The first-ever National Defense Industrial Strategy (NDIS) was released last week by The United States Department of Defense (DoD).  THE NDIS “offers a strategic vision to coordinate and prioritize actions to build a modernized defense industrial ecosystem.”  Details here.

DOD Releases First-Ever National Defense Industrial Strategy

The Department of Defense today released its inaugural National Defense Industrial Strategy (NDIS), which will guide the Department’s engagement, policy development, and investment in the industrial base over the next three to five years. Taking its lead from the National Defense Strategy (NDS), this strategy will catalyze generational change from the existing defense industrial base to a more robust, resilient, and dynamic modernized defense industrial ecosystem.

While the NDS identifies risk to the industrial base, it also guides the Department to solutions. Recognizing that the defense industrial base must provide the required capabilities at the speed and scale necessary for the U.S. military to engage and prevail in a near-peer conflict, the NDIS strategy calls out challenges, solutions, and risks of failure concisely. The strategy offers a strategic vision and path along four strategic priorities: resilient supply chains, workforce readiness, flexible acquisition, and economic deterrence. This proposed pathway to modernize the defense industrial ecosystem also recognizes that this effort cannot be a Department of Defense-only solution, repeatedly emphasizing cooperation and coordination between the entire U.S. government, private industry, and international allies and partners.

About the Office of the Assistant Secretary of Defense for Industrial Base Policy (OASD(IBP))

The OASD(IBP) works with domestic and international partners to forge and sustain a robust, secure, and resilient industrial base enabling the warfighter, now and in the future.

The full NDIS and a fact sheet are available at: https://www.businessdefense.gov/NDIS.html

What Next?

NDIS Strategic Priorities

Resilient supply chains that can securely produce the products, services, and technologies needed now and in the future at speed, scale, and cost.

a) To address this priority, the DoD will incentivize industry to improve resilience by investing in extra capacity; manage inventory and stockpile planning to decrease near term risk; continue and expand support for domestic production; drive investment in the organic industrial base and production accelerators; diversify the supplier base and invest in new production methods; leverage data analytics to improve sub-tier visibility to identify and minimize strategic supply chain risks and to manage disruptions proactively; engage allies and partners to expand global defense production and increase supply chain resilience; and improve the Foreign Military Sales process.

b) The risks of not achieving resilient supply chains include supply and materiel shortfalls; diminished surge capacity; supply chain vulnerability; and falling behind pacing challenges identified in the NDS.

Workforce readiness will provide for a sufficiently skilled, and staffed workforce that is diverse and representative of America.

a) To address this priority, DoD will work to prepare the workforce for future technological innovation; continue targeting critical skill sets in science, technology, engineering, and math; increase access to apprenticeship and internship programs; and reduce stigmatization of industrial careers while expanding recruitment of non-traditional communities.

b) Insufficient workforce readiness could lead to the inability to successfully onshore critical manufacturing; the inability to compete globally; reduced productivity throughout the full supply chain; and limited innovation.

Flexible acquisition will lead to the development of strategies that strive for dynamic capabilities while balancing efficiency, maintainability, customization and standardization in defense platforms and support systems. Flexible acquisition strategies would result in reduced development times, reduced costs, and increased scalability.

a) To address this priority, DoD will work to broaden platform standards and interoperability; strengthen requirements to curb “scope creep;” prioritize off-the-shelf acquisition where applicable and reasonable; increase DoD access to intellectual property and data rights to enhance acquisition and sustainment; consider greater use and policy reform of contracting strategies; continue to support acquisition reform; and update industrial mobilization authorities and planning to ensure preparedness.

b) Flexible acquisition planning will allow the DoD to work with a broader set of industry partners and balance the tension between the need for customization and adopting, where appropriate, industry standards. While some level of customization is necessary to meet specific mission requirements and stay ahead of potential adversaries, there are risks associated with excessive customization that hinder the development of a modern industrial ecosystem. Thus, COTS approaches versus customized systems must be balanced to meet warfighter requirements at speed and scale. Failure to balance these risks strategically can significantly hinder the delivery of critical capabilities. Other risks of failure include limited scale; high costs and lengthy development times; technology obsolescence; diminished industrial base resilience; sustainment and logistics challenges; reduced operational effectiveness; and increased technological risk.

Economic deterrence will promote fair and effective market mechanisms that support a resilient defense industrial ecosystem among the U.S. and close international allies and partners and economic security and integrated deterrence. As a result of effective economic deterrence, fear of materially reduced access to U.S. markets, technologies, and innovations will sow doubt in the mind of potential aggressors.

a) To address this priority, DoD will work to strengthen economic security agreements; enable international interoperability standards through active participation in standardssetting bodies; fortify alliances to share science and technology; strengthen enforcement against adversarial ownership and against cyberattacks; and strengthen prohibited sources policies to protect the DIB from adversarial intrusion.

b) Failing to deter adversarial entities could generate critical economic, supply chain, and infrastructure vulnerabilities; increased costs and reduced defense budgets; a weakened industrial ecosystem; intellectual property theft and adversarial capital IP control; degraded technological edge, innovation, and quality; and eventually lead to the loss of trust and reputation with international partners.

Additional OODA Loop Resources

The Inevitable Acceleration of Reshoring and its Challenges: The momentum towards reshoring, nearshoring, and friendshoring signals a global shift towards regional self-reliance. Each region will emphasize local manufacturing, food production, energy generation, defense, and automation. Reshoring is a complex process, with numerous examples of failures stemming from underestimating intricacies. Comprehensive analyses encompassing various facets, from engineering to finance, are essential for successful reshoring endeavors. See: Opportunities for Advantage

Russian Invasion of Ukraine: Russia’s aggression against Ukraine prompts global repercussions on supply chains and cybersecurity. This act highlights potential threats from nations like China and could shift defense postures, especially in countries like Japan. See: Russia Threat Brief

Israel and Gaza: The horrors of war in the region are also giving rise to uncertainty in markets, but for now it seems the war will not spread throughout the Middle East. There were many initiatives between Israel and Arab/Persian nations that have been stalled due to the war.

Economic Weakness in China: China’s economy faces dim prospects exacerbated by disasters, COVID-19, and geopolitical tensions. Amid limited financial transparency, some indicators suggest China’s economic growth is severely stunted, impacting global economic stability. See: China Threat Brief

Networked Extremism: The digital era enables extremists worldwide to collaborate, share strategies, and self-radicalize. Meanwhile, advanced technologies empower criminals, making corruption and crime interwoven challenges for global societies. See: Converging Insurgency, Crime and Corruption

Food Security and Inflation: Food security is emerging as a major geopolitical concern, with droughts and geopolitical tensions exacerbating the issue. Inflation, directly linked to food security, is spurring political unrest in several countries. See: Food Security

Demographic Time Bomb: Industrialized nations face demographic challenges, with a growing elderly population outnumbering the working-age demographic. Countries like Japan and China are at the forefront, feeling the economic and social ramifications of an aging society. See: Global Risks and Geopolitical Sensemaking