JUST IN: Release of DoD Industrial Strategy Shows ‘Time for Action is Now’

By Josh Luckenbaugh

The defense industrial base is facing a number of significant challenges, and the release of the Defense Department’s National Defense Industrial Strategy signals the government is ready to tackle these problems, a senior official said Jan. 11.

With industry still recovering from the effects of the COVID-19 pandemic and two major conflicts breaking out in the last two years requiring defense companies to surge production, the supply chain is facing critical challenges not just in one area but “across the board,” said Dr. Laura Taylor-Kale, assistant secretary of defense for industrial base policy.

The National Defense Industrial Strategy, released Jan. 11, is “the first time that the Defense Department in recent years has put pen to paper and outlined a strategic vision for what it is that we need in order to have a modernized, innovative, resilient defense industrial base that can meet the current demands and challenges, but also address the future and pacing threats,” Taylor-Kale said during an event hosted by the Center for Strategic and International Studies.

The United States “can’t afford to wait” to revitalize its industrial base, she said. “We have seen over the last few years the importance of why we need resilient supply chains … not just to us domestically but also for our close allies and partners. We think that the time for action is now, and we're starting with the strategy and setting this vision and wanting everyone to join with us so that we can move forward and … meet the needs of warfighters today as well as for the future.”

The strategy outlined four priority areas: resilient supply chains, workforce readiness, flexible acquisition and economic deterrence.

To ensure a resilient supply chain, the Defense Department must do a better job of providing consistent, stable funding that sends a clear demand signal to industry, Taylor-Kale said. One way is through multi-year procurement, which “allows us to be able to give industry more consistent demand signals,” she said.

The department is also investing in ways to address “critical pain points within the supply chain,” such as critical minerals and strategic materials, she said. “We may not know what kind of batteries we'll need for what kind of future capabilities, but we know that they'll probably need lithium. And so, the necessity of really investing in those critical minerals, rare earth elements, has been important for us over the last few years.”

Building up and maintaining the requisite workforce is a challenge plaguing both industry and government, she said. Many baby boomers are retiring, and “younger generations are less interested in pursuing manufacturing careers and industrial careers. We really have to destigmatize that.”

Taylor-Kale said this is an area where interagency cooperation could play a key role. Defense Department analysis has shown that labor shortages are “oftentimes very regional,” and “what we now want to do is take the mapping that we've done across the United States to look at the various regions and share that with the Labor Department so that they can see where some of the key chokepoints are for us within the defense workforce.”

Then, the Defense Department can work with Labor and Commerce — along with industry — “in partnership to address some of these challenges at a more regional level,” she said. “I think sometimes it gets really overwhelming and challenging when we think about it from a larger national level, but really there are ways that we need to work on it and address it at a regional level.”

On the acquisition front, the strategy is not calling for “wholesale reform,” but is a recognition the Defense Department “needs to do a better job of striking … that balance between what needs to be customized and why, as well as production efficiency and timing,” Taylor-Kale said.

Part of that is acquiring “off-the-shelf” products when it is “applicable and reasonable” — “oftentimes there are off-the-shelf solutions in the commercial arena that can be helpful in driving the kinds of impact and outcomes that we need and also bring more innovation into the department, but sometimes we make it difficult for ourselves,” she said.

The department has a lot of flexible acquisition authorities already, “and what we probably need to do is use those authorities better [and] be more attentive to what's actually needed in the moment,” she said. “This is going to be a tough one, but I think it's very important.”

Additionally, the strategy called for the department to utilize more open systems architectures across critical programs to broaden platform standards and interoperability. “The goal is to, again, meet the needs of warfighters,” and the department must do a better job of identifying “whether those goals can be met through off-the-shelf products and solutions that are available in the market currently,” or whether “we need to focus more on customization where it's necessary to do that,” she said.

“This is part of the reason why the strategy is sector agnostic — it's industry agnostic, it's weapons agnostic, systems agnostic — because we understand that there will need to be choices that will have to be made,” she continued. “But the truth is we need to set the priority and have the vision there that” having more flexibility “is something that the department needs to do going forward.”

As for economic deterrence, a big part of achieving that is working closely with allies and partners across the globe, Taylor-Kale said. She noted the 2024 National Defense Authorization Act expands the authority of the Defense Production Act so Australia and the United Kingdom — the United States’ partners in the AUKUS security alliance — are considered “domestic sources.”

This provision is “actually really important,” Taylor-Kale said. “This will be something that will allow us to work … on securing and [building] more resilience in the supply chains,” as well as “working more collaboratively with our partners and allies. So, I think there's a lot of possibility here, and there's certainly a necessity based on what we've seen over the last several years.”

The war in Ukraine has demonstrated the importance of interoperability and interchangeability with allies and partners, she said. “It's more than just what do you do once the product is done? It's how do you think about interoperability and operationalize it? Well, early into the acquisition process, this is something that we're highlighting and we think is important.”

Another way to establish economic deterrence is to ward off adversarial capital. The strategy stated: “Adversarial nations are strategically employing investments in key U.S. and allied defense industries to harvest critical technologies, gain access to pioneering innovation and research and development efforts, leverage opaque private-public reporting structures to mask ultimate beneficial ownership and capitalize on dual-use technologies that may be used to close the gap in the U.S. military's comparative advantage.”

The Defense Department is working internally on how to address adversarial capital in the supply chain as well as collaborating with international organizations like NATO and other allies and partners, Taylor-Kale said. “I think going forward that's going to be very important for the Department of Defense … to be a leader and to really step forward and implement economic deterrents in a way that will strengthen the industrial base and build the ecosystem that we need.”

To realize the goals of the National Defense Industrial Strategy, the Defense Department is working on a classified implementation plan “that will have near-term measurable actions and metrics in order to gauge progress,” Taylor-Kale said. The department plans to publish an unclassified overview of the implementation plan in February, and the full classified version will be ready in March, she added.

“We … understand and recognize the importance of continuing to work closely with industry partners in order to get there,” she said. “It's not a DoD-only solution. It's not a partisan solution or issue. It's one that we all really need to work together on.”


Topics: Defense Department

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