System Discourages Defense Firm Risks

“At the Pentagon, Competition Is No Panacea” (May 13) did an excellent job of pointing out the many vexing problems associated with competition that is artificially induced.

The article points out that “Pentagon-style” competition discourages investment in development and innovation at a time when we need those capabilities to sustain the national defense at an acceptable level for the foreseeable future.

In the commercial world, firms invest in ideas that they believe that someone will buy in sufficient quantity or at a high enough price to make the investment worthwhile. Potential competitors accept the same investment risk after considering the size of the market, their ability to attract customers and the price they will charge.

In the world of defense, however, the potential competitor’s risks are far different. Investments in technology and product development are decreased because the government will make available the fruits of another company’s investment and expertise.

When it is far more attractive to be the “second source,” why assume the greater investment risks associated with product development and innovation?

BETTIE S. McCARTHY

H. (BUD) HILL JR.

The writers work for Glendale-based Proprietary Industries Assn. , a trade group.