The US Department of Defense has published its inaugural National Defense Industrial Strategy (NDIS), calling for “generational change” to fortify the US defence industrial base, and meet the challenges posed by competitors and aggressors. The strategy aims to answer the question of how the US can prioritise defence needs in the face of wider economic priorities and geopolitical tensions, and rapid technological developments.
Through four strategic priorities, the document sets out the roadmap for how the US can create a defence industrial ecosystem that is more resilient and dynamic. The strategy follows the 2022 publication of the National Defense Strategy (NDS), which outlined the US Department of Defense’s priorities and strategic direction. The 2022 strategy stated a need to “fortify the defense industrial base”, and the NDIS now sets out the path for delivering on this aim.
The long-term priorities
The NDIS lays out four long-term priorities to signal the direction and resource prioritisation needed from industry to delivery on the aims of the NDS. The NDIS also calls more widely for sustained collaboration between industry, the US Government, and international partners to fulfil the four priorities of the strategy:
1. Resilient Supply Chains
The first priority outlined in the strategy is to create resilient supply chains that can securely produce the products, services and technologies needed now and in the future, at speed, scale and cost. To meet this priority, the Department of Defense (DoD) sets out the following actions:
- Incentivise industry to improve resilience by investing in extra capacity, partly through establishing public-private partnerships and risk sharing mechanisms.
- Manage inventory and stockpile planning to decrease near-term risk, and to increase stockpiles of strategic and critical systems.
- Continue and expand support for domestic production by promoting accelerator programmes to foster innovation.
- Diversify the supplier base and invest in new production methods by actions such as mitigating cybersecurity costs of entry to work in the defence industrial ecosystem.
- Leverage data analytics to improve sub-tier visibility to identify and minimise strategic supply chain risks and to manage disruptions proactively.
- Engage allies and partners to expand global defence production and increase supply chain resilience.
- Improve the Foreign Military Sales process to enable FMS to drive commercial sustainability.
- Enhance industrial cybersecurity.
2. Workforce Readiness
The NDIS sets a goal to create a skilled and sufficiently staffed workforce that is diverse, and representative of America. The strategy recognises the challenge that the US defence industry currently faces in ensuring the right skills to meet domestic production and sustained demand. The paper sets out the following actions to achieve “workforce readiness”:
- Prepare the workforce for future technological innovation, by investing in upskilling and reskilling programmes, and investing in advanced manufacturing workforce pipelines.
- Continue targeting defence-critical skill sets in manufacturing and STEM.
- Increase access to apprenticeship and internship programmes.
- Destigmatise industrial careers, through partnering with high schools and promoting partnerships with educational institutions.
- Expand recruitment of non-traditional communities.
3. Flexible Acquisition
The strategy sets out a goal for acquisition strategies that strive for dynamic capabilities while balancing efficiency, maintainability, customisation and standardisation in defence platforms and support systems. Flexible acquisition strategies would result in reduced development times, reduced costs, and increased scalability. The actions identified by the DoD to achieve this are:
- Broaden platform standards and interoperability, through such things as promoting open architecture and considering exportability during system design.
- Strengthen requirements process to curb “scope creep”, through incremental development and advanced virtual modelling methodologies.
- Prioritise off-the-shelf acquisition where applicable and reasonable.
- Increase access to intellectual property and data rights to enhance acquisition and sustainment.
- Consider greater use and policy reform of contracting strategies, by working with Congress to modify contract authorities to align with present defence production priorities.
- Continue to support acquisition reform.
- Update industrial mobilisation authorities and planning to ensure preparedness.
4. Economic Deterrence
The final long-term priority laid out in the NDIS is to promote fair and effective market mechanisms that support a resilient defence industrial ecosystem among the U.S. and close international allies and partners, and economic security and integrated deterrence. The aim is that a result of effective economic deterrence, fear of materially reduced access to U.S. markets, technologies, and innovations will sow doubt in the mind of potential aggressor. The actions to achieve this are set out by the DoD to be:
- Strengthen economic security agreements.
- Enable international interoperability standards through active participation in standards-setting bodies.
- Fortify alliances to share science and technology.
- Strengthen enforcement against adversarial ownership and cyber attacks.
- Strengthen prohibited sources policy to ensure that materiel required for national defence is not sourced from adversarial entities.
Challenges
The strategy also addresses the challenges that the US will face to deliver on these priorities. The challenges identified are:
- Under-utilisation of multi-use technologies.
- Inadequate workforce.
- Inadequate domestic production.
- Non-competitive practices.
- Long lead times and sub-par readiness.
- Fragility of sub-tier suppliers.
- Lack of market share, over-customisation, and obsolescence.
- Instability of procurement.
- Funding uncertainty and constraints.
- Limited visibility to international ally and partner requirements.
Conclusion
The NDIS is the first of its kind and is a significant step towards strengthening and modernising the US defence industrial base. It recognises the strategic and economic importance of industry in ensuring national security and provides a roadmap for the DoD’s engagement and investment. ADS will continue to engage with US Government and US trade associations in the framework of the AUKUS trilateral advanced capabilities forum to understand how the UK can support the US’s priorities as laid out in the NDIS and will look to create engagement opportunities with the US and Farnborough International Airshow 2024.