The 2022 National Defence Strategy’s Integrated Deterrence has increased U.S. defence procurement, R&D, and maintenance needs. Over half of U.S. military systems are outdated, and nearly half of major defence acquisition programs face delays. The Russo-Ukraine conflict has exposed ammunition supply weaknesses. Even the rapid acquisition efforts face cost escalation and teething technical issues.
By Brigadier Vivek Verma (Retd)
a 5 mins read.
US President Dwight D. Eisenhower is credited for famously coining the term the ‘military-industrial complex’ (MIC) in his January 1961 presidential farewell speech. He counselled the establishment of acquiring “unwarranted influence, whether sought or unsought, by the military-industrial complex”. He warned about the dangers of “the disastrous rise of misplaced power” that exists and will persist. General Eisenhower, as the US President for two terms at the commencement of the Cold War weathered criticism for going slow on increased defence spending despite pressure to build more military equipment to beat the USSR in the arms race.
However, the US defence expenditure has swollen exponentially to USD 877 billion for FY 2024 and has provisioned USD 850 billion for FY 2025. It is almost 40 per cent of the world’s military spending. The current US military spending may be relatively low at three per cent of the GDP, but it is higher than at any point of the Cold War in inflation-adjusted terms. Notwithstanding, the large budgetary allocation, the 2018 National Defence Strategy (NDS) pose a challenge to compete with two leading powers- Russia and China and deter two rogue powers- Iran and North Korea while it wants to win the Global War on Terror (GWOT). According to an estimate, 53 per cent of US military hardware has legacy systems compared to 43 per cent of Chinese military hardware.
According to the 2022 US Government Accountability Office (GAO) report, almost half of the 63 major defence acquisition programmes (MDAP) struggle with schedule delays. The Russo-Ukraine conflict has also highlighted the chinks in the US armoury to meet the surge capacity of arms and ammunition to bolster the Ukrainian war effort. The US Department of Defence (DoD) has been increasingly using the middle tier of acquisition (MTA) pathway for rapid prototyping and fielding. However, the report observes that the lack of sufficient product knowledge before starting follow-on efforts has added to the cost escalation, schedule overruns risk and technical challenges.
The NDIS report cites low purchasing trends, shifts in procurement priorities, program cancellations, and compliance burdens as reasons for the MIC to sustain short-term stable production capacity.
NDIS OVERVIEW
Despite criticism and scepticism surrounding the MIC and power elite clubs and institutions, the Department of Acquisition and Sustainment (DAS) under DoD is looking for measures to meet the demand rising from the Russo-Ukraine War, counter the Chinese coercive policies in shaping the international system in general and Indo-Pacific in. In 2023, DAS and the Office of Management and Budget (OMB) advocated for a multi-year procurement authority that can allow manufacturers to plan their production and investment cogently.
In January 2024, DoD released its first-ever National Defence Industrial Strategy (NDIS) aiming to modernise MIC to meet the future challenges of capability and capacity building. The 59-page strategy document outlines the challenges faced by the numerous stakeholders and the defence industry. The foremost is the underutilisation of Multi-use technologies and innovations and their cost-effective adaption into the military. It adds scepticism about fewer young generations opting for manufacturing-related specialisation creating a shortfall of skilled workers.
The strategy paper also talks about the uncertain funding from DoD and prolonged cost-driven offshoring of the manufacturing sector as the primary reason for disincentivising the modernisation of manufacturing processes. The NDIS report also lists issues related to low buying patterns, changes in the priority of procurement, programme cancellations and the burdens of compliance, as the reason for the MIC to maintain short-term steady production capacity. The problem of forecasting the requirements of allies and partners, navigating the exportability regulations and lengthy procurement cycles have also been cited as the most enduring challenges faced by defence companies.
MITIGATING MEASURES
The 2018 and 2022 National Defence Strategy are the capstone documents driving the NDIS initiative. The future battlefield scenario for dealing with leading powers like Russia and China and operationalising the doctrine of ‘Integrated Deterrence’ calls for larger reliance on situational awareness and the need to reduce the latency in decision-making by having embedded systems tied to an Internet of Battlefield Thing (IoBT). NDIS aims to foster speed and scale of defence production by incorporating small and medium-sized businesses and strengthening American private and government-owned organic industrial base (OIB) innovation and manufacturing ecosystems.
To mitigate the challenges ailing the MIC, the NDIS focused on four critical areas. Firstly, making supply chains resilient. Secondly, to create a skilled and diverse workforce. Thirdly, making the acquisition plan flexible with the capability to accelerate the development and production of new technologies and lastly, deterring economic infringement by adversaries. Each of these demands a focused approach.
- Resilient Supply Chain: One of the measures recommended to achieve resilience in the supply chain and manage near-time risks was to link inventory forecasting and stockpile planning to production capability. It talks of diversifying the supplier base and investing in new production methods and innovations. It is looking at developing new certification and testing systems and a life cycle engagement with the original equipment manufacturers (OEM). The Foreign Military Sales (FMS) Process has been given due impetus to add to the MIC’s financial health and national job creation. To preserve the IPR and design, due emphasis has been laid on industrial cybersecurity.
- Enhance Workforce Readiness: The NDIS recommends developing a framework that integrates the acquisition and sustainment workforce strategies. It seeks to target defence-essential industrial skills through a collaborative approach between academia, industry, professionals and laboratory. DoD has created the ‘I-DREAM4D’ (Innovation Driven Research/Education Ecosystem for Advanced Manufacturing for the Defence) consortium comprising five higher education institutions, national research centres, national labs, more than ten top defence manufacturers and community colleges.
- Flexible Acquisition: The lessons from the protracted attritional Russo-Ukraine conflict have impacted the strategy paper as the rapid depletion in military resources was witnessed. It advocates investment in advanced virtual modelling methodologies while embracing commercially off-the-shelf (COTS) systems. The paper acknowledges the need to promote a modular open systems approach (MOSA) to manage proprietary components and cautions the need to consider the extra portability and interoperability during system design rather than the post-production phase. It seeks to obtain priorities from the DoD to create a sustained demand signal for a multi-year programme (MYP) allocation. To provide flexibility to the acquisition process, it plans to work with the US Congress to modify contracting strategies and update industrial mobilisation.
- Economic Deterrence: The NDIS recognises the threat of adversarial capital in an era of strategic competition. It calls for friend-shoring of resources based on geopolitical partnership while preventing investments by adversarial nations in key US and allied defence industries to siphon ‘critical technologies and gain access to pioneering innovation and research and development efforts”. It recommends strengthening enforcement against adversarial ownership and cyber attacks by collaborating with other federal executive departments. The NDIS is especially sceptical of Chinese forays and recommends DoD to create inter-agency synergy, and work with Congress and global Allies “to eliminate defence industrial dependencies emanating from China”.
LESSONS FOR INDIA
India has embarked on the journey to self-reliance through multiple programmes like ‘Atm Nirbhar Bharat’ or ‘Make In India’ and by infusing it with productivity-linked incentives (PLI) and now with employment-linked incentives (ELI), Skill India and Start-Up India programme. The government of India has launched the Technology Demonstrator Fund to give impetus to develop projects beyond the proof of concept stage. Indian Ministry of Defence (MoD) and all services are batting for indigenisation, and lots of private companies have plunged into the strategic space of the defence industry. However, the nascent private defence industry and government-owned enterprises need a bipartisan push and centre-state collaboration to succeed. The publication of the Technology Perspective and Capability Roadmap (TPCR) by HQ Integrated Defence Staff (IDS) under MoD and the Long Term Integrated Perspective Plan (LTIPP) covers details of acquisition plans for 15 years, for use by industry. However, lack of budgeting or absence of MYP adds to the industry dilemma of setting and stepping up production and the associated ecosystem. MoD will need to partner with academia, national labs, trail centres and industry to create centres of excellence within a Defence Economic Zone (DEZ) to create resource optimisation and excellence.
India should strive to establish an indigenous certification and testing agency within the MoD to expedite trials and acquisitions.
MIC has the potential to create large job opportunities for the youth. Unlike the US, there is no stigma associated with manufacturing jobs. A concerted initiative by the MoD to forecast the acquisition and sustainment plan and the related industrial skill sets will go a long way in creating a requisite talent pool. All endeavours must be made to have an indigenous certification and testing agency within the MoD that can fast-track the trials and acquisition. The contracting mechanism also needs to be harmonised while providing decent opportunities to small and mid-sized companies. The strengthening of the FMS processes by having dedicated sales teams with selected Heads of Missions will go a long way in making Indian MIC robust. India will do well if a white paper on strengthening the MIC is formulated. The Government of India can even consider creating a MIC cell within NITI Aayog for synergistic policy formulation.
Creating a robust MIC is of utmost national security importance for India. The national leaders’ response option to a conflict can either be credible or constrained depending on the MIC capacity. The Armed Forces will do well to create an acquisition talent pool by instituting them as part of professional military training. A fair fight is not a desirable condition for the armed forces.
(Brigadier Vivek Verma (Retd) was the former Deputy Director of Indian Army Think Tank CLAWS, New Delhi and a former Senior Research Fellow at India’s oldest Defence Think Tank, USI of India, Delhi. He has also authored the book, ‘Non-Contact Warfare: An Appraisal of China’s Military Capabilities’. The views expressed are of the author and do not necessarily reflect the views of The News Analytics Journal.)
