Assessing the Health of the Defense Industrial Base

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This week, the Department of Defense is scheduled to send the White House a long-awaited comprehensive interagency assessment on the health of the defense industrial base, identifying areas where efforts must be taken to strengthen domestic manufacturing capabilities and highlighting materials on which the U.S. is dependent upon China. Responding to an Executive Order issued by President Trump last summer, the report promises to shake up the way DoD has managed supply chain vulnerabilities for the past decade.

“What comes up and is quite alarming … is we have an amazing amount of dependency on China,” Under Secretary of Defense for Acquisition and Sustainment Ellen Lord recently told an audience at a defense industry forum. “[They] are sole sources for rare earth minerals, some energetics, different things. This is a problem for us as we move forward.”

Frankly, this is old news. A 2013 report from the Alliance for American Manufacturing, Remaking American Security, broke new ground by examining more than a dozen different defense industrial base sectors, identifying vulnerabilities to disruption, and recommending mitigation strategies. Some of the report’s warnings were heeded, some of the recommendations were accepted by policymakers, and some of the risks were reduced. However, the lack of urgency to address the problem has lingered amidst a rapidly changing world.

Still, the undersecretary’s remarks are among the clearest signals to date that previous DoD complacency has changed to bipartisan concern – and that its looming study will lay out clear plans to mitigate them.  

There is bipartisan support for this effort, but Washington’s approach to this has been unfocused. The House and Senate armed services committees, for instance, haven’t paid nearly enough attention to the maintenance of our defense industrial base, let alone its expansion. They have often instead chipped away at the domestic content requirements that ensure the survival of small- and medium-sized manufacturers whose workers arm our troops. Finding cost savings within a complex bureaucracy is important, but the balance often seems to tilt towards a greater reliance on foreign products as a solution.

Meanwhile, the vulnerabilities in our readiness are truly myriad.

To begin, consider cyber risks, which are perhaps the most immediate and least understood. The Internet of Things upon which our economy, homeland security infrastructure, and defense systems increasingly depend is not only a web of capabilities but susceptibilities. We are just now realizing the scope of the threat, much less doing anything about it. The just-released report from the U.S.-China Economic and Security Review Commission (Supply Chain Vulnerabilities from China in U.S. Federal Information and Communications Technology) highlights a critical sector that is vulnerable to Chinese disruption. Now that it has been acknowledged and accepted, we must follow-up with a detailed review of our supply chains in other important defense and homeland security infrastructure sectors.

Next is the painstaking process of actually mitigating the vulnerabilities of those supply chains. Just last month, for example, DoD banned the sale of cell phones made by Chinese tech giants Huawei and ZTE in military exchanges worldwide. This is a welcome though woefully tardy acknowledgment that such devices put our globally deployed soldiers at risk of being tracked by Chinese back-doors in the phones themselves. Elsewhere, Congress is reviewing investment restrictions of Chinese takeovers of key technology, and President Trump has imposed tariffs on imported steel and aluminum to shore up our production capabilities against a backdrop of predatory trade that has decimated the industry. Again, all are positive steps, but more needs to be done, in a comprehensive whole-of-government manner, to sustain and strengthen America’s capabilities.

Following that comes the incorporation of mitigation strategies into our strategic planning. That will mean an end to sequestration. When it comes to providing the weapons and equipment for our warriors to defend our country, there is no excuse for privileging profits — or short-term budget relief — over security. It has had a destructive effect on our defense readiness, and in effect has helped create this culture of complacency regarding identifying risks to our defense supply chains.

The most pressing recommendation, however, is that the weapons and equipment upon which our defense and homeland security infrastructure depend should be made in America.

This recommendation only now is beginning to be taken seriously, but it should be a default position; when we complacently allow our most implacable strategic competitors to produce the weapons and equipment we need for our defense, we are ultimately introducing doubt to their readiness. We must not cripple our warriors’ ability to fight future battles before those battles even begin.

In her comments to that defense forum, Under Secretary Lord said the report “will clearly give categories where we are sole-sourced and where we have fragility in the supply chain, and you will also see a round of efforts that we have to repair those fragilities.” I welcome it. A clear-eyed examination at the interagency level of our supply chains was needed yesterday. This report’s release is an important first step. It must then be followed by immediate actions to address the most urgent vulnerabilities. Most important, it must be followed by detailed interagency planning — at the strategic level — to ensure we minimize risks to our defense supply chains’ disruptions in the future.

As we eagerly await the release of the DoD report, let us not lose sight of the fact that our work to secure our defense supply chains is just the beginning.

Brigadier General Adams (Ret., U.S. Army) served more than thirty years in command and staff assignments as an Army Aviator, Military Intelligence Officer, and Foreign Area Officer in Europe, Asia, the Middle East, and Africa. He is president of Guardian Six Consulting.

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