Defense Manufacturing During the Conflict- Risks & Scopes

The escalating military competition between the United States and China necessitates a critical reassessment of defense strategies and capabilities. This analysis gives insights regarding the challenges and opportunities facing the U.S. defense sector in this new era. It examines vulnerabilities within supply chains, proposes measures to improve resilience and capacity, and advocates for a holistic approach that prioritizes immediate procurement and the long-term sustainability of defense manufacturing.

US-China Military Competition

New Era of Competition- The U.S. and China are engaged in a great-power competition spanning various domains, most notably in the military sphere.

China's Military Modernization- China has rapidly modernized its military, surpassing the U.S. in specific areas like hypersonic weapons. The People's Liberation Army Navy or PLAN's ship count exceeds the U.S. Navy's, with continued growth projected.

Response Required- The U.S. must strengthen its defense capabilities and those of its allies in the region to address the growing China threat.

Planning and Budgeting- Concerns exist that current DOD or Department of Defense planning scenarios don't adequately account for the realities of war with and deterrence of China. Critical weapon manufacturing could cease abruptly when the demand is most dire.

Defense Manufacturing Supply Chain Vulnerabilities

Limited Visibility- The Department of Defense has a lack of knowledge of its supply chains. They rely on main suppliers, who then rely on other suppliers. Thus, the information is scattered and there's a lack of understanding beyond the first few levels.

Hidden Risks- This lack of transparency obscures critical vulnerabilities, such as dependence on China for raw materials and components.

Single-Source Suppliers- Many defense system components have only one supplier, creating a single point of failure that can disrupt entire manufacturing processes.

Delayed Response- The DOD often discovers supply chain issues only after problems arise, hindering timely mitigation.

To address these vulnerabilities, the DOD must prioritize greater transparency and redundancy in its manufacturing supply chains, ensuring resilience and minimizing disruptions to critical defense production.

Strategic Response to the Defense Challenges

Honest Assessment- The DOD must conduct a thorough assessment of global threats.

Force Structure and Budget- The DOD and executive branch should use this assessment to develop a risk-mitigating force structure and corresponding budget.

Funding- The legislative branch must appropriate the necessary funds to support this strategy.

By addressing these issues, the U.S. can better prepare for and manage the escalating military competition with China, ensuring its national security and regional stability.

Improving Resilience and Capacity

Defense Production Act (DPA)- Title III of the DPA empowers the President to bolster domestic industrial capabilities, incentivizing businesses to enter or expand in the defense sector. This tool should be reserved for urgent needs not met by market forces or standard procurement practices.

Acquisition Strategy Redefined- Traditional metrics of cost, schedule, and performance must now include resilience. Defense contracts should address production risks and require a surge in manufacturing capacity for certain items.

Investing in Surge Capacity- The DOD and Congress should allocate funds to maintain this latent manufacturing capacity, ensuring readiness for increased production when needed.

Training and Education- The acquisition workforce should be trained in resilience-focused strategies at the Defense Acquisition University.

Strengthening Defense Manufacturing Supply Chains

Improved Visibility- The Department of Defense needs a clearer understanding of its suppliers and all the steps involved in getting its materials to handle problems well.

Data-Driven Solutions- Utilize modern tools and blockchain to gather, maintain, and analyze supply chain data for informed decision-making.

Risk Management Framework- Implement a framework to assess the probability and consequences of supply chain disruptions, allowing targeted allocation of resources.

Tailored Mitigation- Address vulnerabilities with strategies specific to each sector and acquisition program.

Multiyear/Block-Buy Contracting- Employ multiyear and block-buy contracting to provide stability for manufacturers, incentivize investments in facilities and workforce, and achieve cost savings through optimized production.

Developing Defense Manufacturing Capacity

Balancing Act- Traditional defense acquisition focused on cost, effectiveness, and time. Now, it must also address the weakened defense industrial base.

Long-Term Contracts- The DOD needs to sign longer-term contracts with industry for critical platforms and munitions, prioritizing the development of manufacturing capacity over immediate procurement needs.

Surge Capacity- Contracts should require industry to maintain surge production capabilities, ensuring the U.S. can rapidly increase manufacturing output in times of crisis.

Foreign Military Sales- Encouraging more Foreign Military Sales can boost defense manufacturing capacity while easing the burden on taxpayers.

Risk Identification- Policymakers must identify specific risks within various supply chains to strengthen the industrial base strategically.

Supply Chain Visibility- Improving supply chain visibility is crucial for the DOD to understand and address manufacturing challenges effectively.

By adopting these measures, the DOD can strengthen the resilience of defense manufacturing supply chains, ensuring uninterrupted production of critical equipment and minimizing vulnerabilities.

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