DOD Needs Competitive, Innovative, Robust Defense Industrial Base

In early 2022, the Defense Department released a report detailing the state of the defense industrial base, or DIB, which is the collection of private sector companies that produce the materials, hardware and weapons used by the U.S. military.

It was no surprise the report concluded that the DIB had dramatically downsized from where it had been decades earlier. As an example, 90% of missiles now come from just three sources, the report says.

That consolidation, along with other issues related to the DIB, continue to pose a challenge to DOD, Vice Chairman of the Joint Chiefs of Staff Navy Adm. Christopher W. Grady said today while speaking at the Center for Strategic and International Studies in Washington, D.C. Either the industrial base will need to change, he said, or the Defense Department will need to adapt.

"I think there's at least three characteristics ... that characterize the defense industrial base right now that may have to change or at least that we have to understand and live with. The first is the contraction," he said. "From the mid-80s ... to where we are now, the industrial base has gotten much, much smaller."

At the end of the Cold War in the early 1990s, the U.S. military needed fewer new weapons and munitions. As a result, companies that made up the defense industrial base underwent a great period of consolidation.

The complexity of what the department is looking for today has also increased exponentially, he said, which challenges the DIB in ways different than what it was challenged during World War II, for instance.

"If we were pumping out ... a Liberty Ship every three days during WWII, we're not going to do that with a Virginia Class [submarine] or a [guided-missile destroyer] or similarly, an F-35," he said. "That's just not going to happen."

In recent decades, the DIB, like other industries, has found efficiencies and greater profit by implementing "just-in-time" manufacturing concepts, where only what has been ordered is produced.

"Industry, for all the right reasons ... kind of went to this 'just-in-time' piece of sustainment and logistics as part of the industrial base," he said. "I certainly understand what that means from a profit motivation. But that's a Phase 0 world ... if we use that construct. It's not a Phase 3 world. So, we're going to have to fix that going forward."

As part of DOD's "Joint Operations" publication, "Phase 0" refers, in general, to peacetime, while "Phase 3" refers to a wartime environment.

DOD's recently published National Defense Industrial Strategy lays out four long-term strategic priorities to help build a modernized defense industrial ecosystem and to ensure that the DIB can meet today's challenging national security demands.

Included among those priorities is the building of resilient supply chains; ensuring a ready workforce within the DIB; a focus on flexible acquisition; and, through economic deterrence, promotion of fair and effective market mechanisms to support a resilient defense industrial ecosystem within the U.S. as well as allied and partner nations.

"I think what we want is a defense industrial base ... that's built on competition, where [there are] free flows of capital, that is built on ... strong innovation with a demand signal from us, that has supply chains that are robust and resilient," he said. "It's a defense industrial base that increasingly is going to have to be hardened. It's one that has to build on the larger, writ large industrial base ... what do allies and partners bring to it?"

Grady also said there must be a strong, educated and diverse workforce that is able to run that industrial base.

"Perhaps the most important ... is we must value and encourage the artisans to come to us," he said. "I don't call them workers anymore, because if you look at anything they build, they are artisans of the highest order. Encouraging a resilient workforce is absolutely critical. We talk about national service. That's a form of national service. And you can get paid pretty well doing it. And so, we undervalue that, and I think that's changing, and we need to value that more so that we have the workforce we need."