The issue that Jeb and I got started with in puzzling over was the question of Pentagon acquisition and the ways in which Pentagon acquisition had become so burdensome and so costly and expensive that companies were basically opting out of becoming involved in the government contract system. To borrow phrase that Jeb would often use, we’ve developed a Soviet-style acquisition system and that system is I think one of the key differences from the way in which the US was able to arm itself to World War II.
In World War II, the government had to invest in using, for example, defense plant corporation because the amount of private capital invested in defense industry — defense related technologies as we would call them today — was about zero. Again, that had to do with a way in which the Pentagon had built its acquisition system. It was one in which private industry basically stayed away from government as much as possible.
I’ll give you a quick example. When the government decided to build the light utility vehicle which became the Jeep, they sent a request for proposal to 186 companies the United States. Two answered them. None of the big automakers wanted to get involved. Not GM, not Chrysler, not Ford. It was Bantam which was a company on the verge of bankruptcy. It was their last throw of the dice. They figured, ‘we’re going under anyway we might as well take a shot at a government contract.’ And the other one was Willys Overland.
That was Arthur Herman at a Hudson Institute event.
While I agree with the development of a Soviet-style acquisition system as the core reason companies have been exiting the federal contracting sector, his story doesn’t necessarily line up with that. The Jeep story shows that even during World War II, or at least the beginning of it, US companies refused government contracts.
This, despite the fact that a story “The Birth of the Jeep” found that General Marshall had just a 3 minute conversation to get 15 test articles approved for that program. Long-lead times and absurd requirements were not the problem at that time. Not surprisingly, this story was told during a 1967 congressional hearing on the “soviet-style” PPBS created earlier that decade.*
Government contracting has always been fraught with challenges, particularly after World War I with pervasive charges of “war profiteering.”
* Planning-Programming-Budgeting. Selected Comment. Prepared by the Subcommittee on National Security and International Operations (Pursuant to S. Res. 54, 90th Cong.) of the Committee on Government Operations. United States Senate. U.S. Government Printing Office. Washington, 1967.
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