The Pentagon has unveiled the USA’s first-ever national strategy to specifically address the country’s defence industrial base.

Revealed on 11 January, the National Defense Industrial Strategy (NDIS) will be overseen by Laura Taylor-Kale, the first-ever assistant US secretary of defense for industrial policy.

Taylor-Kale assumed the newly created position in March 2023 and oversaw the creation of the first NDIS. Before joining the Pentagon, she studied strategic innovation and industrial policy at the Washington, DC think-tank Council on Foreign Relations and served in the US Department of Commerce under the Obama administration.

Speaking at the Center for Strategic and International Studies on 11 January, Taylor-Kale said the NDIS outlines what Washington can do to create a “modernised, innovative [and] resilient” defence industry that can meet both current and future threats.

Beglian F-35 in factory

Source: Lockheed Martin

The Pentagon’s new National Defense Industrial Strategy hopes to address significant challenges that arose within critical manufacturers following the Covid-19 pandemic, including lack of critical inventory and labour shortages, and a slow-to-adapt government acquisition process

To achieve that, the NDIS lists four strategic priorities for investment: resilient supply chains, workforce readiness, flexible acquisitions and economic deterrence.

“This National Defense Industrial Strategy will guide the department’s engagement, policy development and investment in the industrial base over the next three to five years,” Taylor-Kale says.

She notes the four areas of focus were generated based on conversations with domestic suppliers, foreign partners and military officials within the Pentagon.

Supply chain and workforce challenges have proven to be a major hurdle at some of the USA’s largest defence manufacturers, including RTX and Boeing, as the US economy emerged from the Covid-19 pandemic.

While the strategy focuses on the short- and medium-term time horizon, Taylor-Kale says the NDIS aims to achieve a “generational change” in how US companies produce defence products – and how the Pentagon buys them.

“There is a lot that is part of the current state of the industrial base that’s really [the result of] decades of business and policy decisions,” she notes. “We can’t make those changes over one or two years.”

One major change for industry will be a shift away from the just-in-time delivery practices that were popularised in the later decades of the 20th Century. The strategy sought to cut costs by minimising excess inventory and the associated warehousing costs.

The NDIS makes official a sentiment that was signaled by the Pentagon’s top acquisitions official almost a year ago.

“To meet the pacing challenge of China, there needs to be a shift away from the just-in-time mindset as it relates to sustainment and procurement,” US undersecretary of defense William LaPlante said in March 2023 at an industrial conference in Washington, DC.

Defence industry executives indicated as early as July 2022 that rates of munition consumption observed in the Ukraine-Russia war far outpaced the production capacity of US companies.

Under the NDIS, the Pentagon will now seek to incentivise both prime contractors and lower tier suppliers to expand the domestic production of critical components, add manufacturing capacity and build out stockpiles to decrease short-term risk.

When it comes to changing its own acquisition practices, which have long been accused of adding to both costs and delivery timelines, the Pentagon will also be making changes.

Some prescriptions outlined in the NDIS have already been underway, including a greater emphasis on using off-the-shelf technologies and retaining greater intellectual property ownership for the government.

However, the Pentagon says it will also consider more substantive “policy reform of contracting strategies” and stronger requirements to reduce “scope creep”, where an acquisition programme’s goals and requirements change during development.

This effort will also include changes to the Foreign Military Sales process, with an eye toward reducing acquisition timelines for overseas partners.

Making gains in the areas of supply chain resilience, workforce readiness and defence acquisitions will, according to the Pentagon, feed into the fourth goal of economic deterrence.

“The NDIS recognises that America’s economic security and national security are mutually reinforcing and, ultimately the nation’s military strength cannot be untethered from our overall industrial strength,” LaPlante said.

Or as stated in the new strategy document itself, the Pentagon hopes to “sow doubt in the mind of potential aggressors” based on the strength of US industrial capacity.