Faced with a shrinking force structure, declining readiness and congressionally-mandated caps on spending, the U.S. Army has drastically curtailed spending on new technology. Its modernization plan for the rest of the decade now consists mainly of upgrading and adapting combat systems first fielded during the Cold War. Contractors who initially took a wait-and-see attitude towards how their military customer would generate savings required by the 2011 Budget Control Act are beginning to look elsewhere for opportunities. For instance, United Technologies last week signaled that it would spin off or sell its Sikorsky helicopter unit, which for many years has counted the Army as its biggest customer. If the Army cannot stabilize demand for new technology, overseas adversaries will continue closing the capabilities gap and suppliers will gradually drift away. I have written a commentary for Forbes here.
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