The mission of the DOD is to provide the military forces needed to deter war and protect the security of our country. The heart of deterrence lies in our inventory of military equipment and human resources, and in the ability to develop and produce new systems in response to national emergencies.
History has shown that at times the industrial base was prepared to support these national emergencies and at other times we were not. In the 1930's the U.S. attempted to stay out of the growing war in Europe by passing the Neutrality Act of 1937. Then the Neutrality Act of 1939 allowed France and Great Britain to buy arms here in the states and ship them overseas on their carriers on a "cash and carry" basis. This kept us directly out of the war and allowed us to support those allied against the Germans. The rapid fall of France in 1940 shocked many Americans and caused President Roosevelt to sign the "Destroyers for Bases" deal in which we exchanged fifty (50) destroyers for 99 year leases on British bases in Europe. Congress later passed the "Lend-Lease Act" in 1941 which allowed the President to lend or lease war material in support of the allies. The Lend-Lease Act made the U.S. "the arsenal of democracy." Factories converted from civilian production to wartime production with amazing speed. Automobile factories converted to making tanks, typewriter companies began making machine guns, a factory that made silk ribbons began making parachutes. Thus when America did enter the war, we entered it with our industrial base on high alert.
The Peace Dividend at the end of WW II caused the demobilization of military forces (over 6 million in the Army alone), and the return to the production of commercial goods by factories that had turned to producing military materials. Under President Truman the U.S. ignored the need for modernizing its aging weapon systems in favor of a "nuclear shield" as the basis for our defense. The outbreak of war on the Korean peninsula found U.S. forces and our allies greatly outnumbered and facing better weapons. President Truman then understood that military preparedness and economic preparedness were inseparable and asked Congress to pass the Defense Production Act of 1950 giving him broad authority to allocate resources and material to the production of wartime goods and giving priority to defense production.
The lifeblood of this military capability is the United States' industrial base. The "industrial base" combines the manufacturing process with the managerial talent which establishes a strong economy and industrial sector to produce weapon systems required to provide for the defense of the country.
What is the industrial base (IB)? The term "domestic defense industrial base" is defined to mean "domestic sources which are providing, or which would be reasonably expected to provide, materials or services to meet national defense requirements during peacetime, graduated mobilization, national emergency, or war." A domestic source is "one performs in the United States or Canada substantially all of the research and development, engineering, manufacturing, and production activities required of such business concern under a contract with the United States relating to a critical component or a critical technology item." The industrial base is composed of prime contractors, together with tiers of subcontractors, with the plant and equipment, processes, material, and skilled workers necessary to develop and produce the hardware required to fulfill the nation's defense program. The industrial base includes government organizations and facilities such as labs, depots, shipyards and any other facility where production could occur.
2.3.2 Today's Environment
A number of problems have degraded the ability of the industrial base to respond to near-term readiness, surge and mobilization problems have resulted in a deterioration of the subcontractor and vendor base which has diminished the likelihood of competition and contributed to the emergence of production bottlenecks.
The decline in aircraft production for example has contributed to industry consolidation. Since 1990 the aircraft industry has seen significant consolidation (Figure 2-2), resulting in lower variety, which may adversely affect technological innovation. Innovation does not occur in isolation, and available knowledge that frames the definition and solution of problems constrains the behavior of firms. Thus, insufficient diversity results in a less resilient industry.
Figure 2-2 Consolidation of the Aircraft Industrial Base
To encourage industry's innovative response to the needs of our Service members, the 2011 National Defense Authorization Act (NDAA) has recommended a number of changes that will impact how the Department of Defense's (DOD) Office of Industrial Policy is organized and funded.
First, the NDAA establishes the position of Deputy Assistant Secretary of Defense for Manufacturing and Industrial Base Policy to reflect the expanded duties of the Industrial Policy office. The inclusion of "manufacturing" in the title ensures that the linkage between "industry" and "manufacturing" is firmly established and effectively coordinated.
Reporting to the Under Secretary of Defense for Acquisition, Technology, and Logistics, the Office of Manufacturing and Industrial Base Policy will expand its current mission to include managing a new Industrial Base Fund used to:
- Support the monitoring and assessment of the industrial base;
- Address critical issues in the industrial base related to urgent operational needs;
- Support efforts to expand the industrial base; and
- Address supply chain vulnerabilities.
The mission of the Office of Manufacturing and Industrial Base Policy is to sustain an environment that ensures the manufacturing and industrial base on which the Department of Defense (DOD) depends is reliable, cost-effective, and sufficient to meet DOD requirements. Manufacturing and Industrial Base Policy is responsible to ensure that DOD policies, procedures, and actions:
- Stimulate and support vigorous competition and innovation in the IB supporting defense; and
- Establish and sustain cost-effective industrial and technological capabilities that assure military readiness and superiority.
Manufacturing and Industrial Base Policy does so by:
- Monitoring industry readiness, competitiveness, ability to innovate, and financial stability as the Department moves to capabilities-based acquisitions in an era of increasingly sophisticated systems;
- Leveraging DOD research and development, acquisition, and logistics decisions to promote innovation, competition, military readiness, and national security;
- Leveraging statutory processes and promoting innovation, competition, military readiness, and national security; and
- Leading efforts for the Department to engage with industry to ensure openness and transparency with the goal of increasing effective public-private partnerships.
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