In the third issue of the Arms Export magazine , Maxim Volkov's review of the first National Defense Industrial Strategy of the United States (National Defense Industrial Strategy) was published. The bmpd blog publishes the text of the article.
An apprentice mechanic operates a 3D printer at the Center for Advanced and Additive Manufacturing in Rock Island, Illinois, July 14, 2023 (c) Kendall Swank / U.S. Department of Defense
The US Department of Defense officially presented the National Defense Industrial Strategy on January 11, 2024. [1] The new document establishes the principles of the development of the US defense industry for the next 3-5 years, defines its main vectors and necessary actions, targets and expected results, as well as the risks of non-fulfillment of the tasks outlined in the strategy. This strategy should be considered in the context of other strategic documents adopted by the administration of President Joseph Biden in the fall of 2022, in particular the US National Security Strategy, including the Nuclear Policy Review and the Missile Defense Review [2] . These documents are top-level for the defense industrial strategy, since they define the hierarchy of challenges and threats to US national security, the order of response to them and the military-political tools for dealing with threats. The National Security Strategy prioritizes strengthening the defense industry, "... so that the US armed forces, their partners and allies have the full range of opportunities to realize an advantage over potential adversaries" [3] .
At the same time, the authors of the document, as well as commentators and experts of the US defense industry community, especially note that the National Defense Industrial Strategy is the first independent document of its kind at the highest level dedicated to the development of the military-industrial complex [4] . The Pentagon regularly issues many public documents analyzing the situation in the national defense industry in the form of reviews, analytical notes for Congress, but for the first time the vision of the development of the American defense industry is presented in a separate document and brought to the level of strategy. This means not only increased attention to the national defense industry, but also subsequent political and economic steps recorded in specific regulations. The document highlights the following factors that contributed to the emergence of the strategy:
- China's transformation into a global industrial power in all significant industries, including the production of microelectronics and strategic materials, on which dependence for the United States and its allies has been steadily growing in recent decades. At the same time, China, like Russia, is indicated as a strategic enemy of the United States in the coming years (the term "hostile/unfriendly", adversarial states is used in relation to these countries);
- The combination of socio-economic crises of recent years (among which the COVID-19 epidemic stands out in particular) has highlighted the inability of the United States to meet current and future needs for various industrial products and components important for national defense, serious dependence on many foreign manufacturers, as well as the vulnerability of supply chains;
- The beginning of Russia's special military operation in Ukraine in 2022, the Hamas attacks on Israel in 2023, followed by an armed response in the form of an Israeli operation in Gaza, required a US response in the form of accelerated military supplies of large amounts of weapons and ammunition [5] .
As indicated in the document, the importance of the US National Defense Industrial Strategy is, recognizing the mutual link between economic power and military potential, to identify and prioritize the development of the defense industry with the elimination of potential gaps and risks in the creation of advanced weapons systems and sustainable supply of the armed forces of the United States and its allies. Given the rapidly changing "strategic landscape" and the increasing military, economic and technological power of potential adversaries, the United States must maintain the military and technological advantage achieved after the end of the cold War. It is precisely this that is the basis for maintaining a world order beneficial to the United States in the near foreseeable future. The most important task of the US Department of Defense as a regulator of the military-industrial sphere is to strengthen and develop supply chains of raw materials, products, components and materials that are resistant (to any external influences) in the interests of arms manufacturers and customers of military products.
The strategy offers four main directions for achieving the top-level goal: supply chain sustainability, staff training, flexible procurement system and economic deterrence. Each direction is divided into a separate section, where it is divided into smaller tasks and specific steps to complete them. In addition, the expected results and risks acquired in case of non-fulfillment are prescribed in the directions. The development of these areas, according to the authors of the strategy, should form a military-industrial ecosystem that is resistant to changes in the modern world, the competitive influence of hostile powers, as well as forming the potential for economic deterrence of US opponents. This ecosystem includes a large number of stakeholders, such as the executive and legislative authorities of the United States, government agencies and departments, government production, logistics, financial and other infrastructure serving the defense industry, defense companies, scientific organizations, small private companies, venture funds, and foreign partners.
The document as a whole is very concise, abstract in nature, without providing any analytics, figures or other factual information. The designated results of the implementation of the strategy are also not digitized, not marked by responsible persons and not linked to a timeline. As noted by Halima Najib-Lok, Deputy head of the Military Department for Defense and Industrial Policy, this strategy is an "attempt to balance between points of tension", which can rather be called a "call to action" with a set of recommendations for creating a competitive defense sector in the 21st century [6] .
Sustainability of supply chains
The rapid and difficult-to-predict changes in the international situation, expressed by the growth of crises, interstate and internal armed conflicts with subsequent rapid escalation, pose tasks for the US defense industry complex to maintain a steady supply of its own and allied armed forces. As examples, the document cites conflicts in Ukraine, the Middle East and potential "hot spots" in East Asia, which require the United States to quickly supply weapons and ammunition in increasing quantities. This, in turn, poses a serious challenge to the current American industrial capacities and the chain of subcontractors at all technological stages of the creation of weapons systems. Taking into account these challenges, the strategy defines the most important tasks for the military-industrial ecosystem: to maintain the existing industrial base (the document repeatedly notes its current degradation), to develop sustainability, rapid adaptability to a changing external environment, to strengthen technological independence from hostile states, to involve new players in the chain (including "non-traditional" contractors from small and medium-sized businesses) [7] . The following steps are suggested as steps to complete these tasks:
- Stimulating the industry to increase investments in modernization and creation of additional production facilities for the production of spare parts and components for current models of equipment and weapons, taking into account the increasing demands of the US army and the international market.
- Measures for a sharp replenishment of stocks of strategic materials and raw materials necessary for the production of weapons, spare parts and finished products; ensuring full independence from States called hostile in the strategy. In the spring of 2023, a Joint Production Accelerator Cell was created in the structure of the procurement department of the US Department of Defense, whose main task is to rapidly increase the production of weapons that are urgently needed in the current situation (for example, the supply of MANPADS, anti-tank missiles or 155 mm shells to Ukraine), through the introduction of advanced production methods, direct investments in capital expenditures of manufacturing companies, optimization of production chains [8] . This management measure is aimed at accelerating decision-making, full control of supply chains and, if necessary, manual management of any bureaucratic delays.
- Maintaining a national program for the creation of advanced technologies and their applications in the defense sector (robotic and autonomous systems, artificial intelligence, quantum computing, new materials, etc.). The development of this area requires close cooperation with research organizations, "non-traditional" contractors [9] from the knowledge-intensive sector of fast-growing small and medium-sized enterprises, non-defense government agencies. New management structures are being created (for example, the Department of Defense Innovation - Defense Innovation Unit) within the Ministry of Defense to coordinate interaction between the commands of the US armed forces and market participants in the field of technology [10] . In addition, the Pentagon plans to capitalize state-owned enterprises that produce and store defense products in order to increase production capacity and the ability to quickly respond to explosive demand.
- Diversification and expansion of the Pentagon's contractor pool through new names in the defense business. The document especially notes that the technological superiority of the United States during the Cold War and to the present has been achieved largely thanks to private innovative companies, which are still determining trends in all breakthrough market directions. However, the vast majority of small and medium-sized enterprises are not contractors of the Pentagon [11] . At the same time, such companies, being involved in procurement programs and competitions of the US Department of Defense, can introduce new technological and managerial approaches and strengthen competition in the defense sector, the document says. The Pentagon will focus on attracting "non-traditional" contractors from among knowledge-intensive SMEs, primarily by reducing entry barriers (increased cybersecurity measures for operational activities in projects, excessive bureaucratic barriers) for such companies, attracting mentors and curators to accelerate the adaptation of SMEs to the defense ecosystem.
- Improving the efficiency of data analytics collection to monitor all key parts of the supply chain (from raw materials to the final product). The purpose of these measures is to improve the manageability of supply chains and reduce the likelihood of risks of disruption in them and non-fulfillment of defense contracts in the end. At a time when the Pentagon's supply chains are becoming more global, and the degree of participation of national contractors has been decreasing in recent years, these measures seem extremely relevant [12] . In order to strengthen the reliability of the supply system of raw materials and components, it is proposed to continue the policy of international military-industrial integration and cooperation in the future, both within the framework of existing alliances and blocs (NATO, AUKUS), and through the conclusion of bilateral interstate agreements (both with Japan and the Republic of Korea)ru/C:/Users/%D0%A2%D0%B8%D0%BC%D0%BE%D1%84%D0%B5%D0%B9/Downloads/%D0%92%D0%BE%D0%BB%D0%BA%D0%BE%D0%B2_%D0%9E%D0%B1%D0%BE%D1%80%D0%BE%D0%BD%D0%BD%D0%BE-%D0%BF%D1%80%D0%BE%D0%BC%D1%8B%D1%88%D0%BB%D0%B5%D0%BD%D0%BD%D0%B0%D1%8F%20%D1%81%D1%82%D1%80%D0%B0%D1%82%D0%B5%D0%B3%D0%B8%D1%8F%20%D0%A1%D0%A8%D0%90_%D0%A2%D0%91+%D0%9A.docx#_edn13" target="_blank" rel="nofollow">[13] .
- Improvement of the system of intergovernmental foreign military sales Foreign Military Sales (FMS). The supply of weapons abroad is a key tool for maintaining American military and political power in the world. The global influence of the United States depends on the ability to provide allies and partners with modern defense capabilities in a timely manner. In this regard, the strategy requires the national system of military-technical cooperation to improve the planning of the Allies' needs for advanced weapons systems for timely delivery and maintenance of their capabilities.
Staff training
The strategy pays great attention to the state of the workforce in the US industrial sector, since the shortage of qualified workers, scientific and engineering personnel directly affects the working condition and efficiency of the military-industrial complex. This trend is associated with the retirement of the "baby boomer" generation (born in the late 1940s - early 1960s) and the unpopularity of working and engineering professions among the younger generation of Americans. The US Department of Defense sets the task of restarting the system of training qualified workers for the military-industrial complex through the following actions:
- Stimulating investments by defense companies in the development of human capital (training and advanced training) in accordance with the growing technological requirements for production. Including with the help of already established institutions (for example, the Institutes of Industrial Innovation of the US Department of Defense, Manufacturing Innovation Institutes) through the financing of educational programs (including in the formats of public-private partnerships with companies) and with the involvement of universities.
- Investments in new skills and knowledge needed by employees of promising industries. In 2020, the National Imperative for Industrial Skills was established to help companies, government defense organizations, and local communities deal with the challenges posed by labor shortages in the military-industrial complex. With an annual budget of about $300 million, this initiative invests in educational programs and courses, social work and raising the status of industrial workers and engineers, and adapting workers to new production requirements. Another initiative is the Manufacturing USA Network [14], an association of seventeen organizations (universities and colleges, public institutions and groups) engaged in the development of educational projects in the field of mathematics and natural sciences (internships, training programs, the creation of training centers, etc.) for employees of defense enterprises on grants from the Ministry U.S. Defense Department.
- Involving students and graduates of colleges and universities, veterans of the armed forces in internships and production practices at enterprises of the military-industrial complex and state military infrastructure with the opportunity to obtain additional special qualifications. The goal is to attract young talented and motivated people to the defense ecosystem.
- Support for initiatives aimed at popularizing work in the industrial sector, primarily among university youth.
- Encouraging the practice of attracting labor from various "non-traditional" hiring communities, expanding the ethnic and gender diversity of human resources in the defense ecosystem. The document pays special attention to the need to stimulate "human diversity" in the defense sector as a source of new ideas and approaches to management, innovation in technology [15] .
Flexible purchasing system
The policy of purchasing weapons and military materials is closely linked to the vision of the prospects for the development of the defense industry, the priorities that the customer (the Pentagon) determines, financial instruments and requirements (restrictions) in state contracts. In the strategy for the formation of purchases of defense products, it is proposed to seek a balance between delivery times, production efficiency and satisfaction of the customer's technical requirements. This section provides for the following actions of the US Department of Defense as the main customer and regulator of the military-industrial ecosystem:
- Expanding the operational compatibility of combat platforms and easing the requirements for standardization in their production. In particular, it is proposed to make wider use of the principles of open architecture, including modularity (use of embedded equipment) in the design of end products. To apply standards from the civilian industry more widely in the production of weapons - for the interchangeability of production processes and individual components of the final product, thereby increasing production efficiency and reducing the cost of products. The Ministry of Defense will increase investments in R&D required by manufacturers to integrate various platforms and optimize the production of end products. The principle of modularity in the design and manufacture of weapons systems and the simplification of standards for the integration of various systems should, according to the authors of the strategy, attract new "non-traditional" companies to the defense industry, primarily from among SMEs. At the same time, we are talking not only about the integration of platforms created by American companies, but much more broadly - for the development of cooperation with foreign manufacturers of weapons systems from allied and partner states of the United States. Thus, the Pentagon's resources will strengthen the stability of the defense ecosystem at the expense of foreign production and intellectual resources.
- The use of ready-made civilian (commercial) platforms in procurement for military purposes, where possible and appropriate, from microelectronics to transport and robotic systems. The strategy notes that civilian platforms (products) have a great advantage for purchases by the defense department, since they are cheaper than military products (taking into account the costs already incurred by manufacturers for designing and creating production equipment based on greater demand in the commercial market, many times higher than military orders) and carry significant innovative potential. In addition, the Pentagon may order foreign commercial platforms from allied countries with significant industrial and scientific potential, which will seriously spur competition and ultimately have a beneficial effect on the supply and pricing of the contract. The strategy consistently focuses on attracting new contractors, using civilian technological solutions, and attracting foreign suppliers.
- Obtaining access by the US Department of Defense to intellectual property and data on copyright holders in defense products being created in order to reduce risks and costs in managing the lifecycle of purchased weapons and military equipment. As an effective tool, the modularity and open systems approach is proposed, which combines an open architecture (the possibility of embedding equipment from third-party manufacturers), open source and free licenses. The current situation, when the cost of licenses for a military product or application (in the case, for example, with IT products) is often several times higher than the cost of similar products for the civilian market, of course, does not suit the Pentagon.
- Development of advanced weapons procurement strategies in order to strengthen the state of the national defense industry. Clear priorities in the Pentagon's arms procurement policy, as well as long-term contracts with industry, will facilitate capital investments in production facilities and R&D, investments in personnel, in the purchase of raw materials and components from businesses. The larger the project, the longer the planning horizon for developers and investors. It is important for a business to understand the demand from the main customer in order to calculate its risks and make investment decisions. The strategy suggests wider use of such a risk-sharing tool as public-private partnership, where long-term contracts and guarantees of demand should be provided by the US Department of Defense, and investments, effective management, speed, and creativity of the proposed solutions should be provided by business. Procurement procedures should be as transparent and long-term as possible with a minimum number of bureaucratic barriers and expensive costs/requirements for contractors. Such conditions should attract SME companies and new, "non-traditional" contractors.
- Improving the efficiency of management of the mobilization production reserve. The national defense ecosystem, as indicated in the strategy, should be as adaptive as possible to rapid changes due to increased threats of armed conflict and a large-scale increase in weapons production. Mobilization planning should take into account the specifics of the work of the state customer with private contractors and all available military-industrial infrastructure.
