New Industrial Strategy Echoes Association Goals

By Michael Bayer

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The horrific Oct. 7 terrorist attack on Israel has been difficult to comprehend. As we pray for peace, we need to understand this attack has immediate implications for the U.S. military and its defense industrial base.

The attack was conducted with a combination of new military technology and old civilian equipment such as bulldozers, rubber boats and paragliders. The attack reinforced the need to prepare for the changing character of war, with an emphasis on new uses of technology and new operating concepts.

But that is only part of the story. To deter this from devolving into a wider regional conflict, the United States sent significant force elements, including a second carrier strike group and Air Force jets armed with advanced munitions, into the region. It was an important, visceral reminder of the lesson history teaches us: wars often start with the tactical surprise of new technologies, but they are almost always won through the enduring strength of robust industrial bases.

For the past year — using its annual “Vital Signs” report on the health of the U.S. defense industrial base and more — the National Defense Industrial Association has been conducting an educational campaign to highlight the necessity of transforming a brittle industrial base, which was shaped and resourced for low-intensity conflict, into a threat-informed, resilient defense ecosystem that can both deter near-peer competitors and be responsive at scale to multiple contingencies and crises.

This transformation will require time, money, strategic discipline and patience.

To this end, Secretary of Defense Lloyd Austin released the department’s inaugural “National Defense Industrial Strategy,” which notes today’s industrial base is not postured to respond to the dynamic requirements of near-peer modern conflict.

Furthermore, the department notes the current state of U.S. supply chains and workforce, technological change, spending constraints and geopolitical threats need action if we are to sustain our competitive advantage. The strategy has notable strengths, including highlighting the dangerous gaps between the robust and resilient industrial base called for in the 2022 National Defense Strategy and the current industrial capability and capacity. It also recognizes that to be a true mobilization partner with industry, the department needs to prioritize and optimize defense needs beyond traditional cost, speed and scale.

The strategy identifies clear goals, two of which especially resonate with industry: the need to rebuild resilient supply chains and the need for dynamic production and workforce readiness.

As the Defense Department moves into the implementation phase, NDIA will encourage it to engage with industry to ensure government and industry are aligned on goals, actions and metrics.

There are three areas that merit ongoing attention: the cause and effect of the current posture of the defense industrial base, the funding gaps and the performance metrics.

First, the Defense Department must internalize that the current defense industrial base has been shaped by bipartisan policy and resourcing decisions it and Congress made over the last 30 years. Some of those decisions have been obviated by the subsequent relationships between the financial markets and institutions and the publicly traded companies, including those companies in the defense industrial base.

Today’s public boards are highly attuned to institutional investors who deploy massive amounts of capital in multiple sectors on a global scale and expect healthy returns on their investments. Those markets and companies respond to contracts, not press releases. As it implements its strategy, the department must pay more attention to its intended and unintended market signaling and infuse more rigorous discipline into a predictable requirements process.

Second, the strategy acknowledges many of the current known risks in the defense industrial base are due to past budget decisions. Therefore, the department will need to address the requirement for additional resources to support the proposed actions in the strategy.

Finally, all stakeholders — inside and outside of government — need to be clear on why we must make the defense industrial base resilient.

To reiterate, the industrial base needs to be a threat-informed, resilient ecosystem that can deter near-peer competitors, respond to multiple contingencies and crises and, if needed, be able to surge to respond to conflict. This requires that investors understand the exact nature of the threat and what is at stake for them and the concomitant need for an industrial base that is resilient through conflict by design, not just designed to be resilient through competition.

If the strategy is to be an actionable and effective roadmap for the necessary seismic shift our defense industrial base needs, we need your intellectual rigor, expertise and experience with us in this effort. Throughout 2024, NDIA is doubling down on its commitment to providing strategic forums to connect you and your company across every echelon of the Defense Department. Our goal is straightforward: we are determined to improve the readiness of the defense industrial base so warfighters never enter a fair fight.

Therefore, I invite you to join us as we kick off our 2024 strategic conference season. Please start by attending the 38th Annual National Logistics Forum Feb. 6-7 in Oklahoma City, Oklahoma. The theme of this year’s forum is “Integrated Deterrence: Driven by Logistics.”
For nearly four decades, this national event has brought together senior defense officials, industry and acquisition leaders, logisticians, financial experts and coalition partners to exchange ideas and share insights into the best ways to support our nation’s warfighters. We look forward to seeing you there! ND

Michael Bayer is NDIA board chair and president and CEO of Dumbarton Strategies.

Topics: Defense Department

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