Updated January 31, 2020
Defense Primer: The National Technology and Industrial Base
What is the NTIB?
advantages of potential adversaries, recent trends have
The National Technology and Industrial Base (NTIB)
exacerbated concerns regarding the ability of the
consists of the people and organizations engaged in national
Department of Defense (DOD) to maintain this dominance
security and dual-use research and development (R&D),
in the future. The sharp decline in U.S. defense R&D
production, maintenance, and related activities within the
spending as a share of global R&D spending from 1960 to
United States, Canada, the United Kingdom, and Australia.
2016, together with the rise of the private sector in driving
The NTIB, as established by 10 U.S.C. §2500, is intended
innovation, signify continuing challenges to DOD’s
to support national security objectives of the United States,
reliance on technology for battlefield advantage. Analysts
including supplying military operations; conducting
and DOD officials increasingly assess that allies and
advanced R&D and systems development to ensure
potential adversaries alike are achieving technological
technological superiority of the U.S. Armed Forces;
parity with—and in some instances have already surpassed
securing reliable sources of critical materials; and
certain capabilities of—the U.S. military. In the FY2017
developing industrial preparedness to support operations in
NDAA (P.L. 114-328), responding in part to this concern,
wartime or during a national emergency.
Congress expanded the NTIB to include the United
Kingdom and Australia. S.Rept. 114-255 describes global
Establishing the NTIB
R&D as shifting abroad, in part to avoid U.S. technology
During World War II, shipments of critical wartime
transfer and export control rules, raising concerns that:
materials to the United States were disrupted. To ensure a
supply of defense articles in future conflicts, Congress and
…innovation may be increasingly conducted overseas
the executive branch sought to establish a more robust
with technology more readily available to potential
domestic defense industrial base. Over the next half-
adversaries than to the U.S. military because of the lack
century, evolving U.S. national security objectives led to
of civil-military integration of the [NTIB].
new legislation and regulations addressing the defense
Congress also directed DOD to create a plan that would
industrial base, dual-use critical technologies, and
promote closer integration of the technology and industrial
manufacturing technology. Defense spending, particularly
bases of all NTIB member countries.
significant R&D investment, was critical to the
advancement of U.S. military and industrial technology.
How Does the NTIB Operate?

The National Defense Technology and Industrial Base
Following the end of the Cold War, Congress grappled with
Council (10 U.S.C. §2502) is responsible for ensuring
the economic implications of predicted significant cuts in
interagency cooperation in promoting the NTIB and
U.S. defense spending. Responding to the perceived
providing advice to the President. The council consists of
“failure of the Department of Defense to undertake serious
the Secretaries of Defense, Energy, Commerce, and Labor,
technology and industrial base planning”—and the need to
and other officials appointed by the President. While the
maintain a national technology and industrial base capable
U.S. government has a governing body to coordinate
of meeting future national security and economic
activities across agencies, no such structure with
challenges—Congress mandated a more active federal
representation of all NTIB member countries exists.
government role in shaping the U.S. technology and
industrial base through provisions in the FY1993 National
The Secretary of Defense is also required to develop a
Defense Authorization Act (NDAA). These provisions
national security strategy for the NTIB based on a
consolidated existing defense industrial base policies into a
prioritized assessment of risks and challenges to the defense
single chapter of the U.S. Code and enacted additional new
supply chain (10 U.S.C. §2501); to submit an annual report
policies and requirements, including establishing the NTIB,
to Congress addressing NTIB capabilities, performance,
formalizing in statute what had been a traditionally close
and vulnerabilities (10 U.S.C. §2504); and to submit a
United States-Canada defense cooperation relationship.
report on unfunded priorities to address gaps or
vulnerabilities in the NTIB (10 U.S.C. §2504a). Most
DOD and the Global R&D Landscape
recently, the FY2018 Industrial Capabilities report spent
See CRS Report R45403, The Global Research and Development
less than one page discussing the NTIB and did not provide
Landscape and Implications for the Department of Defense.
a clear plan to achieve integration.
Statutory Benefits of NTIB Membership
Expanding the NTIB
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
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Defense Primer: The National Technology and Industrial Base
mobilization (10 U.S.C. §2304). Fire-resistant rayon fiber
Bloomberg Innovation Index describes Germany, South
in uniforms may only be procured from a non-NTIB
Korea, Singapore, Switzerland, and Sweden as the most
member if NTIB sources are not available (10 U.S.C.
innovative economies. Together with the current NTIB
§2533a). NTIB manufacturers are generally exempt from
members, these countries represent nearly 40% of the
domestic sourcing restrictions on buses, chemical weapons
world’s GDP. The World Intellectual Property Organization
antidotes, ball and roller bearings, and certain components
2019 Global Innovation Index also lists several of these
for naval vessels (10 U.S.C. §2534). As of August 2019,
countries, as well as the Netherlands and Finland, as among
DOD must develop a process for deciding if certain items
the most innovative. Methodology and accuracy of these
must be procured from NTIB sources (P.L. 115-232, §844).
rankings notwithstanding, some have argued that working
Some NTIB entities may also be exempted from the foreign
closely with some of these countries—whether by
ownership, control, or influence requirements of the
expanding NTIB membership, strengthening bilateral
National Industrial Security Program and, as of October 1,
agreements, or leveraging multilateral arrangements—could
2020, are to be exempt from the requirement to obtain a
increase U.S. access to technology and other critical
national interest determination to be awarded a contract
innovations.
under a national security program (10 U.S.C. §2536).
Considerations for Congress
How Effective is the NTIB?
Officials from the United States and other NTIB member
Some analysts argue that domestic sourcing requirements,
countries have stated that, while coordination is moving in
such as the Buy American Act (41 U.S.C. Ch. 83) and the
the right direction, the industrial bases are not meaningfully
Byrnes-Tollefson Amendment (10 U.S.C. §8679), hinder
integrated. Furthermore, some contend that the NTIB
effective integration. Small business set-asides that apply
currently falls short of the aspiration of a seamless
only to American small businesses can also be a barrier to
integration of the “transfer of knowledge, goods, and
integration. Cross-border partnerships with U.S. small
services” called for in the FY2017 NDAA. Potential related
businesses could help foreign firms circumvent these
considerations for Congress include the following options.
restrictions, but inconsistencies among NTIB countries,
Establish a governing body of NTIB members: A 2019
such as different thresholds to qualify as a small business in
Atlantic Council report called for establishing a high-level
the United States, can make integration more difficult.
group of senior officials from member countries to facilitate
better coordination and cooperation. A similar proposal was
Others argue that these measures reflect higher public
included in DOD’s FY2017 Annual Industrial Capabilities
policy priorities and should be enhanced, not weakened.
report, though not in the FY2018 version of the report.
Some analysts and officials also point to the U.S. export
Opponents could argue that a formal structure would add
control system for certain categories of defense articles and
unnecessary layers of bureaucracy and hamper
services as a barrier to closer integration. For example, the
coordination.
International Traffic in Arms Regulations (ITAR),
Amend laws affecting integration of the NTIB: Some
administered by the State Department, restricts the export
analysts and government officials have called for
of defense-related articles and services that are inherently
overhauling technology transfer, socioeconomic, export,
military in character and, if exported, could jeopardize U.S.
and related laws and regulations to promote more effective
national security or foreign policy interests. Compliance
integration. Others have argued for tightening these policies
with the ITAR requires individuals or business entities to
to emphasize the promotion of domestic industry.
obtain a license from the State Department in order to
Increase international cooperation: Congress could also
export covered materials. While the ITAR provides
expand the NTIB to include other allies with shared values
licensing requirement exemptions for some U.S. exports to
and interests and robust industrial bases. However, a
Canada and temporary imports from Canada to the United
successful expansion of the NTIB would rely upon current
States, not all ITAR-controlled items fall under the
members trusting new members; without the buy-in of
Canadian exemptions. Similar ITAR exemptions are not
current members, expansion could decrease integration. An
currently available to the other members of the NTIB.
increase in membership could also make it more difficult to
Additionally, while the United States has bilateral defense
coordinate joint activities and policies. Some officials
trade cooperation treaties with the United Kingdom and
suggest focusing instead on improving current NTIB
Australia, some analysts and officials do not consider them
integration. Alternatively, Congress could strengthen
to be effective.
bilateral or multilateral agreements to increase access to,
and collaboration in developing, technologies and critical
DOD Cooperation with Other Allies
items.
DOD is actively strengthening defense cooperation
partnerships with non-NTIB countries. The FY2018
Other Resources
Industrial Capabilities report notes that DOD is working to
Department of Defense, FY2018 Industrial Capabilities.
enhance its partnerships with Israel and India and has
Atlantic Council, Leveraging the National Technology Industrial
promoted cooperation with other allies through mechanisms
Base to Address Great-Power Competition, 2019.
such as reciprocal defense procurement memoranda. For
CSIS, National Technology and Industrial Base Integration, 2018.
example, seven allied countries (including all NTIB
members) are participating in the F-35 Joint Strike Fighter

Program. However, while some of the world’s most
innovative countries are generally considered U.S. allies,
they are not part of the NTIB. For example, the 2020
Heidi M. Peters, Analyst in U.S. Defense Acquisition
Policy
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Defense Primer: The National Technology and Industrial Base

IF11311


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https://crsreports.congress.gov | IF11311 · VERSION 4 · UPDATED

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