The Pentagon on Thursday released a much-anticipated strategy to start remedying what officials say are serious shortfalls in the industrial base needed for national defense — so serious, they say, that even the combined industrial output of the U.S. and its closest allies currently can’t match that of China.
The National Defense Industrial Strategy — the first DoD has even published — calls for “generational” changes in the way the U.S. government manages and fosters the defense industrial base. It doesn’t lay out the specific steps DoD will take, nor how much they’ll cost: those, officials say, will be part of more detailed implementation plans to be finished in the coming months. It remains unclear how many of those details will be publicly released.
“This is the beginning, the outline of the strategic vision, and the implementation plan will be the other key aspect of it,” Dr. Laura D. Taylor-Kale, the assistant secretary of Defense for industrial base Policy told reporters Thursday. “We spent months of doing extensive socialization and consultation with industry, with key stakeholders. We’ll continue to do so in the next weeks and months as we finalize the implementation plan.”
Broadly, the strategy lays out what Defense officials see as the current weaknesses in U.S. industrial capacity and describes four main priorities for shoring them up: building more resilient supply chains, increasing the industrial workforce, using more flexible acquisition policies, and economic deterrence.
Defense officials say they’ve long understood the department has serious limitations in its ability to understand its own supply base, but those problems were laid bare by the COVID-19 pandemic and the war in Ukraine.
“We have had manufacturing choke points, and it’s really about our ability to surge capacity,” said Halimah Najieb-Locke, the deputy assistant secretary for industrial base resilience. “Where we have tension points in the supply chain, we have to think through what the capacities are, what are the investing strategies that industry is employing, and how can we be force multipliers by perhaps coming to the table with standard-setting bodies, or working with our allies and partners on interoperability and interchangeability where we see those very acute choke points.”
As part of the effort to create surge capacity, the framework calls for DoD to “incentivize” companies to build spare production lines, for the government to stockpile more supplies of critical items, and to extend its reach into parts of the private sector that don’t traditionally do business with DoD.
Taylor-Kale said that’s likely to mean increasing DoD’s use of the Defense Production Act, which she said is currently underutilized.
“We really only use a quarter of the authorities [in the DPA],” she said. “So our goal with the implementation plan is to really outline some of the key areas that are important, and that we within Industrial Base Policy have control over. We’re looking at, for instance, critical minerals and strategic materials, where we’ve already done a number of key investments.”
On the workforce front, the strategy calls for more DoD spending on upskilling and reskilling programs in the private sector – with a focus on STEM skills the department considers critical. Officials said they’re also seeking to “destigmatize” careers in the industrial sector.
“Often, people believe these jobs are low-wage, low-skilled, monotonous, and dangerous, and that they are a poor alternative to nonindustrial jobs,” according to the document. “In fact, industrial jobs contribute directly to the national security mission while being interesting and providing stability and competitive wages. Promoting industrial careers early is important to confront negative stereotypes and increase visibility.”
Meanwhile, the strategy looks to another round of Defense acquisition reforms to make DoD procurements more flexible and reduce barriers to entry. It offers relatively few specifics, but telegraphs that DoD is likely to increase the number of acquisition-related legislative proposals it makes to Congress in the coming years.
Among the main acquisition reform priorities: implementing a more disciplined requirements process, adopting more standards-based systems using open architectures, embracing commercial technologies, and reducing restrictions on the intellectual property that goes into Defense systems.
“In addition to broadening the players at the sub tier level, we’re going to be using buying activities to increase commercial off the shelf purchasing, which is going to send a signal to industry that we care about this,” Najieb-Locke said. “Part of the implementation plan is really going to focus on setting up more public private partnerships, thinking through some of the risk mechanisms and the way that the federal government can work with industry to say, ‘If you are a part of a co-funding or an element that we’ve invested in, we will bear the burden of the risk, and we will work to leverage our indemnification elements where feasible and where appropriate.”
By March, the department plans to have developed a detailed implementation plan that will outline specific tasks, roles and responsibilities to start carrying out the strategy. The more detailed plan will be classified, but Taylor-Kale vowed to release an unclassified summary by late February.
The details in those implementation plans and other DoD planning documents will matter a great deal, said Jerry McGinn, a former senior official in DoD’s office of manufacturing and industrial base policy who now leads George Mason University’s Center for Government Contracting.
“Watch for the FY25 President’s budget submission and specific DoD policy and regulatory actions to address the four NDIS priorities over the next few months,” he said. “Clear and increased levels of investment and substantial implementation-related initiatives will signal that the strategy is truly making a difference.”
David Berteau, a former assistant secretary of Defense who’s now the president of the Professional Services Council said the strategy was a good first start.
“The priorities don’t cover everything they should, but what they do cover is important and needs focus. This helps bring that focus,” he said.
But Berteau said one challenge the department will face as it moves into the implementation phase will be finding ways to continuously engage with industry.
“There are existing avenues for communication, but they probably are neither broad enough or focused enough,” he said. “They’ll have to do more.”