The 2024 National Defense Industrial Strategy: Issues for Congress

The 2024 National Defense Industrial Strategy: Issues for Congress

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INSIGHTi

The 2024 National Defense Industrial
Strategy: Issues for Congress
January 29, 2024
The National Defense Industrial Strategy
On January 11, 2024, the U.S. Department of Defense (DOD) publicly released its first-ever National
Defense Industrial Strategy (NDIS). According to DOD’s Assistant Secretary of Defense for Industrial
Base Policy—the official responsible for day-to-day oversight of the defense industrial base (DIB)—the
aim of the strategy is to “guide the Department’s engagement, policy development and investment in the
industrial base over the next three to five years.” To do it, the NDIS identifies four “long-term priorities”
and describes the actions necessary to accomplish each priority (see Table 1). The NDIS also provides
details on risks and “illustrative outcomes” associated with each priority, as well as ten “systemic
challenges” facing the industrial base (these challenges are: underutilization of multi-use technologies; an
inadequate workforce; inadequate domestic production; non-competitive practices; long lead times; sub-
tier supplier fragility; lack of DOD market share; procurement instability; funding uncertainty; and
limited knowledge of ally/partner requirements).
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Table 1. NDIS Priorities and Actions
Priority
Definition
Associated Actions
•
Incentivize industry to expand capacity
•
Increase inventory and improve stockpile
planning
•
Expand government support for domestic
production
Resilient
“The DIB can securely produce the products,
•
Diversify supplier base and invest in new
Supply
services, and technologies needed now and in
production methods
Chains
the future at speed, scale, and cost.”
•
Leverage data analytics to improve visibility over
and management of supply chain risks
•
Engage allies and partners to expand global
defense production
•
Improve the Foreign Military Sales process
•
Enhance industrial cybersecurity
•
Prepare workforce for future technological
innovation
•
Continue targeting defense-critical skil sets in
manufacturing and STEM
Workforce
“A skil ed and sufficiently staffed workforce
•
Readiness
that is diverse and representative of America.”

Increase access to apprenticeship and internship
programs
•
Destigmatize industrial careers
•
Expand recruitment of non-traditional
communities
•
Broaden platform standards and interoperability
•
Strengthen requirements process to curb ‘scope
creep’
•
Prioritize off-the-shelf acquisition where
Acquisition strategies that strive for dynamic
applicable and reasonable
capabilities while balancing efficiency,
•
Increase access to intellectual property and data
Flexible
maintainability, customization, and
rights to enhance acquisition and sustainment
Acquisition
standardizations to reduce development times,
•
Consider greater use and policy reform of
reduce costs, and increase scalability.
contracting strategies
•
Continue to support acquisition reform
•
Update industrial mobilization authorities and
planning to ensure preparedness
“Fair and effective market mechanisms that
•
Strengthen economic security agreements
support a resilient defense industrial
•
Enable international interoperability standards
ecosystem among the U.S. and close
through active participation in standards-setting
Economic
international allies and partners and contribute
bodies
Deterrence
to economic security and integrated
deterrence. Fear of materially reduced access
•
Fortify alliances to share science and technology
to U.S. markets, technologies, and innovations
•
Strengthen enforcement against adversarial
sows doubt in the minds of potential
ownership and cyber attacks
aggressors.”
•
Strengthen prohibited sources policy
Source: National Defense Industrial Strategy, Department of Defense, January 2024. Available online at
https://www.businessdefense.gov/docs/ndis/2023-NDIS.pdf.

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Issues for Congress
Background
The NDIS was released in the context of what some observers perceive as a challenging situation for the
U.S. defense industrial base. Beyond supplying the U.S. military with the equipment necessary to deter
(and, if necessary, prevail in) great power conflict, the DIB has also been tasked to produce weapons
systems and munitions for international partners currently engaged in armed conflict (e.g., Ukraine and
Israel) or that could become so in the future (e.g., Taiwan). Additionally, some analysts and
policymakers—including the NDIS’ authors—argue that certain market developments (for example, the
consolidation of prime defense contractors since the 1990s, or the widespread adoption of ‘just-in-time’
approaches to logistics) have reduced the capacity and resilience of U.S. defense suppliers. Partly as a
result of these concerns, Congress has included provisions intended to strengthen the DIB in recent
defense authorization and appropriations legislation, and the executive branch has announced or
implemented actions to accomplish various other DIB-related objectives. For more information on the
DIB, see CRS Report R47751, The U.S. Defense Industrial Base: Background and Issues for Congress.
The NDIS raises several questions for Congress, including: 1) whether or not to enact additional
appropriations; 2) whether or not to create or modify industrial base authorities; 3) how potentially to
prioritize among competing NDIS recommendations; and 4) how potentially to oversee NDIS
implementation. In addition to these questions (discussed below), Congress may consider whether the
findings and assumptions undergirding the strategy’s recommendations are themselves sound.
Resourcing the NDIS
Although the NDIS does not provide details on the costs of its recommendations, many are likely to
require additional resources to achieve their intended effects. For example, the “Resilient Supply Chains”
and “Workforce Readiness” sections include recommendations for new or expanded DIB investment and
incentive programs, supply chain monitoring capabilities, and workforce development programs that may
require funding beyond the current DOD budget.
Congress may assess the fiscal implications of the NDIS and determine whether or not to appropriate
funds for it and the level of any appropriations. Congress may also consider whether certain DOD
accounts or programs may be particularly well-suited to accomplish NDIS goals. Given the multiplicity of
existing DIB-related programs (which include, for example, Defense Production Act Title III, the
Industrial Base Fund, the Defense Manufacturing Community Support Program, the Manufacturing
Technology Program, the National Imperative for Industrial Skills, and the Manufacturing USA
Network), Congress may consider whether to fund efforts it assesses to be especially effective and
priorities, if any.
Creating or Modifying Industrial Base Authorities
As part of its “Flexible Acquisition” priority, the NDIS calls for DOD to work with Congress “to modify
contract authorities to align with present defense production priorities” and “set up the legal and
regulatory conditions to ensure [industrial] mobilization ability in the future.” Neither of these two
recommendations specifies which authorities or legal/regulatory conditions DOD is seeking to change or
establish. However, the first recommendation is presented in the context of balancing flexibility against
other contract risks (including “complexity, transparency and accountability [issues], cost overruns…
[and] limited competition”), and the second is identified as concerning “the legal and regulatory

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mechanisms that enable the United States government to rapidly expand, reconfigure, and draw on” the
DIB during periods of crisis.
Congress may consider whether or not to change the statutory framework governing defense contracting
and industrial mobilization. Additionally, given the strategy’s lack of detail on this topic, Congress may
consider requesting or requiring more information from DOD on the precise nature of the proposed
changes.
Weighing Competing Recommendations
The NDIS contains a number of recommendations whose concurrent implementation may create policy
conflicts or contradictions. For example, the NDIS states that it both seeks to “mitigate cybersecurity
costs of entry to work in the defense industrial ecosystem” and “enhance industrial cybersecurity.” While
these two aims are not intrinsically opposed to each other, in practice the enactment of more rigorous
cybersecurity requirements may create additional barriers to entry for small or non-traditional defense
contractors. As another example, the NDIS simultaneously aims to “continue and expand support for
domestic production” and “engage allies and partners to expand global defense production.” Again, while
these aims are not necessarily in conflict, because foreign and American defense suppliers routinely
compete for business, expanding foreign defense production may negatively impact the market
performance (and, ultimately, the production capacity) of domestic firms. Congress may weigh these and
other tradeoffs as it considers potential appropriations or other legislative provisions to support NDIS
priorities.
Overseeing Implementation
According to the Assistant Secretary of Defense for Industrial Base Policy, DOD will release “a detailed,
classified implementation plan with near-term, measurable actions and metrics to gauge progress,” as well
as an unclassified overview of the classified plan, at some point “in the coming months.” In the meantime,
Congress may refer to the “illustrative outcomes and outputs” identified for each NDIS priority area to
inform its oversight efforts or request additional information from DOD.

Author Information

Luke A. Nicastro

Analyst in U.S. Defense Infrastructure Policy

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
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