Defense Primer: The National Technology and Industrial Base

Defense Primer: The National Technology and Industrial Base

Updated March 30, 2023
Defense Primer: The National Technology and Industrial Base
What Is the NTIB?
and in some sectors, superiority over—the U.S. military. In
The National Technology and Industrial Base (NTIB)
the FY2017 NDAA (P.L. 114-328), driven in part by this
consists of the people and organizations engaged in national
concern, Congress expanded the NTIB to include the
security and dual-use research and development (R&D),
United Kingdom and Australia. S.Rept. 114-255 describes
production, maintenance, and related activities within the
global R&D as shifting abroad, in part to avoid U.S.
United States, Canada, the United Kingdom, Australia, and
technology transfer and export control rules, raising
New Zealand. The NTIB, as established by 10 U.S.C.
concerns that
§4801, is intended to support national security objectives of
innovation may be increasingly conducted overseas with
the United States, including: supplying military operations;
technology more readily available to potential adversaries
conducting advanced R&D and systems development to
than to the U.S. military because of the lack of civil-
ensure technological superiority of the U.S. Armed Forces;
military integration of the [NTIB].
securing reliable sources of critical materials; and
developing industrial preparedness to support operations in
In the FY2023 NDAA (P.L. 117-263), Congress further
wartime or during a national emergency.
expanded the NTIB to include New Zealand.
Establishing the NTIB
How Does the NTIB Operate?
During World War II, shipments of critical wartime
Among other matters, the National Defense Technology
materials to the United States were disrupted. To ensure a
and Industrial Base Council (10 U.S.C. §4812) is
supply of defense articles in future conflicts, Congress and
responsible for ensuring interagency cooperation in
the executive branch sought to establish a more robust
promoting the NTIB. The council consists of the Secretaries
domestic defense industrial base. Over the next half-
of Defense, Energy, Commerce, and Labor, and other
century, evolving U.S. national security objectives led to
officials appointed by the President. While the U.S.
new legislation and regulations addressing the defense
government has a governing body to coordinate activities
industrial base, dual-use critical technologies, and
across agencies, no such structure with representation of all
manufacturing technology. Defense spending, particularly
NTIB member countries exists. The Secretary of Defense is
significant R&D investment, was critical to the
also required to establish a national security strategy for the
advancement of U.S. military and industrial technologies.
NTIB (10 U.S.C. §4811) and submit an annual report to
Congress addressing NTIB capabilities, performance, and
Following the end of the Cold War, Congress grappled with
vulnerabilities (10 U.S.C. §4814).
the economic implications of reduced defense spending.
Responding to the perceived “failure of the Department of
Statutory Benefits of NTIB Membership
Defense to undertake serious technology and industrial base
NTIB countries benefit from certain limited statutory
planning”—and the need to maintain a national technology
preferences. Procurement of conventional ammunition can
and industrial base capable of meeting future national
be restricted to NTIB sources and must be from the NTIB
security and economic challenges—Congress mandated a
in a national emergency or when necessary for industrial
more active federal government role in shaping the U.S.
mobilization (10 U.S.C. Ch. 223 note proceeding). Fire-
technology and industrial base through provisions in the
resistant rayon fiber in uniforms may only be procured from
FY1993 National Defense Authorization Act (P.L. 102-484;
a non-NTIB member if NTIB sources are not available (10
NDAA). These provisions enacted various related policies
U.S.C. §4862 (note)). Buses, chemical weapons antidotes,
and requirements, including establishing the NTIB,
ball and roller bearings, satellite “star trackers,” and certain
formalizing in statute what had been a traditionally close
components for naval vessels may only be procured from
United States-Canada defense-industrial relationship.
NTIB manufacturers, unless the Secretary of Defense
Expanding the NTIB
waives this restriction (10 U.S.C. §4864).
While the U.S. military has historically used advanced
Some NTIB entities may also be exempted from the foreign
technological capabilities as a strategic counterbalance to
ownership, control, or influence requirements of the
superior force size and geographic advantages of
National Industrial Security Program, and may also be
geopolitical rivals, recent trends have led some to question
exempted from the requirement to obtain a national interest
the ability of the Department of Defense (DOD) to maintain
determination to be awarded a contract under a national
this dominance in the future. The sharp decline in U.S.
security program (10 U.S.C. §4874).
defense R&D spending as a share of global R&D spending,
together with the rise of the private sector in driving
How Effective Is the NTIB?
innovation, pose challenges to DOD’s reliance on
Some analysts argue that domestic sourcing requirements,
technology for battlefield advantage. Analysts and DOD
such as the Buy American Act (41 U.S.C. Ch. 83) and the
officials increasingly assess that allies and potential
Byrnes-Tollefson Amendment (10 U.S.C. §8679), as well
adversaries alike are achieving technological parity with—
as policies implementing preferential treatment for
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Defense Primer: The National Technology and Industrial Base
domestic entities (e.g., small business set-asides for which
Establishing a governing body of NTIB members: A 2019
only U.S. firms are eligible) hinder effective integration of
Atlantic Council report called for establishing a high-level
NTIB industrial capabilities. Cross-border partnerships with
group of senior officials from member countries to facilitate
U.S. small businesses could help foreign firms circumvent
better coordination and cooperation. Likewise, a 2021
these obstacles, but policy inconsistencies among NTIB
House Armed Services Committee (HASC) report called
countries, such as different thresholds to qualify as a small
for an NTIB “International Council” as a means of
business in the United States, may limit the efficacy of such
synchronizing “industrial base and supply chain security
measures.
policies.” While DOD reports indicate that NTIB members
have committed to regular meetings and have established
Observers also point to the U.S. export control system for
information-sharing agreements, it is unclear whether these
certain categories of defense articles and services as a
activities are steps toward establishing a governing body.
barrier to closer integration. For example, the International
Amending laws affecting integration of the NTIB: Some
Traffic in Arms Regulations (ITAR), administered by the
analysts and government officials have called for
State Department, restricts the export of defense-related
overhauling technology transfer, socioeconomic
articles and services that are inherently military in character
preferences, export control, and related laws and
and, if exported, could jeopardize U.S. national security or
regulations to promote NTIB integration. Many reform
foreign policy interests. Compliance with the ITAR requires
proposals have advocated changing or modifying provisions
individuals or business entities to obtain a license from the
of the ITAR to extend the Canadian licensing exemptions to
State Department in order to export covered materials.
all NTIB members—particularly given the scale of defense-
industrial cooperation necessary for implementation of the
The ITAR provides licensing requirement exemptions for
Australia-United Kingdom-United States (AUKUS)
some U.S. exports to Canada and temporary imports from
security pact. Others have argued for tightening these
Canada to the United States; however, not all ITAR-
policies to promote domestic industry.
controlled items fall under the Canadian exemptions.
Directing DOD to harmonize international cooperation
Similar ITAR exemptions are not currently available to
efforts: The NTIB is part of a broader landscape of
other NTIB members. While the United States has bilateral
international defense cooperation mechanisms and
defense trade cooperation treaties with the United Kingdom
authorities (e.g., trade agreements, defense trade
and Australia that provide limited licensing exemptions,
cooperation treaties, bilateral or multilateral supply
some analysts do not consider these exemptions to
arrangements, and other security cooperation programs).
meaningfully facilitate increased industrial cooperation.
While these programs and policies represent a spectrum of
integration, some analysts argue their relationships to each
DOD Cooperation with Other Allies
other and to broader national objectives have not been
DOD is actively strengthening defense cooperation
adequately delineated. Congress may consider harmonizing
partnerships with non-NTIB countries. DOD has promoted
these efforts—whether by statutory changes or by directing
cooperation with other allies and partners through
modifications to DOD policies—particularly in light of
mechanisms such as the U.S.-India Defense Technology &
recent concerns regarding the capacity of domestic
Trade Initiative (DTTI), as well as security of supply
producers to meet the requirements of geopolitical crises.
arrangements and reciprocal defense procurement
Increasing international cooperation: Congress could
agreements. Seven allied countries (including all NTIB
further expand the NTIB to include other allies with shared
members except New Zealand) are also participating in the
interests and robust industrial bases. A successful expansion
F-35 Joint Strike Fighter Program.
of the NTIB would likely rely on current members’
acquiescence; without the buy-in of current members,
While U.S. allies and partners include some of the most
expansion could decrease integration. An increase in
economically developed nations in the world, most are not
membership could also make it more difficult to coordinate
part of the NTIB. For example, the World Intellectual
joint activities and policies. Some officials suggest focusing
Property Organization’s 2022 Global Innovation Index
instead on improving current NTIB integration.
describes Switzerland, the Republic of Korea, and Israel as
Alternatively, Congress could strengthen international
some of the most innovative economies globally. Together
agreements to increase access to, and collaboration in
with the current NTIB members, these countries
developing, technologies and critical items.
represented nearly 35% of the world’s estimated GDP in

2022. Some have argued that working closely with some of
these countries—whether by expanding NTIB membership,
Other Resources
strengthening bilateral agreements, or leveraging other
Title 22, Code of Federal Regulations, Appendix Supplement No.
multilateral arrangements—could increase U.S. access to
1 to Part 126.
technology and other critical innovations.
Atlantic Council, Leveraging the National Technology Industrial
Policy Options for Congress
Base to Address Great-Power Competition, 2019.
Some officials from the United States and other NTIB
member countries have stated that, while increased
Heidi M. Peters, Analyst in U.S. Defense Acquisition
cooperation continues to be a priority of NTIB members,
Policy
the industrial bases are not meaningfully unified, and falls
Luke A. Nicastro, Analyst in U.S. Defense Infrastructure
short of the aspiration of seamless integration called for in
Policy
the FY2017 NDAA.
Potential related options for Congress include:
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Defense Primer: The National Technology and Industrial Base

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