National security: An industry where fair markets just don't cut it

Everyone loves the feeling of sipping their fair-market coffee while having a breakfast of sustainably-grown toast, free-range chicken eggs and locally-sourced greens. We love that feeling because we know that somewhere, someone is having a better life because we are helping local businesses around the world become more competitive in the increasingly cutthroat global market. 

This is the epitome of free trade supporting fair trade. We assist the small business owners because that is where we choose to spend our hard-earned money. But when the government begins to use this purchasing model, especially in the national defense industry, problems in the market start to arise. When it comes to protecting America’s homeland, we expect the highest standards and best quality services available — bar none. In the case of national security, “fair” markets just don’t cut it. 

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In 2016, the United States Senate passed the National Defense Authorization Act (NDAA). One of the key measures in this new legislation was that the United States instructed the Air Force to phase out the Russian RD-180 launch system, which had previously kept America dependent on Russian aerospace technology. In its first steps to implement the NDAA, the United States Air Force initiated the Launch Services Agreement (LSA), a program designed to rid America of its pesky dependence on foreign rockets by creating domestic alternatives for every type of national security payload. To do this, the Air Force needed to separate the program into phases, each with particular requirements and goals.

The first phase was primarily a planning stage, focusing on establishing launch prototypes for future aerospace missions. In October 2018, the Air Force announced the winners of the LSA’s Phase 1: Blue Origin, Northrop Grumman and United Launch Alliance. These contractors represent those best suited for the task at hand, and they were selected through a process of free-market competition. Many companies had the chance to compete, but the Air Force selected only the cream of the crop. The stakes are too high to choose any other way.

Nevertheless, as the LSA transitions into its second phase, the plan is drawing some critical attention. Some members of Congress believe that Phase 2 of the Launch Services Agreement — which involves the Air Force choosing only two contractors for missions between 2022 and 2025 — is “unfair” to others in the market. In a letter to Air Force Secretary Heather Wilson, Sen. Diane Feinstein (D-Calif.) and Rep. Ken CalvertKenneth (Ken) Stanton CalvertMORE (R-Calif.) made the claim that the Air Force has chosen an unfair path to select future launch providers. What they fails to realize is that when dealing with an issue as sensitive as national security, America’s Armed Forces don’t have the luxury of considering the fairness of the marketplace. They care about keeping Americans safe and keep Americans safe only.

The use of Russian rockets in our domestic (and military) space program puts the United States at risk politically, economically and technologically should the relationship between the United States and Russia further deteriorate. The LSA is developing a modern, domestically-manufactured system, which allows the United States to participate in all aspects of near space exploration, not simply the aspects for which the Russians provide equipment. Companies in the LSA program participated in a highly competitive process to have their products screened to meet numerous national security criteria, and the Air Force’s decision should be honored — not disparaged.

Some believe that Feinstein and Calvert were protecting SpaceX, a California company that did not make the cut in the first round of the LSA. SpaceX had the opportunity to compete in the first phase of the LSA, and the fact that the company wasn’t selected for the grant just means that they will need to spend their own money to compete with the winners of Phase 1. When challenged on this topic, Will Roper, assistant secretary of the Air Force, clarified that SpaceX could compete in Phase 2 — they would just have to do it without help from the Defense Department’s checkbook. 

Attempts to allow political considerations to influence national security issues only serve to put the future of the whole country at risk. As a nation, we need the best products being supported by the best companies. We cannot allow our elected representatives to ask our Defense Department to favor “locally-sourced” products — expecially it is due to political preferences or campaign promises. When it comes to the issue of American national security, any attempt to impose “fair” markets creates damaging interference, lowers our standards of protection and fails to keep America safe. Such efforts cannot be tolerated. 

Christopher Smithmyer is an adjunct professor of business at Penn State University in their World Campus and an adjunct professor of Business at the University of South Florida St. Petersburg’s Business School. Smithmyer’s research focuses on conflict management, specifically the history of U.S.-Russia relations and its potential impact.