2.4 DOD Law/Policy

2.4 DOD Law/Policy
     2.4.1 Acquisition Related Industrial Base Laws, Policies and Guidance
          2.4.1.1 Industrial Base Considerations In Acquisition Plans
          2.4.1.2 DODI 5000.1
          2.4.1.3 DODI 5000.02
          2.4.1.4 Defense Acquisition Guide (DAG)
               2.4.1.4.1 Chapter 2
               2.4.1.4.2 Chapter 4
     2.4.2 Other Related Industrial Base Laws, Policies and Guidance
          2.4.2.1 National Security Objectives For The Industrial Base
          2.4.2.2 National Defense Technology And Industrial Base Council
          2.4.2.3 Analysis Of Technology And Industrial Base
          2.4.2.4 Annual Report To Congress
          2.4.2.5 Periodic Defense Capability Assessments
          2.4.2.6 DODI 5000.60 Industrial Base Capabilities Assessments
          2.4.2.7 Defense Critical Infrastructure Program (DODD 3020.40)
               2.4.2.7.1 What is Critical Infrastructure?
               2.4.2.7.2 What is DCIP?
                    2.4.2.7.2.1 Federal Department
                    2.4.2.7.2.2 Sector-Specific Agency (SSA)
          2.4.2.8 DFARS 207.105 Contents Of Written Acquisition Plans

The requirement for Industrial Base assessments and other activities flows from the Law.  This chapter will look at two specific laws and how they impact:

• PMs on acquisition programs, and
• Service and Agency acquisition offices.

10 USC Chapter 144, Section 2440 directs the Secretary of Defense to prescribe regulations requiring consideration of the national technology and industrial base (NTIB) in the development and implementation of acquisition plans for each major defense acquisition program. A PM is responsible for knowing the capabilities of their industrial base and integrating those considerations in their risk assessments, acquisition planning and program implementation.  Figure 2-3 shows the flow of requirements from law to policy to guidance for the assessment of the industrial base for acquisition programs.

Figure 2-3 Industrial Base Requirements Flow

It is DOD's policy to ensure that defense acquisition systems are responsive.  That is these systems must ensure that advanced technologies are integrated into producible systems and deployed in the shortest time possible.  In addition, the acquisition systems shall recognize the reality of fiscal constraints and to the greatest extent possible the PM must identify the major drivers of the total cost of ownership.  Finally, the PM must provide knowledge about key aspects of a system at key points in the acquisition process. All of this requires an analysis and understanding of their industrial base's capabilities.

Acquisition Strategies must consider Industrial Base capabilities at Milestones B and C.  In addition, the Analysis of Alternatives (AoA) conducted in the Material Solution Analysis phase must include an assessment of manufacturing feasibility which will require an assessment of the industrial base capabilities.  The Technology Development phase requires an evaluation of manufacturing processes, and this also requires an assessment of the industrial base.

The Defense Acquisition Guide (DAG) has several sections that address the need to conduct industrial base assessments and these assessments are required early (pre-Milestone A) and throughout the life cycle of a program.  A simple search of Chapters 2 and 4 of the DAG using a word search on "industrial base" will reveal all of these references. 

Chapter 2.2.9  Notes that the Technology Development Strategy (TDS) should identify and address how industrial capabilities, including manufacturing technologies and capabilities, will be considered and matured during the TD Phase.  Industrial capabilities required to design, develop, manufacture, maintain, and manage DOD products.

Chapter 2.3.9  Notes that the development of Acquisition Strategy (AS) should include the results of an industrial base capability analysis to design, develop, produce, support, and if appropriate, restart an acquisition program. 

Chapter 4.3.2.1  Under the Purpose of Systems Engineering in Technology Development states that one of the SE requirements is to "assess the industrial base to identify potential manufacturing sources."  Similar requirements exists for each of the acquisition phases.

Congress passed the following laws that impact the U.S. industrial base.  U.S. Code, Title 10, Chapter 148 identifies five specific statutory requirements:

• Sets National Security Objectives for the Industrial Base;
• Establishes the Industrial Base Council headed by the Secretary of Defense;
• Establishes a program for the analysis of Technology and the Industrial Base;
• Requires an annual Industrial Base Report to be submitted to Congress; and
• Requires periodic assessments of the Industrial Base.

Section 2501 sets the national security objectives that the U.S. industrial base must be capable of:

• Supplying, equipping, and supporting the force structure of the armed forces;
• Sustaining production, maintenance, repair, logistics, and other activities in support of military operations of various durations and intensity;
• Maintaining advanced research and development activities to provide the armed forces with systems capable of ensuring technological superiority over potential adversaries;
• Reconstituting within a reasonable period the capability to develop, produce, and support supplies and equipment, including technologically advanced systems, in sufficient quantities to prepare fully for a war, national emergency, or mobilization of the armed forces before the commencement of that war, national emergency, or mobilization;
• Providing for the development, manufacture, and supply of items and technologies critical to the production and sustainment of advanced military weapon systems within the NTIB;
• Providing for the generation of services capabilities that are not core functions of the armed forces and that are critical to military operations within the NTIB;
• Providing for the development, production, and integration of information technology within the NTIB; and
• Maintaining critical design skills to ensure that the armed forces are provided with systems capable of ensuring technological superiority over potential adversaries.

Section 2502 established the National Defense Technology and Industrial Base Council which is composed of the following:

• The Secretary of Defense,
• The Secretary of Energy,
• The Secretary of Commerce,
• The Secretary of Labor, and
• Such other officials as may be determined by the President.

The Council is responsible to ensure effective cooperation among departments and agencies of the Federal Government, and to provide advice and recommendations to the President, the Secretary of Defense, the Secretary of Energy, the Secretary of Commerce, and the Secretary of Labor, concerning:

• The capabilities of the NTIB to meet the national security objectives;
• Programs for achieving such national security objectives; and
• Changes in acquisition policy that strengthen the NTIB.

Section 2503 makes the Secretary of Defense responsible for the establishment of a program for analysis of the NTIB with the following functions:

• The assembly of timely and authoritative information;
• Initiation of studies and analyses;
• Provision of technical support and assistance; and
• Dissemination, through the National Technical Information Service of the Department of Commerce, of unclassified information and assessments for further dissemination within the Federal Government and to the private sector.

Section 2504 requires the Secretary of Defense to provide Congress an annual report that includes the following information:

• A description of the departmental guidance;
• A description of the methods and analyses being undertaken by DOD and/or other Federal agencies, to identify and address concerns regarding capabilities of the NTIB;
• A description of the assessments prepared and other analyses used in developing the budget submission of the Department of Defense for the next fiscal year; and
• The identification of each program designed to sustain specific essential technological and industrial capabilities and processes of the NTIB.

Figure 2.4 Annual Industrial Capabilities Report to Congress

Section 2505 requires the Secretary of Defense to prepare selected assessments of the NTIB which should:

• Describe sectors or capabilities, their underlying infrastructure and processes;
• Analyze present and projected financial performance of industries supporting the sectors or capabilities in the assessment;
• Identify technological and industrial capabilities and processes for which there is potential for the NTIB not to be able to support the achievement of national security objectives; and
• Consider the effects of the termination of major defense acquisition programs in the previous fiscal year on the sectors and capabilities in the assessment.

The assessments need to include a discussion identifying the extent to which the NTIB is dependent on items which are produced outside of the United States and Canada and for which there is no immediately available source in the United States or Canada. The discussion on foreign dependency needs to:

• Identify cases that pose an unacceptable risk of foreign dependency, as determined by the Secretary; and
• Present actions being taken or proposed to be taken to remedy the risk posed by the cases identified, including efforts to develop a domestic source for the item in question.

DODI 5000.60 provides policy and identifies responsibilities for assessing defense industrial capabilities. The purpose of the assessment is to ensure that the industrial capabilities needed to meet current and future national security requirements are available and affordable. The industrial base capability assessment will be used to use to determine:

• Whether a specific industrial capability is required to meet DOD needs, is truly unique, and is truly endangered; and, if so,
• What, if any, action the DOD should take to ensure the continued availability of the capability.

Government funds should not be used to preserve an industrial capability unless it is the most cost-effective and time-effective approach to meeting national security requirements. Enclosure 2 to DODI 5000.60 provides criteria for the assessment of endangered industrial capabilities and provides procedures for preserving (funding) the capabilities at the program level and below. The Defense Acquisition Executive (DAE) or the Component Acquisition Executive (CAE), under the authority of the DOD Component Head to which the program is assigned has the authority to approve the use of government funds to preserve a capability with an anticipated cost of less than $10 million annually. Any proposed investment should be accompanied by an industrial capability analysis summary report, with information copies to the Director, Industrial Policy. For all non-ACAT programs, the Head of the Contracting Activity, under the authority of the DOD Component Head to which the item or program is assigned, shall approve decisions to use government funds of less than $10 million. In addition to Enclosure 2, DOD 5000.60-H is a DOD Handbook that details the process for conducting assessments of Defense Industrial Capabilities.

Systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters.

Critical Infrastructure Protection (CIP) consists of actions taken to prevent, remediate, or mitigate the risks resulting from vulnerabilities of critical infrastructure assets. Depending on the risk, these actions could include changes in tactics, techniques, or procedures; adding redundancy; selection of another asset; isolation or hardening; guarding, etc. 

DCIP is an integrated risk management program designed to support DOD Mission Assurance programs. When effectively applied, these programs form a comprehensive structure to secure critical assets, infrastructure, and key resources for our nation. The national defense and economic vitality is highly dependent upon the availability and reliability of both DOD and non-DOD owned critical infrastructure (such as: power, transportation, telecommunications, water supply, etc.). With limited resources to address risk to critical infrastructure, the DCIP relies on continuous analysis of changing vulnerabilities to all types of threats and hazards to effectively manage risk to the nation's most essential infrastructure.  DOD established the Defense Critical Infrastructure Program (DCIP) for coordinating the management of risk to the critical infrastructure that DOD relies upon to execute its missions.

As a Federal department DOD's responsibilities include the identification, prioritization, assessment, remediation, and protection of defense critical infrastructure.  Federal departments and agencies need to work together at a national level to "prevent, deter, and mitigate the effects of deliberate efforts to destroy, incapacitate, or exploit" critical infrastructure and key resources. 

Federal departments are also directed to:

• Ensure homeland security programs do not diminish the overall economic security of the U.S.;
• Appropriately protect the information; and
• Implement the directive in a manner consistent with applicable provisions of law.

As the Sector-Specific Agency DOD has the responsibility to:

• Collaborate with all relevant federal departments and agencies, state and local governments, and the private sector, including key persons and entities in their infrastructure sector;
• Conduct or facilitate vulnerability assessments of the sector;
• Encourage risk-management strategies to protect against and mitigate the effects of attacks against critical infrastructure and key resources; and
• Support sector-coordinating mechanisms:
  • To identify, prioritize, and coordinate the protection of critical infrastructure and key resources; and
  • To facilitate sharing of information about physical and cyber threats, vulnerabilities, incidents, potential protective measures, and best practices.

The USD(AT&L) with the support of the USD(P), needs to:

• Integrate DCIP policies into acquisition, procurement, military construction, and installation guidance. Ensure DCIP-related guidance is developed and implemented that requires that, prior to system fielding or deployment, either commercial system developers remediate or senior-level DOD PM documents a risk management decision for all vulnerabilities identified.   
• Develop policies, make recommendations, provide guidance, and approve science and technology efforts related to DCI. Synchronize these efforts with DHS science and technology efforts.  
• Identify vulnerabilities in technologies relied upon by DCI that are developed, acquired, owned, or operated by the DOD, and develop effective risk response options to emerging vulnerabilities or threats to include cyber threats.   
• Provide guidance to; monitor the activities of; and review, validate, and advocate funding for the Defense Infrastructure Sector Lead Agents for the DIB Logistics, Public Works, and Transportation Sectors. Coordinate such matters with the USD(P) and the Chairman of the Joint Chiefs of Staff, as appropriate.    
• Identify, develop, update, and implement policy and processes into the DOD acquisition contracting process for improved protection of unclassified DOD information regarding controls on unclassified DIB systems and networks as part of DIB CA/IA activities.

Acquisition plans must be correlated with the DOD Future Years Defense Program (FYDP), applicable budget submissions, and the decision coordinating paper/program memorandum, as appropriate.  The acquisition planner needs to coordinate the plan with all those who have a responsibility for the development, management, or administration of the acquisition.  The acquisition plan should be provided to the contract administration organization to facilitate resource allocation and planning for the evaluation, identification, and management of contractor performance risk.

Major defense acquisition programs need to address the following NTIB considerations in their acquisition plans:

• An analysis of the capabilities of the NTIB to develop, produce, maintain, and support such program, including consideration of the following factors related to foreign dependency;
  • The availability of essential raw materials, special alloys, composite materials, components, tooling, and production test equipment for the sustained production of systems fully capable of meeting the performance objectives established for those systems; the uninterrupted maintenance and repair of such systems; and the sustained operation of such systems. 
  • The identification of items that are available only from sources outside the NTIB.
  • The availability of alternatives for obtaining such items from within the NTIB if such items become unavailable from sources outside the NTIB; and an analysis of any military vulnerability that could result from the lack of reasonable alternatives. 
  • The effects on the NTIB that result from foreign acquisition of firms in the United States. 
• Consideration of requirements for efficient manufacture during the design and production of the systems to be procured under the program. 
• The use of advanced manufacturing technology, processes, and systems during the research and development phase and the production phase of the program. 
• The use of contract solicitations that encourage competing offers to acquire modern technology, production equipment, and production systems that increase the productivity and reduce life-cycle costs. 
• Methods to encourage investment by U.S. domestic sources in advanced manufacturing technology production equipment and processes.
• Expanded use of commercial manufacturing processes rather than processes specified by DOD. 
• Elimination of barriers to, and facilitation of, the integrated manufacture of commercial items and items being produced under DOD contracts. 
• Expanded use of commercial items, commercial items with modifications, or to the extent commercial items are not available, nondevelopmental items.
• Acquisition of major weapon systems as commercial items.

Major defense acquisition programs need to address the following Industrial Capability (IC) considerations in their acquisition plans:

• Provide the program's IC strategy that assesses the capability of the U.S. industrial base to achieve identified surge and mobilization goals.  If no IC strategy has been developed, provide supporting rationale for this position. 
• If, in the IC strategy, the development of a detailed IC plan was determined to be applicable, include the plan by text or by reference.  If the development of the IC plan was determined not to be applicable, summarize the details of the analysis forming the basis of this decision. 
• If the program involves peacetime and wartime hardware configurations that are supported by logistics support plans, identify their impact on the IC plan.

In addition, Major defense acquisition programs need to address several special considerations in their acquisition plans. See PGI 207-105(C) for additional information.