One of the most significant lessons from Hurricane Katrina is the potential vulnerability of critical infrastructure and the consequences of losing unique national assets. Gasoline prices rose 25% in a week due to the shutdown of Gulf Coast refineries. The situation is rendered even more dangerous when unique facilities are affected. For example, there is growing concern that damage to the port of New Orleans will result in billions of dollars of lost agricultural exports. There are reports that the Ingalls shipyard at Pascagoula, Mississippi, responsible for the production of Navy surface warships, will be operating at reduced capacity for months to come.
The military industrial base is one infrastructure sector that is particularly vulnerable to such single-node failures. Most military equipment is produced or assembled at a single facility. A natural disaster or terrorist strike in one part of the homeland could negatively impact U.S. national security on a global scale. In addition, because successive administrations have refused to invest in surge capabilities, most of these facilities lack the ability to rapidly increase production in times of war.
One case in point is small arms ammunition. The military relies on a single production facility, the U.S. Army’s Lake City Ammunition Plant, a government-owned facility run by ATK. This is a terrific operation. Lake City also is the exception to the rule that surge capability is absent in the defense industrial base. After 9/11, as demand for small caliber ammunition went through the roof, Lake City increased its production from 300 million rounds a year to 1.2 billion. It is prepared to increase that further to at least 1.5 billion rounds if required.
The Army saw the need to enhance the ammunition industrial base even further. It is moving towards a second source producer of small arms ammunition. The second source will produce 300 million rounds per year with the possibility of an additional 200 million. The second source will be geographically separated from Lake City. The Army envisioned the second source as a low risk supplement to Lake City, one that would maximize U.S. content and have a demonstrated capability in supply chain management. Together with the further expansion of production at Lake City, the Army could purchase nearly 2 billion rounds of small arms ammunition a year. The Army’s pursuit of a second source for ammunition is a good example of acquisition reform.
The value of a second source for ammunition geographically separated from the primary production site should be obvious to everyone after Katrina. A second source also provides some insurance against future spikes in demand while simultaneously ensuring the viability of the core industrial capability represented by Lake City.
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