Updated January 21, 2020
Defense Primer: The National Technology and Industrial Base
What is the NTIB?
exacerbated concerns regarding the ability of the
The National Technology and Industrial Base (NTIB)
Department of Defense (DOD) to maintain this dominance
consists of the people and organizations engaged in national
in the future. The sharp decline in U.S. defense R&D
security and dual-use research and development (R&D),
spending as a share of global R&D spending from 1960 to
production, maintenance, and related activities within the
2016, together with the rise of the private sector in driving
United States, Canada, the United Kingdom, and Australia.
innovation, signifies continuing challenges to DOD’s
The NTIB, as established by 10 U.S.C. §2500, is intended
reliance on technology for battlefield advantage. Analysts
to support national security objectives of the United States,
and DOD officials increasingly assess that allies and
including supplying military operations; conducting
potential adversaries alike are achieving technological
advanced R&D and systems development to ensure
parity with—and in some instances have already surpassed
technological superiority of the U.S. Armed Forces;
certain capabilities of—the U.S. military.
securing reliable sources of critical materials; and
developing industrial preparedness to support operations in
In the FY2017 NDAA (P.L. 114-328), Congress expanded
wartime or during a national emergency.
the NTIB to include the United Kingdom and Australia.
Congress also directed DOD to create a plan that would
Establishing the NTIB
promote closer integration of the technology and industrial
During World War II, shipments of critical wartime
bases of all NTIB member countries. S.Rept. 114-255
materials to the United States were disrupted. To ensure a
describes global R&D as shifting abroad, in part to avoid
supply of defense articles in future conflicts, Congress and
U.S. technology transfer and export control rules, raising
the executive branch sought to establish a more robust
concerns that:
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 perceived
the Secretaries of Defense, Energy, Commerce, and Labor,
“failure of the Department of Defense to undertake serious
and other officials appointed by the President. While the
technology and industrial base planning”—and the need to
U.S. government has a governing body to coordinate
maintain a national technology and industrial base capable
activities across agencies, no such structure with
of meeting future national security and economic
representation of all NTIB member countries exists.
challenges—Congress mandated a more active federal
government role in shaping the U.S. technology and
The Secretary of Defense is also required to develop a
industrial base through provisions in the FY1993 NDAA.
national security strategy for the NTIB based on a
Theses provisions consolidated existing defense industrial
prioritized assessment of risks and challenges to the defense
base policies into a single chapter of the U.S. Code and
supply chain (10 U.S.C. §2501) and to submit an annual
enacted additional new policies and requirements, including
report to Congress addressing NTIB capabilities,
the establishment of the NTIB, formalizing in statute what
performance, and vulnerabilities (10 U.S.C. §2504). Most
had been a traditionally close United States-Canadian
recently, the FY2018 Industrial Capabilities report spent
defense cooperation relationship.
less than one page discussing the NTIB and did not provide
a clear plan to achieve integration.
DOD and the Global R&D Landscape
See CRS Report R45403, The Global Research and Development
Statutory Benefits of NTIB Membership
Landscape and Implications for the Department of Defense.
NTIB countries benefit from certain limited statutory
preferences. Procurement of conventional ammunition can
be restricted to NTIB sources and must be from the NTIB
Expanding the NTIB
in a national emergency or when necessary for industrial
While the U.S. military has historically conceptually used
mobilization (10 U.S.C. §2304). Fire-resistant rayon fiber
advanced technological capabilities as a strategic
in uniforms may only be procured from a non-NTIB
counterbalance to superior force size and geographic
member if NTIB sources are not available (10 U.S.C.
advantages of potential adversaries, recent trends have
§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
NTIB members, these countries represent nearly a third of
antidotes, ball and roller bearings, and certain components
the world’s GDP. The World Intellectual Property
for naval vessels (10 U.S.C. §2534). As of August 2019,
Organization 2019 Global Innovation Index also lists
DOD must develop a process for deciding if certain items
several of these countries, as well as the Netherlands,
must be procured from NTIB sources (P.L. 115-232, §844).
Sweden, and Singapore, as among the most innovative.
Some NTIB entities may also be exempted from the foreign
Irrespective of the rankings’ methodology and accuracy,
ownership, control, or influence requirements of the
some have argued that working closely with some of these
National Industrial Security Program and, as of October 1,
countries—either by expanding NTIB membership,
2020, are to be exempt from the requirement to obtain a
strengthening bilateral agreements, or leveraging
national interest determination to be awarded a contract
multilateral arrangements—could increase U.S. access to
under a national security program (10 U.S.C. §2536).
technology and other critical innovations.
How Effective is the NTIB?
Considerations for Congress
Some analysts argue that domestic sourcing requirements,
Officials from the United States and other NTIB member
such as the Buy American Act (41 U.S.C. Ch. 83) and the
countries have stated that, while coordination is moving in
Byrnes-Tollefson Amendment (10 U.S.C. §8679), hinder
the right direction, the industrial bases are not meaningfully
effective integration. Small business set-asides that apply
integrated. Furthermore, some contend that the NTIB
only to American small businesses can also be a barrier to
currently falls short of the aspiration of a seamless
integration. Cross-border partnerships with U.S. small
integration of the “transfer of knowledge, goods, and
businesses could help foreign firms circumvent these
services” called for in the FY2017 NDAA. Potential related
restrictions, but inconsistencies among NTIB countries,
considerations for Congress include the following options.
such as different thresholds to qualify as a small business in
Establish a governing body of NTIB members: A 2019
the United States, can make integration more difficult.
Atlantic Council report called for establishing a high-level
group of senior officials from member countries to facilitate
Others argue that these measures reflect higher public
better coordination and cooperation. A similar proposal was
policy priorities and should be enhanced, not weakened.
included in DOD’s FY2017 Annual Industrial Capabilities
Some analysts and officials also point to the U.S. export
report, though not in the FY2018 version of the report.
control system for certain categories of defense articles and
Opponents could argue that a formal structure would add
services as a barrier to closer integration. For example, the
unnecessary layers of bureaucracy and hamper
International Traffic in Arms Regulations (ITAR), issued
coordination.
by the State Department, restricts the export of defense-
Amend laws affecting integration of the NTIB: Some
related articles and services that are inherently military in
analysts and government officials have called for an
character and, if exported, could jeopardize U.S. national
overhaul of technology transfer, socioeconomic, export, and
security or foreign policy interests. Compliance with the
related laws and regulations to promote more effective
ITAR requires individuals or business entities to obtain a
integration. Others have argued for the tightening of these
license from the State Department in order to export
policies to emphasize the promotion of domestic industry.
covered materials. While the ITAR provides licensing
Increase international cooperation: Congress could also
requirement exemptions for some U.S. exports to Canada
expand the NTIB to include other allies with shared
and temporary imports from Canada to the United States,
interests and robust industrial bases. However, a successful
not all ITAR-controlled items fall under the Canadian
expansion of the NTIB would rely upon current members
exemptions. However, similar ITAR exemptions are not
trusting new members; without the buy-in of current
currently available to the other members of the NTIB.
members, expansion could decrease integration. An
Additionally, while the United States has bilateral defense
increase in membership could also make it more difficult to
trade cooperation treaties with the United Kingdom and
coordinate joint activities and policies. Some officials
Australia, some analysts and officials do not consider them
suggest focusing instead on improving current NTIB
to be effective.
integration. Alternatively, Congress could strengthen
bilateral or multilateral agreements to increase access to,
DOD Cooperation with Other Allies
and collaboration in developing, technologies and critical
DOD is also actively strengthening defense cooperation
items.
partnerships with non-NTIB countries. The FY2018
Industrial Capabilities report notes that the DOD is
Other Resources
working to enhance its partnerships with Israel and India
Department of Defense, FY2018 Industrial Capabilities.
and has promoted cooperation with other allies through
Atlantic Council, Leveraging the National Technology Industrial
mechanisms such as reciprocal defense procurement
Base to Address Great-Power Competition, 2019.
memoranda. For example, seven allied countries (including
CSIS, National Technology and Industrial Base Integration, 2018.
all NTIB members) are participating in the F-35 Joint Strike
Fighter Program.

However, some of the world’s most innovative countries
are generally considered U.S. allies, but are not part of the
Heidi M. Peters, Analyst in U.S. Defense Acquisition
NTIB. The 2019 Bloomberg Innovation Index describes
Policy
South Korea, Germany, Finland, Switzerland, and Israel as
IF11311
the most innovative economies. Together with the current
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Defense Primer: The National Technology and Industrial Base


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https://crsreports.congress.gov | IF11311 · VERSION 3 · UPDATED

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