Thrust and Perry Print E-mail
Friday, 30 March 2012 15:54

The IPC Apex Expo show floor in late February was rife with rumors that the US State Department might remove printed circuit boards from the ITAR Control List.
Several representatives from board shops or distributors had heard the same story. And they hid no concern that such a move, if true, would be the death knell of the US PCB industry. Given how much domestic fabricators rely on military work to keep their shops open, they had every right to be worried.

Export control reform is a recurring issue. This latest go-round could probably be traced to a set of initiatives announced in August 2010 by Secretary of Defense Robert Gates. In the interests of reforming the way the Pentagon does business, Secretary Gates said it was time for tough love, calling on the department to take an unsparing look at how it is run.

It is important that we not repeat the mistakes of the past, where tough economic times or the winding down of a military campaign leads to steep and unwise reductions in defense. As a matter of principle and political reality, the Department of Defense cannot expect America’s elected representatives to approve budget increases each year, unless we are doing a good job, indeed everything possible, to make every dollar count.

With reform comes upheaval, and, unfortunately, miscommunication and misunderstanding. Gates’ initiatives – and the interpretations of those asked to put said initiatives into practice – appear to have led to just that. Some prime defense contractors may have taken Gates’ comments as a pending license to, in the words of one fabricator, “buy anything, anywhere.”

The Department of Defense has publicly stated it views IC design and fabrication as “essential strategic capabilities” of the US’s technological advantage in weapons systems and national security. We can find no such statement of support for PCBs. The bare board, of course, often costs a fraction of the microprocessor, perhaps one reason it always gets short shrift in these discussions. 

But throwing the doors open to importing boards would, in our opinion, not only decimate the US circuit board industry, but invite a rash of counterfeit products; not the bare board, per se, but it would be impossible to prevent fake raw materials from finding their way into the fab shops abroad. Pricing already encourages some suppliers to cut corners, using substandard materials in order to meet margins. Open the door to hundreds of additional vendors and any remaining ethical restraints would likely be undermined for good in the name of staying alive.

This magazine has been assured by the US government, however, that when it comes to PCBs, this is just not the case. Whereas some products may be shifted from one control list to another, when the dust settles, PCBs will be either on the US Munitions List (USML) or the Commerce Control List (CCL).
Yet we are cursed to continue to have this conversation (dare we call it “fear?”). This gets back to a fundamental flaw in defense acquisition: the never-ending pursuit of lower price, no matter what else is ceded in the chase.

For that we have former Secretary of Defense William H. Perry to thank. In his version of acquisition reform – the famous “Specs and Standards – A New Way of Doing Business” memo of 1994 – Secretary Perry mandated perhaps the Pentagon’s single biggest move to commercial off-the-shelf parts. The goals were sound: reduce development costs, take faster advantage of technology innovation, and improve economies-of-scale and time-to-market.

But the product lifecycle of commercial parts is far shorter than those of the typical defense program – in many cases by 10 or more years for development and some 40 years in the field. The hidden expense of redesigns due to obsolete or unavailable parts was never truly factored in. (Or, perhaps more accurately, it was assumed there was sufficient inefficiency and excess margin at the supplier level to absorb those hidden costs.)

What we are left with is a supply chain in disarray. Government hands down poorly worded, broad edicts. The primes are not given the necessary tools and constraints to implement those edicts in the spirit intended. The subcontractors get hit with even greater risk and responsibility, but with less to show for the return on their investment. If we drew up a plan on efficient, effective defense acquisition, that’s not at all how it would look.

For years, I thought Dr. William Perry’s mandate to reform Pentagon acquisition was the right decision by the right man at the right time. Today, I’ve never been less sure.

Last Updated on Friday, 30 March 2012 21:40




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