How to ensure the defense-industrial base and supply chain resiliency

How to ensure the defense-industrial base and supply chain resiliency

Time Stamp: September 19, 2023 9:00 AM
Source Node: 2889094

The U.S. Department of Defense needs to transform its industrial base management approach from reactively dealing with challenges as they arise toward a posture of consistent proactivity and management for resiliency.

Policies such as managing surge as an independent critical capability, adding resilience to the evaluation criteria for contractors, and routinely including the industrial base and surge in required wargames will reinforce and secure the supply chain reset initiated by the one-two punch of the COVID-19 pandemic and the lack of surge capacity as revealed by Russia’s war in Ukraine.

Concerns about the ability of the U.S. defense-industrial base to support potential conflict in the Indo-Pacific region should put this at the top of the agenda for DoD policymakers and Congress.

The conflict in Ukraine has offered key lessons about the importance of the defense-industrial base and the challenges of surge. There are a number of real and measurable efforts underway across the DoD to strengthen the industrial base, including investments in key areas like critical minerals, and using tools like multiyear procurements, which Congress has approved for 17 different munitions in the fiscal 2023 National Defense Authorization Act. These systems range from 155mm artillery rounds and the Guided Multiple Launch Rocket System, which have been used to great effect in Ukraine, to the Joint Air-to-Surface Standoff Missile and the Standard Missile-6, which will be important in an Indo-Pacific conflict.

These policies and investments are important, but not sufficient to strengthen the industrial base for the future. The good news is that there are efforts that can help and tools that can be used to support the resilience of the industrial base — even after current conflicts are in the past. We have several recommendations for actionable policies that could contribute to the long-term health and resiliency of the industrial base.

The first proposal is a policy to invest in surge capacity for weapon systems as an independent activity, separate from the acquisition and sustainment of the systems themselves. Currently, industry has strong incentives to be as lean as possible, eliminating manufacturing slack and making it nearly impossible to surge. Requiring programs to assess industrial capacity, including surge potential, will allow the government and industry to work together to fund investments to increase resiliency and perhaps identify lower-cost approaches to surge with new manufacturing techniques or enhanced automation.

The programs would need to establish or expand their supply chain management capabilities (personnel and tools) to ensure a concentrated effort for this outside of the normal acquisition and sustainment functions. This would also require Congress to authorize and fund this capability. The challenge will be to maintain leadership support over decades for a system that will not be consistently producing output.

The second proposal recognizes that the DoD connects to the industrial base through acquisition and program management, which is judged using the metrics of cost, schedule and performance. Notably, this does not include issues of supply chain management or broader issues of industrial base resiliency, including surge capacity. If “resilience” is added as a fourth metric, this will create incentives for industry to invest in that area.

One of the challenges is transparency into the supply chain, which can be as difficult for contractors as it is for the government. The identity of subcontractors can be considered intellectual property, which industry is not willing to share. The government would need to develop fair and data-driven metrics to assess resilience if it is going to judge contractors on it, and would need to train the acquisition workforce to ensure proper evaluation.

An additional challenge may be the DoD’s recognition of the balance between cost and industrial base resiliency over the life cycle of a program. While a healthy and resilient supply chain may lead to short-term cost increases, overall life-cycle costs will be lower.

A third proposal is to require Title 10 wargames focused on the industrial base and supply chains to ensure warfighters understand these risks. Service chiefs typically come out of the warfighting community, not the acquisition community, which can limit their understanding of the role a robust industrial base plays in both deterrence and in actual warfighting. These games may yield useful insights and policies for managing the industrial base and supply chains from a different perspective. They will also bring home the fact that “the tail is the tooth” and that the ability to fight wars depends on a strong industrial base.

Much like the operational plans that are developed to ensure military readiness for particular conflicts, the department should have comparable industrial base readiness plans that ensures those operational plans can be executed effectively.

The tragedy of Russia’s war in Ukraine is real, but taking insights from the war is absolutely necessary. The importance of a robust and resilient industrial base stands out as a key lesson. It is far better for the DoD and congressional leadership to act on these lessons now rather than waiting for a conflict in which the United States is directly engaged.

Cynthia R. Cook is the director of the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies think tank, where she is also a senior fellow with the International Security Program. Christine Michienzi is a former senior defense official and is now the owner of MMR Defense Solutions LLC as well as a nonresident senior associate at CSIS.

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