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It doesn’t take more than a quick scan of the headlines to grasp the dangerous turn in today’s geopolitics, compared to the recent past. Wars in Ukraine and the Middle East, and increasingly combative rhetoric from newly anointed superpower China, signal an end to the relatively stable post-Cold War period. This stark vibe shift calls for a sharp pivot in national defense readiness and resilience. The Pentagon recently responded by issuing the first-ever National Defense Industrial Strategy (NDIS), designed to “catalyze generational change from the existing defense industrial base to a more robust, resilient, and dynamic modernized defense industrial ecosystem.”
Jerry McGinn, executive director of the Greg and Camille Baroni Center for Government Contracting in the Donald G. Costello College of Business at George Mason University, applauds the NDIS as “a strong call to action that is needed given the challenges facing us today.” He particularly salutes the Department of Defense (DoD)’s “recognition that it took decades for the U.S. to get into this situation,” citing the substantial drop in percentage of GDP spent on defense, as well as the emphasis on cost efficiencies over supply chain resilience, that took hold in the last 30 years. Appropriately, the NDIS pushes for fundamental change rather than quick fixes.
However, he states that “strategy is strategy, it doesn’t come with any resources…A lot of that’s out of the control of the department. They can propose, but then Congress disposes.” The success of the strategy, then, will largely depend on how DoD manages the levers of implementation that are under its control.
McGinn and the Baroni Center are no strangers to this issue. In March 2023, well before NDIS’ release, McGinn published an op-ed in Breaking Defense laying out a four-part framework for increasing industrial base resilience, informed by his prior experience as the senior career official in the Office of Manufacturing and Industrial Policy for DoD.
First, DoD should dramatically ramp up production with significant multi-year commitments aimed at replenishing diminished munitions stockpiles as well as ensuring that military aircraft and ships can withstand the losses incurred by large-scale combat. Second, some of DoD’s extremely lengthy and laborious acquisition processes should be switched out in favor of more agile, outcome-driven approaches used by industry. Third, methods such as second sourcing should be used to shore up weak spots in the supply chain. Fourth, DoD should remove barriers to increased industrial collaboration with U.S. allies and partners. (In a 2023 report, McGinn and co-author Michael T. Roche offer nine case studies to demonstrate how a “Build Allied” approach could work on a larger scale.)
All four steps remain important as the Pentagon looks toward putting NDIS into practice, McGinn says. But one stands out as especially urgent. “The most important by far is agile acquisition, that’s where most of the effort should go. At the end of the day, this is a government-driven market, it’s a monopsony. The government can change the market anytime by changing how they buy, hence the emphasis on agile acquisition.”
Here, too, the Baroni Center has been ahead of the curve, publishing numerous reports and white papers (with more in the works) deploying deep knowledge of the Pentagon’s procurement bureaucracy to target bottlenecks and outmoded processes.
For example, a 2022 report (co-authored by McGinn, Eric Lofgren and Lloyd Everhart) addresses the so-called “Valley of Death” that often ensnares promising, innovative defense projects due to the two-year lead time required for resource allocation. The report highlights existing areas of “execution flexibility,” or discretionary line items in the defense budget that can be used to support such projects. One possibility, the report suggests, involves innovation funds such as the Rapid Defense Experimentation Reserve, which was introduced in 2021 “to address high-need capability gaps across the military.” Additionally, the report recommends redefining project elements to encompass a broader range of efforts and initiatives, and taking fuller advantage of the department’s latitude in transferring funds between budget lines below a certain threshold.
These workarounds may prevent some worthy projects from getting stranded within the system, but they don’t address root causes. McGinn stresses the overarching need to repair the “rigid and linear Planning, Programming, Budgeting and Execution (PPBE) process” for distributing appropriated funds, which was inaugurated in 1961 by Secretary of Defense Robert McNamara. McNamara came to the DoD fresh from serving as president of Ford Motor Company, and the PPBE system smacks of peak industrial-era practice. Instead of trying to squeeze a 21st-century innovation ecosystem into what McGinn calls the “old, comfortable shirt” of PPBE protocols, the Pentagon should prioritize flexible, decentralized principles such as portfolio management that have long since been adopted by commercial industry.
Indeed, flexible acquisition is one of four main strategic priorities in the NDIS, following years of exploratory government efforts toward PPBE reform. “I want to give the government credit for that,” McGinn says. As the head of a research center known for its unique blend of political neutrality and domain expertise, “you want to reinforce good government action and keep pushing them in that direction.”