September 17, 2019
Defense Primer: The National Technology and Industrial Base
What Is the NTIB?
in the future. The sharp decline in U.S. defense R&D
The National Technology and Industrial Base (NTIB)
spending as a share of global R&D spending from 1960 to
consists of the people and organizations engaged in national
2016, together with the rise of the private sector in driving
security and dual-use research and development (R&D),
innovation, signifies continuing challenges to DOD’s
production, maintenance, and related activities within the
reliance on technology for battlefield advantage. Analysts
United States, Canada, the United Kingdom, and Australia.
and DOD officials increasingly assess that allies and
The NTIB, as established by 10 U.S.C. §2500, is intended
potential adversaries alike are achieving technological
to support national security objectives of the United States,
parity with – and in some instances have already surpassed
including supplying military operations; conducting
certain capabilities of – the U.S. military.
advanced R&D and systems development to ensure
technological superiority of the U.S. armed forces; securing
Expanding the NTIB
reliable sources of critical materials; and developing
In the FY2017 NDAA (P.L. 114-328), Congress expanded
industrial preparedness to support operations in wartime or
the NTIB to include the United Kingdom and Australia.
a national emergency.
Congress also directed DOD to create a plan that would
promote closer integration of the technology and industrial
Establishing the NTIB
bases of all NTIB member countries. S.Rept. 114-255
During World War II, shipments of critical wartime
describes global R&D as shifting abroad, in part to avoid
materials to the United States were disrupted. To ensure a
U.S. technology transfer and export control rules, raising
supply of defense articles in future conflicts, Congress and
concerns that
the executive branch sought to establish a more robust
domestic defense industrial base. Over the next half-
…innovation may be increasingly conducted overseas
century, evolving U.S. national security objectives led to
with technology more readily available to potential
new legislation and regulations addressing the defense
adversaries than to the U.S. military because of the lack
industrial base, dual-use critical technologies, and
of civil-military integration of the [NTIB].
manufacturing technology. Defense spending, particularly
significant R&D investment, was critical to the
How Does the NTIB Operate?
advancement of U.S. military and industrial technology.
The National Defense Technology and Industrial Base

Council (10 U.S.C. §2502) is responsible for ensuring
Following the end of the Cold War, Congress grappled with
interagency cooperation in promoting the NTIB and
the economic implications of predicted significant cuts in
providing advice to the President. The Council consists of
U.S. defense spending. Responding to the “failure of the
the Secretaries of Defense, Energy, Commerce, and Labor,
Department of Defense to undertake serious technology and
and other officials appointed by the President. While the
industrial base planning” – and the need to maintain a
U.S. government has a governing body to coordinate
national technology and industrial base capable of meeting
activities across agencies, no such structure with
future national security and economic challenges –
representation of all NTIB member countries exists. The
Congress mandated a more active federal government role
Secretary of Defense is required to develop a national
in shaping the U.S. technology and industrial base. Through
security strategy for the NTIB based on a prioritized
the FY1993 NDAA, Congress established the NTIB,
assessment of risks and challenges to the defense supply
formalizing in statute what had been a traditionally close
chain (10 U.S.C. §2501) and to submit to the Senate and
United States-Canadian defense cooperation relationship,
House Armed Services Committees an annual report
and consolidated the defense industrial base policies into a
addressing NTIB capabilities, performance, and
single chapter of the U.S. Code.
vulnerabilities (10 U.S.C. §2504). The FY2018 Industrial
Capabilities report spent less than one page discussing the
NTIB and did not provide a clear plan to achieve
DOD and the Global R&D Landscape
integration.
See CRS Report R45403, The Global Research and Development
Landscape and Implications for the Department of Defense.
Statutory Benefits of NTIB Membership
NTIB countries benefit from certain limited statutory

While the U.S. military has historically conceptually used
preferences. Procurement of conventional ammunition can
advanced technological capabilities as a strategic
be restricted to NTIB sources and must be from the NTIB
counterbalance to superior force size and geographic
in a national emergency or when necessary for industrial
advantages of potential adversaries, recent trends have
mobilization (10 U.S.C. §2304). Fire-resistant rayon fiber
exacerbated concerns regarding the ability of the
in uniforms may only be procured from a non-NTIB
Department of Defense (DOD) to maintain this dominance
member if NTIB sources are not available (10 U.S.C.
§2533a). NTIB manufacturers are generally exempt from
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Defense Primer: The National Technology and Industrial Base
domestic sourcing restrictions on buses, chemical weapons
the world’s GDP. The 2019 Global Innovation Index also
antidotes, ball and roller bearings, and certain components
lists several of these countries, as well as the Netherlands,
for naval vessels (10 U.S.C. §2534). As of August 2019,
Sweden, and Singapore, as among the most innovative.
DOD must develop a process for deciding if certain items
Irrespective of the rankings’ methodology and accuracy,
must be procured from NTIB sources (P.L. 115-232, sec.
some have argued that working closely with some of these
844). Some NTIB entities may also be exempted from the
countries – either by expanding NTIB membership,
foreign ownership, control, or influence requirements of the
strengthening bilateral agreements, or leveraging
National Industrial Security Program and, starting October
multilateral arrangements – could increase U.S. access to
1, 2020, are to be exempt from the requirement to obtain a
technology and other critical innovations.
national interest determination to be awarded a contract
under a national security program (10 U.S.C. §2536).
Considerations for Congress
Officials from the United States and other NTIB member
How Effective Is the NTIB?
countries have stated that, while coordination is moving in
Some analysts argue that domestic sourcing requirements,
the right direction, the industrial bases are not significantly
such as the Buy American Act (41 U.S.C. Ch. 83) and the
integrated. Furthermore, some contend that the NTIB
Byrnes-Tollefson Amendment (10 U.S.C. §8679), hinder
currently falls short of the aspiration of a seamless
effective integration. Small business set-asides that apply
integration of the “transfer of knowledge, goods, and
only to American small businesses can also be a barrier to
services” called for in the FY2017 NDAA. Potential related
integration. Cross-border partnerships with U.S. small
considerations for Congress include the following options.
businesses could help foreign firms circumvent these
Establish a governing body of NTIB members: A 2019 Atlantic
restrictions, but inconsistencies among NTIB countries,
Council report called for establishing a high-level group of
such as different thresholds to qualify as a small business in
senior officials from member countries to facilitate better
the United States, can make integration more difficult.
coordination and cooperation. A similar proposal was
included in DOD’s FY2017 Annual Industrial Capabilities
Others argue that these measures reflect higher public
report, though not in the FY2018 version of the report.
policy priorities and should be enhanced, not weakened.
Opponents could argue that a formal structure would add
Some analysts and officials also point to the U.S. export
unnecessary layers of bureaucracy and hamper
control system for certain categories of defense articles and
coordination.
services as a barrier to closer integration. For example, the
Amend laws affecting integration of the NTIB: Some analysts and
International Traffic in Arms Regulations (ITAR), issued
government officials have called for an overhaul of
by the State Department, restricts the export of defense-
technology transfer, socioeconomic, export, and related
related articles and services that are inherently military in
laws and regulations to promote more effective integration.
character and, if exported, could jeopardize U.S. national
Others have argued for the tightening of these policies to
security or foreign policy interests. Compliance with the
emphasize the promotion of domestic industry.
ITAR requires individuals or business entities to obtain a
Increase international cooperation: Congress could also expand
license from the State Department in order to export
the NTIB to include other allies with shared interests and
covered materials. While the ITAR provides licensing
robust industrial bases. However, a successful expansion of
requirement exemptions for some U.S. exports to Canada
the NTIB would rely upon current members trusting new
and temporary imports from Canada to the United States,
members; without the buy-in of current members,
not all ITAR-controlled items fall under the Canadian
expansion could decrease integration. An increase in
exemptions. However, similar ITAR exemptions are not
membership could also make it more difficult to coordinate
currently available to the other members of the NTIB.
joint activities and policies. Some officials suggest focusing
Additionally, while the United States has bilateral defense
instead on improving current NTIB integration.
trade cooperation treaties with the United Kingdom and
Alternatively, Congress could strengthen bilateral or
Australia, some analysts and officials do not consider them
multilateral agreements to increase access to, and
to be effective.
collaboration in developing, technologies and critical items.

DOD Cooperation with Other Allies
DOD is also actively strengthening defense cooperation
Other Resources
partnerships with non-NTIB countries. The FY2018
Department of Defense, FY2018 Industrial Capabilities.
Industrial Capabilities report notes that the DOD is
Department of Defense, FY2017 Annual Industrial Capabilities.
working to enhance its partnerships with Israel and India
Atlantic Council, Leveraging the National Technology Industrial
and has promoted cooperation with other allies. For
Base to Address Great-Power Competition, 2019.
example, seven allied countries (including all NTIB
members) are participating in the F-35 Joint Strike Fighter
CSIS, National Technology and Industrial Base Integration, 2018.
Program.
Acknowledgements
Some of the world’s most innovative countries are
This product was completed in collaboration with Moshe
generally considered U.S. allies, but are not part of the
Schwartz, former CRS Specialist in Defense Acquisition.
NTIB. The 2019 Bloomberg Innovation Index describes
South Korea, Germany, Finland, Switzerland, and Israel as
Heidi M. Peters, Analyst in U.S. Defense Acquisition
the most innovative economies. Together with the current
Policy
NTIB members, these countries represent nearly a third of
Lydia A. Chew, Research Assistant
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Defense Primer: The National Technology and Industrial Base

IF11311


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