Big industry gives way to agile capability development, shared IP to bulk out allied supply chains

It is no secret that over the last four decades, Western nations, beyond a few outliers, have effectively undergone a period of rapid and ever-accelerating deindustrialisation.

Driven in large part by the period of hyper-globalisation in the aftermath of the Cold War and “End of History”, the chickens are now coming home to roost as COVID-19, the ongoing conflicts in Europe and the Middle East, combined with the increasing belligerence by the People’s Republic of China, arguably, the primary beneficiary of this epoch of stability.

While the mask has slipped slowly, for leaders across the Western world, efforts to expand and build out the combined industrial base are proceeding as “like-minded nations”, including the United States, Australia, United Kingdom, Japan and South Korea, seek to re-establish a modicum of economic deterrence.

At the core of this is the US “National Defense Industrial Strategy: Implementation Plan for 2025” or NDIS, which articulates the central pillars of an ambitious plan to reinvigorate America’s defence industrial base and supporting workforce, with a strong focus on leveraging partners to expand the capacity of the industrial base.

In the first part of this short series, we focused on the “big industrial base” implementation initiatives identified and articulated in the NDIS. In this second instalment, we will take a closer look at the final two implementation initiatives that have the potential to truly transform the alliance frameworks and the global economy as a whole.

Cutting-edge capabilities and mass through flexible pathways

Soviet dictator Josef Stalin famously said at the height of the Second World War that “Quantity has a quality all of its own”, speaking of the Soviet preference for vast quantities of material to overcome the engineering excellence of the German military’s platforms.

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Ultimately, we know that this statement proved correct as the Allies eventually overwhelmed the individually superior weapons of Hitler’s Germany through sheer volume of numbers.

This key lesson is once again emerging as a key priority for the US and Allies like Australia, where we have come to perhaps begrudgingly accept that the industrial might of potential peer and near-peer competitors is, at least for the moment, too immense for us to overcome individually, even for the United States, with only an aggregated industrial base capable of providing us with some form of parity.

However, the US and its partners are seeking to balance both quality and quantity to maximise the traditional technological and qualitative edge enjoyed by the Western world while also baking in the capacity to rapidly scale up production to provide mass at the tactical and strategic level.

This brings us to the fifth implementation initiative, which emphasises new capabilities using flexible pathways.

Highlighting this growing emphasis, the NDIS articulates “the importance of fielding new capabilities and adopting commercial-off-the-shelf
technologies more readily”.

Unpacking this further, the NDIS says: “This implementation initiative is designed to highlight and encourage the exercise of existing acquisition pathways that rapidly deliver dynamic capabilities to the warfighter while balancing efficiency, maintainability, customisation, and standardisation in defence platforms and support systems. Efforts related to this initiative will reduce development times and costs as well as increase scalability.”

This approach borrows from the lessons learnt throughout the Second World War and the early Cold War, which saw the need to produce reliable, easy-to-maintain, easy-to-upgrade, and easy-to-mass produce.

Critically in an era of mounting great power competition against a peer and cluster of near-peer competitors, these “old priorities” are now central again.

Initiatives like the US$200 million (AU$302.5 million) “Replicator” program, which is “a DOD-wide process that accelerates the delivery of innovative capabilities to warfighters at speed and scale”, is one such example, with the program aiming to “create a repeatable process by which the DOD can quickly field innovative capabilities in large quantities”.

Australia has, through various initiatives under the Advanced Strategic Capabilities Accelerator and the Defence Industry Development Strategy, begun to shift its own policies and procedures to prioritise a “speed-to-capability” approach and do so en masse.

This feeds into the introduction of flexible acquisition pathways that prioritise the collaborative nature of developing and fielding new capabilities and the often overly complex, bureaucratic, cost- and time-consuming nature of procurement processes that have come to dominate the procurement cycles across the Western world.

To this end, the NDIS says: “The Defense Industrial Base Consortium Other Transaction Agreement (DIBC OTA) is a vehicle that helps enable more rapid execution of Defense Production Act funding and can also allow for other federal agencies with similar investments to invest in projects awarded by DOD separately or jointly.”

In order to do so, the NDIS articulates the implementation of these new procurement processes, saying: “The primary desired outcome of this line of effort is to streamline the acquisition process, which is critical to the department’s success ... The DOD established the Middle Tier of Acquisition (MTA) pathway to rapidly prototype or produce capabilities. The rapid prototyping path provides for the use of innovative technologies to develop fieldable prototypes, demonstrate new capabilities, and meet emerging military needs.”

To avoid the potential for failure, particularly through a scattergun approach, the NDIS articulates a growing need to target its efforts to capitalise on new technologies and industrial techniques to enhance the capacity of the “big industrial base”, with the NDIS saying: “The technology areas include microelectronics; quantum science; future-generation wireless technology; advanced materials; trusted artificial intelligence and autonomy; integrated network systems-of-systems; microelectronics; space technology; advanced computing and software; human-machine interfaces; hypersonics; and integrated sensing and cyber.”

However, the United States can’t do all of this on its own, even with its unbridled economic and industrial potential has its limits, and the post-Second World War order will only survive through the cooperation and collaboration of independently capable industrial powers capable of supporting the greater whole, leading us to the final implementation initiative and arguably, the most important one.

Breaking down barriers to IP sharing, data analysis

Australia, in particular, has been at the forefront of confronting the powerful protections put in place by the United States to keep its intellectual property, particularly around US military technology, as we have sought to stand up various components of a sovereign defence industrial base, which require access to sensitive technologies and intellectual property.

Front and centre of this domestic push is Australia’s multibillion-dollar Guided Weapons and Explosive Ordnance (GWEO) Enterprise, which, for initial success in the material context and critically for the success of the aggregated strategic industrial base, requires access to the intellectual property for a range of munitions.

In recognising the market power that the US Defense Department holds, the NDIS says: “Intellectual property is critical to modern warfighting capabilities, including sustainment efforts. The department has a compelling interest in integrating intellectual property (IP) planning fully into acquisition and product support strategies to prevent overleveraging of privately controlled proprietary technology and undermining return on government investment.”

At the fundamental level, this integration of the IP into acquisition and product support provides greater opportunity for allied integration into the US defence industrial base and, by extension, adds additional critical capacity into the alliance network and strengthens it through multiple productive hubs.

In avoiding a single point of failure, this decentralisation via IP builds on the production and supply chains and allied and partner industrial collaboration implementation initiatives and further expands the aggregated economic deterrence across the alliance network.

Unpacking this policy undercurrent, the NDIS says: “DOD will more systematically encourage vendors to develop competitive business models and provide corresponding offers that better balance both parties’ interests in ensuring return on their technology investments while promoting and enhancing DOD options for increased competition throughout the life cycle of acquisition and sustainment programs ...”

Going further, the NDIS adds: “Recognising that IP considerations must involve extensive and transparent collaboration with industry, Office of the Under Secretary for Defense (Acquisition & Sustainment) (OUDS A&S) will create opportunities to foster balanced communication and relationships founded upon industry and government’s mutual needs to remain innovative and sustainable. This entails building clear and consistent communication detailing that IP is both a necessary commodity for program life cycle product support and a necessary investment in industry for future innovation. ”

Once again, this opens the doors for closer allied industrial collaboration, but any allied industrial collaboration needs to be efficient. The second component of the final implementation initiative is the importance of data analysis.

Recognising the importance of this, the NDIS says: “Effective data management and analysis can be a force multiplier. Building on the NDIS, the department strives to better leverage data, analytics, and artificial intelligence (AI) to improve planning and sub-tier visibility in the defense industrial ecosystem.”

Final thoughts

Australians are going to be asked to accept a number of uncomfortable realities in the coming years. First and foremost, we will have to accept that while the world is increasingly becoming “multipolar”, the Indo-Pacific, in particular, is rapidly becoming the most hotly contested region in the world.

This has been underpinned by the emerging economic, political, and strategic might of powers like China, India, Pakistan, Thailand, and Vietnam, and the established and re-emerging capability of both South Korea and Japan, in particular, are serving to create a hotbed of competition on our doorstep.

At the forefront of preserving Australian sovereignty in this era is a robust, resilient and competitive industrial base and economy, no longer dependent on a limited number of income streams but rather value add and export-oriented “homeland economics”, leveraging Australia’s natural and human competitive advantages can set us apart and secure our interests.

Second, both the Australian public and our policymakers will have to accept that without a period of considered effort, investment and reform, or as I like to colloquially refer to it, our rocky montage moment, current and future generations of Australians will be increasingly impoverished, living in a nation pushed around by the region’s now rising powers.

Get involved with the discussion and let us know your thoughts on Australia’s future role and position in the Indo-Pacific region and what you would like to see from Australia’s political leaders in terms of partisan and bipartisan agenda setting in the comments section below, or get in touch at This email address is being protected from spambots. You need JavaScript enabled to view it. or at This email address is being protected from spambots. You need JavaScript enabled to view it..