press Services report.

In the meantime, DoD is conducting a review of the defense industry.

“We are going sector by sector, tier by tier, to assemble a longterm policy to protect that base as we slow defense spending,” Lynn said. “This detailed review will inform our budget decisions, our acquisition decisions and our industrial policy.”

Already, he said, several “overarching themes” were emerging from the review, including increased competition through globalization and foreign investment.

Globalization of some parts of the industrial base is simply a reality, Lynn said. “The corollary of ensuring our defense market welcomes competition from abroad is ensuring that U.S. firms have full access to the international market,” he added.

DoD also plans to increase funding for targeted research and spending, even as the overall defense budget is set for cuts.

R&D spending on long-range strike systems, unmanned aerial vehicles and cybersecurity will likely buck the trend of decline, he explained.

“We do not yet know the exact shape they will take, or the precise advantages they will confer,” Lynn said. “But unless we shield the research and development funds that support them, we will deny future decision-makers the opportunity to deploy these technologies and deny the nation the security gains that accrue as a result.”

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