Understanding the Contributions of the New National Defense Industrial Strategy

The Department of Defense has just released its first National Defense Industrial Strategy, signed by the deputy secretary of defense and developed by the first Assistant Secretary of Defense for Industrial Base Policy, Dr. Laura Taylor-Kale. The purpose of this new strategy is to create a cohesive vision for the defense industrial base to meet the stated goal to “catalyze generational change” to create a robust, resilient, and dynamic industrial base.

Q1: What is the National Defense Industrial Strategy?

A1: The National Defense Industrial Strategy (NDIS) is an approach to support and manage the defense industrial base (DIB) that was laid out in a document issued by the United States Department of Defense (DOD) on January 11. The goal is to “catalyze generational rather than incremental change” to create a more “robust, resilient, and dynamic defense industrial ecosystem.” This first-ever NDIS joins other strategic planning focused policy documents from the DOD, including the National Security Strategy, the National Defense Strategy, the Nuclear Posture Review, and the Missile Defense Review. The DOD strategic planning documents offer priorities and direction and identify how the U.S. military will meet growing threats to U.S. national security interests and create a stable and open international system.

While the DOD has created a number of documents on aspects of the industrial base, including on Securing Defense-Critical Supply Chains and the State of Competition Within the Defense Industrial Base, the NDIS is the first full-scale industrial strategy that takes a 360 degree look at the defense industrial base, incorporating workforce readiness, acquisition agility, and working with allies in partners in concert with a focus on supply chains. The NDIS creates and defines a vision for a robust defense industrial base that can ensure both effective warfighting and enhance deterrence. The specificity of the language in the NDIS creates guidance that the acquisition community can point to in its decisionmaking and as it works with other stakeholders across the community that work on delivering capability to the warfighter, including requirements setters, budgeteers, and acquisition management professionals.

The fact that there is a defense industrial base strategy demonstrates that leadership truly understands that the DIB is a national asset that needs to be nurtured to ensure that the statement "production is deterrence" can hold true.

Q2: What are the key initiatives?

A2: The NDIS highlights four main lines of effort, each of which has multiple supporting actions:

  1. Create resilient supply chains. This is to enable the DIB to “securely produce the products, services, and technologies needed now and in the future at speed, scale, and cost.” The National Defense Strategy offers the reminder that resilience includes the need to withstand and fight through disruption, which cannot be done without a strong industrial base that produces what is needed quickly and at the scale that is required.
  2. Ensure workforce readiness and development. This is so that the DIB can draw on a highly skilled, well-trained and “sufficiently staffed workforce that is diverse and representative of America.”
  3. Use the power of flexible acquisition. This is to take advantage of “strategies that strive for dynamic capabilities while balancing efficiency, maintainability, customization and standardization in defense platforms and support systems.” The goal is to reduce development times and cost and increase scalability.
  4. Engage in economic deterrence. The NDIS begins by highlighting institutions that support “fair and effective market mechanisms” that support the defense industrial base of the United States and its allies and partners, and cite “fear of materially reduced access” to the United States as being a deterrent to malicious actors. This will be achieved by working with allies and partners to support a resilient defense industrial ecosystem in the United States.

Q3: Why is this needed?

A3: The case for the new NDIS is being written by the threat picture, and it is urgent. Russia’s attack on Ukraine led to the largest land war in Europe since World War II, and allied support for Ukraine’s self-defense highlighted the limitations of existing stockpiles and focused new attention on the challenge of increasing capacity. Concerns about China’s designs on Taiwan and its broader efforts to expand into neighboring waters emphasize the potential for conflict in the Indo-Pacific, and analysis shows the inventories of weapons are insufficient for any kind of protracted conflict. Hamas’s attack on Israel is a reminder of the possibility of strategic surprise and enhances the urgency to address industrial base challenges now.

The NDIS will guide the department’s engagement policy and investments in the DIB. It is a strategy that allows the government to make choices, and it also outlines the risk of the status quo. The NDIS offers metrics for success and highlights that implementation plans will follow. And this is all laid out in a policy signed by the deputy secretary of defense, which gives the guidance the force of leadership commitment. That level of seniority is necessary to ensure that the guidance is heeded by military service leadership and service acquisition professionals, over whom the Office of the Under Secretary of Defense for Acquisition and Sustainment has limited authority, especially with the devolution of the acquisition milestone decision authority to service acquisition executives in 2016.

Q4: What are the challenges?

A4: The contents of the NDIS cover the “wicked problems” that have persisted in the industrial base for decades. Supply chain resiliency, workforce challenges, acquisition agility and working with allies and partners are necessary aspects of ensuring a strong industrial base, and each has been the focus of numerous improvement initiatives over the years. Due to shifts between different priorities, such as cost versus speed, these improvement efforts can be in tension with one another over time. Improvement is slow, challenging, and requires continual focus across administrations. The innovation in the NDIS comes from it being an overarching look at the industrial base as a whole, as situated in a broader ecosystem—and that comes with its own set of constraints.

One constraint is that many of these challenges require actions that are not only outside the control of the Office of Assistant Secretary of Defense for Industrial Base Policy, but are outside of the control of the DOD. For example, the NDIS highlights the workforce challenge and lays out a strategy to begin to address this. Shaping the choices of workers in the industrial base can be addressed by changing incentives structures within industry and by enhancing relevant educational opportunities—but this will take resources.

In fact, all of the initiatives in the NDIS will require resources—including funding, senior management focus, and an approach that aligns stakeholders from across the ecosystem. The DOD’s enormous budget does not preclude the challenge of getting resources for any new initiative, which requires support from all levels of the DOD and further support from Congress. Every decision has an opportunity cost. Investing in growing and sustaining productive capacity for any system means that other priorities will not be funded.

Finally, a challenge of the NDIS is the necessity of overcoming entrenched processes and even perhaps some cynicism about the ease of addressing them. The challenges identified in the NDIS are not new. While the 360-degree approach is an important contribution to addressing them, professionals in the acquisition field in particular have experienced a long history of efforts to improve acquisition and may be reluctant to lean out on change.

Q5: What more work needs to be done?

A5: The NDIS lays out the DOD’s big picture goals and priorities for the defense industrial base. While this will help set direction and drive investment, the challenge of any strategy is effective implementation. The NDIS identifies challenges that are not only well known, but that have persisted in spite of decades of previous attempts to address them. This strategy does highlight implementation and indicates that efforts to develop implementation plans are underway. The NDIS also includes metrics for each initiative, which if collected and monitored over time will provide a means of measuring progress toward goals and offer insights into how the defense industrial base is changing over time.

Implementing the strategy is not the same line of effort as developing it. If the NDIS is to have the desired impact, there will need to be changes across the industrial base ecosystem, affecting stakeholders both inside and outside the DOD. Incorporating change management principles—and there are multiple frameworks to choose from—will increase the likelihood of this having an impact. A clear vision, consistent leadership support, appropriate resources, useful metrics, the celebration of wins along the way, will all help to ensure that the new approach to managing the industrial base achieves its goals and provides warfighters with the equipment they need to either win—or preferably to deter—the next war. Finally, implementation needs to recognize the role of the warfighter in driving requirements and setting resources. The DOD will need to ensure that leaders understand and value the role that a robust industrial base plays in both deterrence and in actual warfighting. The warfighters are the customers of the industrial base—and if they understand the clear urgency of action, then it is more likely to be sustained over time.

Cynthia R. Cook is the director of the Defense-Industrial Initiatives Group and a senior fellow in the International Security Program at the Center for Strategic and International Studies in Washington, D.C.

Cynthia Cook
Director, Defense-Industrial Initiatives Group and Senior Fellow, International Security Program