The ability to harness innovative technologies from a growing and competitive supplier base is crucial to national and economic security, according to the DoD
By Mark Shortt
The U.S. Department of Defense is on a mission to strengthen, expand, and diversify its defense industrial base (DIB), with a goal of bringing more small businesses into the fold and leveraging the formidable technological talents and potential of commercial enterprises. One of the best ways to accomplish this, according to the DoD, is to help create an environment in which competition can flourish and spur innovation.
“The Department is renewing its efforts to ensure we can meet the challenges now and into the future. A vibrant, competitive, and diverse defense industrial base will be critical to our success,” said Deputy Secretary of Defense Kathleen Hicks, Ph.D., in a statement accompanying the release of the Defense Department’s report, State of Competition in the Defense Industrial Base.
“As DoD works to innovate, bring new technologies into our supplier base, and develop the workforce of the future, American small businesses and our U.S. industrial base must expand, not only to improve resiliency, but to ensure we are able to meet the needs of our warfighters for tomorrow’s high-tech challenges,” Deputy Secretary Hicks added.
The report provides an overview of factors affecting the competitiveness of the defense industrial base, including vendor consolidation, which drastically reduced the numbers of suppliers in the 1990s and has continued in the last five years, it said. It also outlines actions the DoD is taking to grow the small business vendor base, including ramping up its outreach and engagement with industry and simplifying opportunities to do business with the Department
The DoD said it recently converted its small business website, business.defense.gov, into a single point of entry for small businesses. Companies can now use the website to find toolkits on how to do business with DoD, as well as information on programs and offices that work with small businesses across DoD, according to the report.
“Small business participation in defense procurements as prime and subcontractors is vital to the defense mission, competition, and the health of the defense industrial base,” the report said. “Small businesses spur innovation, represent the majority of new entrants into the defense industrial base, and, through their growth, create a pipeline of the next generation of suppliers with diverse capabilities to support the DoD mission.”
Noting that small businesses are crucial to the nation’s economic prosperity, the report lauded their ingenuity, agility, and capabilities, stating that small companies are “inextricably tied to the nation’s national and economic security.”
“Small companies hire 43 percent of all high tech jobs in the country, produce 16.5 times more patents than large firms, and generate 44 percent of the nation’s economic activity,” according to the report.
High-Priority Manufacturing Sectors
As recent supply chain disruptions have shown, the lack of sufficient domestic manufacturing capacity for critical components, such as semiconductors, is a glaring risk to national security and the economy. The DoD identified five high-priority industrial base sectors that are critical to the nation’s defense and require a high level of supply chain resiliency. The sectors include castings and forgings; batteries and other forms of energy storage; strategic and critical materials; missiles and weapons systems; and microelectronics produced in the United States.
The report said cast and forged products are “used in almost all platforms, most subcomponents, and machine tools and other production equipment.” However, leading companies in the sector have taken advantage of “China’s low labor costs and lax environmental regulations to compete on price.”
“Like many other manufacturing sectors, this area has been subject to industrial espionage and state-backed adversarial capital pressures,” the report stated. “DoD casting and forging business can often be unattractive to firms and investment capital providers because DoD often orders in small quantities, but frequently has highly specialized requirements that most commercial firms cannot afford to equip themselves to fulfill. In the domestic market, these factors have combined to impede innovative product and process development for defense, including the incorporation of new manufacturing technologies.”
The report said that for “DoD needs that are well-aligned with commercial mass production, competition has spurred innovation and helped DoD control prices to some extent by supporting a larger supplier base.” However, the Defense Department has largely been “limited to the same OEMs…served by a constantly shrinking set of small job shop suppliers making razor-thin margins, one contract loss away from bankruptcy.”
The nation’s loss of microelectronics manufacturing to overseas competitors has whittled the domestic microelectronics supplier base down to mainly companies that provide design services. Although access to trusted, domestic suppliers of microelectronics is critical to national and economic security, many large microelectronics manufacturers are unwilling to adopt DoD assurance and security protocols, the report said, further reducing the number of manufacturers that supply microelectronics for use by the Defense Department.
The process of rebuilding domestic capacity to meet U.S. demand for microelectronics will require a “whole-of-government response,” the report said.
Opportunities for Robotics Manufacturers
Former Assistant Secretary of Defense for Nuclear, Chemical, and Biological Defense Programs Andrew Weber recently joined a group of robotics companies, Gain & Co. and HowToRobot, as a board member. In his new role, he will use his expertise in countering global threats to help the companies mitigate global risks to the U.S. manufacturing sector. These risks could stem from labor shortages, supply chain issues, a pandemic, or the kind of geopolitical instability caused by the war in Ukraine.
During a recent virtual press conference, Weber told D2P that he sees numerous opportunities for deployment of robots and automation in the defense sector. The Department of Defense has always been a leader in robotics, he said, and autonomy has been a priority for the U.S. military for about 20 years.
“We’re seeing it play out with some of the equipment that we’re supplying to Ukraine,” Weber said. “Also, in the same way that a factory needs to get rid of scut work, we don’t want our soldiers doing menial tasks that can be done through automation. We want our soldiers to concentrate on the higher skilled tasks of a modern military force. And so the defense sector, absolutely, is going to benefit from this amazing revolution that’s going on with robotics and automation.”