On January 11, 2024, the Department of Defense (DoD) announced its first-ever National Defense Industrial Strategy (NDIS) focused on building a modernized industrial ecosystem that provides a sustained competitive advantage to the US over its adversaries. Specifically, the NDIS provides a strategic framework to guide the DoD's engagement, policy development, and investment in the industrial base over the next three to five years. As part of this investment strategy, the NDIS highlights several investment tools and opportunities that DoD is already using to spur growth and innovation in key industries.
The DoD identified four strategic priorities to guide industrial action and resource prioritization: (i) resilient and secure supply chains; (ii) workforce readiness; (iii) flexible acquisition to lead to the development of strategies that strive for dynamic capabilities while balancing efficiency, maintainability, customization and standardization in defense platforms and support systems; and (iv) economic deterrence to promote fair and effective market mechanisms that support a resilient defense industrial ecosystem among the U.S. and close international allies and partners, economic security, and integrated deterrence. The DoD also outlined associated actions with, and potential risks of not achieving, each priority.
Finally, the DoD highlighted systemic risks that may impact achieving these priorities, including an inadequate workforce and skilled workers in manufacturing and engineering careers, inadequate domestic production of key materials and production capacity, instability of procurement (e.g., compliance burdens, changing procurement priorities, and technological obsolescence), and funding uncertainty.
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