Defense Primer: U.S. Defense Industrial Base

Defense Primer: U.S. Defense Industrial Base

Updated April 17, 2023
Defense Primer: U.S. Defense Industrial Base
The Department of Defense (DOD) relies on a large and
security strategy for the NTIB that reflects “a prioritized
complex defense industrial base for the materials, products,
assessment of risks and challenges to the defense supply
and services that enable the Department’s warfighting
chain.” Per 10 U.S.C. §133b, the Under Secretary of
capabilities and business operations.
Defense for Acquisition and Sustainment (USD (A&S)) is
responsible for “establishing policies for access to, and
Defining the Defense Industrial Base
maintenance of, the defense industrial base and materials
The defense industrial base (DIB) encompasses all
critical to national security, and policies on contract
organizations and facilities that provide DOD with
administration.”
materials, products, and services. The composition of the
DIB is diverse, and includes entities such as small and
Assistant Secretary of Defense for Industrial Base
medium-sized businesses, university laboratories and
Policy
research centers, and large multinational corporations. DIB
The Assistant Secretary of Defense for Industrial Base
functions are similarly varied, ranging from the production
Policy (ASD (IBP)) serves as the principal advisor to USD
of complex platforms unique to the military (e.g., aircraft
(A&S) on matters related to the DIB, to include conducting
carriers) and the provision of highly specialized services
assessments and developing policies to maintain industry’s
(e.g., intelligence analysis), to the provision of general
ability to meet DOD requirements. Prior to the creation of
commercial products (e.g., laptop computers) and routine
the ASD (IBP) position by the FY2021 National Defense
services (e.g., information technology support).
Authorization Act (NDAA; P.L. 116-283 §903; 10 U.S.C.
§138), many of its functions had been carried out by the
Many analysts and experts distinguish between a domestic
now-defunct Deputy Assistant Secretary of Defense for
DIB and a global DIB. The domestic DIB refers to those
Industrial Policy position.
commercial, non-profit, and public sector organizations and
facilities that provide goods and services to DOD and are
Within the ASD (IBP) organization, the Deputy Assistant
located in the United States. According to the National
Secretary of Defense for Industrial Base Resilience (DASD
Defense Industrial Association, in 2021 the domestic DIB
(IBR)) is responsible for policies and investments to
included nearly 60,000 companies employing
strengthen resilience, while the Deputy Assistant Secretary
approximately 1.1 million individuals. For fiscal year (FY)
of Defense for Industrial Base Development & International
2021, DOD reported that the top five domestic recipients of
Engagement (DASD (IBD&IE)) is responsible for
defense contracts were Lockheed Martin ($39.2 billion),
conducting engagement and managing partnerships with
Boeing ($23.6 billion), Raytheon Technologies ($21.4
domestic DIB entities as well as foreign governments and
billion), General Dynamics ($16.9 billion), and Northrop
industry. ASD (IBP) also oversees the Office of Small
Grumman ($15 billion).
Business Programs, which manages policy, funding, and
coordination of programs intended to increase small
The global DIB includes commercial and non-profit
business participation in the DIB.
organizations located outside the United States, as well as
certain facilities operated by foreign governments with
Selected Industrial Base Authorities
which the United States maintains formal defense
Beyond specific contracting processes established by law
cooperation partnerships. Together, the domestic DIB and
(and contracting regulations more generally), there are a
any “persons and organizations that are engaged in
number of authorities that allow Congress and DOD to
research, development, production, integration, services, or
exercise stewardship over the DIB, including:
information technology activities conducted within the
United States, the United Kingdom of Great Britain and
Industrial Base Fund
Northern Ireland, Australia, New Zealand, and Canada”
10 U.S.C. §4817 directs the Secretary of Defense to
form the National Technology and Industrial Base (NTIB),
establish an Industrial Base Fund (IBF). The IBF is subject
as established by Title 10, United States Code, §4801 (for
to annual appropriations and was established to
more on the NTIB, see CRS In Focus IF11311, Defense
 support the monitoring and assessment of the industrial
Primer: The National Technology and Industrial Base).
base;
Policy Framework
 address critical issues in the industrial base relating to
urgent operational needs;
DOD’s Role
 support efforts to expand the industrial base; and
Subpart I to Part V of Title 10 of the United States Code
 address supply chain vulnerabilities.
(U.S.C.) addresses policies and planning related to the
domestic industrial base and the NTIB. Per Title 10 U.S.C.
§4811, the Secretary of Defense must develop a national
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Defense Primer: U.S. Defense Industrial Base
Defense Production Act (DPA) of 1950
 The Specialty Metals Clause (10 U.S.C. §4863), which
The DPA of 1950, as last reauthorized in 2018, provides the
requires that any specialty metals, defined as certain
President with a number of authorities that he or she may
metal alloys, contained in any aircraft, missile and space
utilize to influence domestic industry in the interest of
system, ship, tank and automotive item, weapon system,
national defense. The authorities most relevant to the DIB
ammunition, or any components thereof, purchased by
are
DOD be melted or produced in the United States.
 Title I: Priorities and Allocations, which allows the
Issues for Congress
President to require persons (including businesses and
Industry consolidation. According to a 2022 DOD report,
corporations) to prioritize and accept contracts for
the number of U.S. aerospace and defense prime contractors
materials and services as necessary to promote the
has shrunk from 51 to 5 since the early 1990s. Some
national defense.
analysts and policymakers suggest that this consolidation

has harmed the health of the DIB by reducing overall
Title III: Expansion of Productive Capacity and
production capacity, limiting competition, and undermining
Supply, which allows the President to incentivize the
supply chain resilience. Others view the current
domestic industrial base to expand the production and
composition of the DIB as a necessary consequence of both
supply of critical materials and goods. Authorized
recent defense spending patterns and the complexity of
incentives include direct purchases and purchase
modern weapon systems. Congress may consider measures
commitments. The President may also procure and
to diversify the domestic DIB, including increased
install equipment in private industrial facilities.
oversight of mergers, changes to intellectual property
 Title VII: General Provisions, which defines salient
provisions in defense contracting, and strengthening
terms and provides several distinct authorities, including
incentives for small businesses and new DIB entrants.
the authority to establish voluntary agreements with
private industry and the authority to block proposed or
Production constraints and surge capacity. Following the
pending foreign corporate mergers, acquisitions, or
2022 continued Russian invasion of Ukraine, some
takeovers that threaten national security, through the
Members of Congress and others have expressed concern
Committee on Foreign Investment in the United States
about the ability of the DIB to meet sudden upticks in
(CFIUS).
demand stemming from unexpected geopolitical
developments. Much of this attention has focused on
Manufacturing Technology (ManTech) Program
munitions production (especially precision-guided
Established in 1956, the ManTech program (10 U.S.C.
munitions such as the Javelin anti-tank weapon), due in
§4841) provides funding to accomplish two broad
large part to high rates of expenditure. Congress may
objectives:
consider measures to increase the capacity of the domestic
DIB, including changes to procurement authorities,
1. Cut acquisition and supportability costs and reduce
increased procurement spending and investments in
manufacturing timelines by providing centralized
industrial facilities, and direction to DOD to identify
guidance and direction to the military departments
alternative sources for particularly constrained products.
and the defense agencies; and
2. Focus DOD support for the development and
Supply chain security and resilience. Many analysts and
application of advanced manufacturing
policymakers argue that U.S. defense supply chains are not
technologies that are essential to national defense.
resilient or secure enough to meet military requirements. A
2021 White House report found “long-standing
Per DOD Directive 4200.15, ManTech investments are
vulnerabilities in [U.S.] supply chains,” driven by factors
intended for cases in which industry “cannot or will not
including “insufficient manufacturing capacity,”
commit private funds to establish manufacturing technology
“misaligned incentives”, other nations’ industrial policies,
and make it available on a timely basis.” ManTech
concentration of global sourcing, and “limited international
programs are managed by the service secretaries, the
coordination.” Congress may consider measures to
Defense Logistics Agency, and the Office of the Secretary
strengthen defense-critical supply chains, including
of Defense.
additional investments in domestic suppliers and modifying
Selected Domestic Sourcing Mandates
sourcing requirements.
Congress has passed several domestic sourcing laws,
Other CRS Products
including
CRS In Focus IF11311, Defense Primer: The National Technology
 The Buy American Act of 1933, which generally
and Industrial Base
requires federal agencies – including DOD – to purchase
CRS Report R43767, The Defense Production Act of 1950:
“domestic end products” and use “domestic construction
History, Authorities, and Considerations for Congress
materials” on contracts exceeding the micro-purchase
CRS Report R43354, Domestic Content Restrictions: The Buy
threshold performed in the United States.

American Act and Complementary Provisions of Federal Law
The Berry Amendment (10 U.S.C. §4862), which
requires textiles, clothing, food, stainless steel flatware

and dinnerware, and hand or measuring tools purchased
by the DOD to be grown, reprocessed, reused, or
Luke A. Nicastro, Analyst in U.S. Defense Infrastructure
produced wholly in the United States.
Policy
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Defense Primer: U.S. Defense Industrial Base

IF10548
Heidi M. Peters, Analyst in U.S. Defense Acquisition
Policy

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