NS3040 Fall Term 2018 Defense Industrial Base https://www.relooney.com/NS3040/US-Defense-Industrial-Base.PDF

Overview September 2018 report documents gravity of situation facing the defense industrial base Evaluates seven tiers deep into the supply chain Documents more than 280 supply chain vulnerabilities and finds Alarming dependency on foreign nations Particular problems with regard to China Report finds a targeted approach involving Funding Policy Legislation Regulation Could combat these declines and significantly contribute to outlook for American defense production

Problems Identified I Many problems identified in report have been recognized for years Foreign dependencies abound within the supply chain especially at sub-tier levels of component or raw material manufacturing Even when U.S. military not entirely dependent on a foreign source for these supplies that source is often A sole or single source Fragile or Only remaining producer of the material

Problems Identified II Report identifies factors that have weakened the defense industrial base such as industrial policies of competitor nations China has used illegal means to dominate critical global markets through Espionage Evasion of export controls Market access restrictions Subsidies and Dumping

Macro Forces Driving Risk into America’s Industrial Base Five macro forces are driving risk into America’s industrial Base Sequestration and uncertainty of U.S. government spending Decline of U.S. manufacturing capabilities and capacity Harmful U.S. government business and procurement practices Industrial policies of competitor nations Diminishing U.S. STEM (science, technology engineering and math) and trade skills

Risks threatening America’s manufacturing and defense industrial base Sole source Single source Fragile supplier Fragile market Capacity constrained supply market Foreign dependency Diminishing manufacturing sources and material shortages Gaps in U.S. based Infrastructure Product security

Recommendations I Recommended Areas for Action First, creation of a national industrial policy to support national security efforts Previous efforts underfunded with limited powers Had no power over major program officers who tended to pursue low-cost globally options – often from unreliable foreign supplies Second, report encourages use of direct funding to target and support critical sectors of the supply chain Although programs already exist – Defense Production Act Title III – need additional resources to make significant changes in the industrial base.

Recommendations II Third, additional efforts in education as to the magnitude and scope of the current vulnerabilities Fourth, cooperation with allied nations to address workforce shortages and joint industrial challenges Fifth, though not explicit in report – acquisition process reform to reduce challenges for innovative manufacturers With red tape and Uncertain funding Driving many potential suppliers away