Technology and Industrial Base Policies Remain Relevant per NDAA 2024

Adherence to technology and industrial base policies can help alleviate supply chain disruptions and dependence on potential adversaries as sources of supply. In what might seem a minor change section 851 of NDAA 2024 added services and supplies to materials in subsection (a) (9) of 10 U.S.C. 4811:

SEC. 851. ADDITIONAL NATIONAL SECURITY OBJECTIVES FOR THE NATIONAL TECHNOLOGY AND INDUSTRIAL BASE. Section 4811(a)(9) of title 10, United States Code, is amended— (1) by inserting ‘‘services, supplies, and’’ before ‘‘materials’’; and (2) by inserting before the period at the end the following: ‘‘, including by reducing reliance on potential adversaries for such services, supplies, and materials to the maximum extent practicable’’.

Critical to achieving a strong technology and industrial base is subsection (b) of section 4811. The policy enacted by subsection (b) years ago is routinely ignored by the military department acquisition organizations as well as those of most of the defense agencies and combatant commands. Subsection (b) creates a civil-military integration policy. It states:

(b) Civil-Military Integration Policy.-The Secretary of Defense shall ensure that the United States attains the national technology and industrial base objectives set forth in subsection (a) through acquisition policy reforms that have the following objectives:

(1) Relying, to the maximum extent practicable, upon the commercial national technology and industrial base that is required to meet the national security needs of the United States.

(2) Reducing the reliance of the Department of Defense on technology and industrial base sectors that are economically dependent on Department of Defense business.

(3) Reducing Federal Government barriers to the use of commercial products, processes, and standards.

Neither the Secretary of Defense nor the secretaries of military departments or leaders of other elements of DOD have established “policy reforms” that implement the objectives in (1) to (3) of subsection (b). This lack of leadership and failure to adhere to the congressional mandate has resulted in the technology and industrial base supporting national security objectives remaining dominated by just a few companies that are not competitive in the commercial marketplace and are dependent on the “takes too long, costs too much” traditional DOD system. In other words a policy exactly opposite of that required by law is being perpetuated by the Secretary of Defense and other key officials.

Volumes could be written on this subject, just a few points will be made by this commentary. The mandate of subsection (b) is not impossible nor is it too hard. Congress has provided the means to accomplish the objectives and even required their use. In NDAA 2018 Congress directed:

SEC. 867. PREFERENCE FOR USE OF OTHER TRANSACTIONS AND EXPERIMENTAL AUTHORITY. In the execution of science and technology and prototyping programs, the Secretary of Defense shall establish a preference, to be applied in circumstances determined appropriate by the Secretary, for using transactions other than contracts, cooperative agreements, and grants entered into pursuant to sections 2371 and 2371b of title 10, United States Code, and authority for procurement for experimental purposes pursuant to section 2373 of title 10, United States Code.

Sections 2371, 2371b and 2373 are currently codified as sections 4021, 4022 and 4023 of title 10. To effectively make use of these authorities Congress has mandated as part of section 4021:

(g) Education and Training.-The Secretary of Defense shall-

(1) ensure that management, technical, and contracting personnel of the Department of Defense involved in the award or administration of transactions under this section or other innovative forms of contracting are afforded opportunities for adequate education and training; and

(2) establish minimum levels and requirements for continuous and experiential learning for such personnel…

Moreover, to show that these policies were not limited to science projects,  unique circumstances, or small projects, Congress enacted section 804 of NDAA 2016, middle-tier of acquisition. Using MTA combined with innovative contracting approaches such as other transactions is a perfect start to implement the policy reforms required by Congress including those involving major defense programs.

Another almost unused contracting authority is subsection (d) (1) (D) of section 4022. This allows traditional contractors to contract via an other transaction for prototype (with potential for follow on production). The “exceptional circumstances” relating to “business arrangements or structures” required by this subsection is simple to satisfy. Merely structuring agreements with payable milestones common in OT agreements which are neither cost reimbursement nor fixed price as contemplated by Part 16 of the Federal Acquisition Regulation (which would require a formal deviation if attempted with a FAR contract) would work. This would begin to ween traditional contractors off the cost-reimbursement paradigm. Senior Procurement Executives can issue policies recognizing this or other circumstances that constitute “exceptional circumstances” on a class basis expediting determinations. Another approach is to utilize section (d) (1) (A) and bring in non-traditional contractors for significant roles in major programs implemented through a modular open system approach (another policy often ignored).

Bottom line: a key policy requiring reforms of the acquisition system is being ignored to the detriment of U.S. national security, added expense to the taxpayer, and delay in getting needed capabilities to warfighters. The reforms are not too hard to implement. It merely takes respect for the law plus the will and intelligence to do it.

written by Richard L. Dunn