Strengthening the U.S. Defense Industrial Base: Policies and Practices for Ensuring Health, Profitability, and Diversity

Abstract

The U.S. defense industrial base (DIB) is fundamental to national security; however, the DIB faces significant challenges, supply chain fragility, industry consolidation, foreign dependence on critical materials, and shortages of skilled labor. These vulnerabilities threaten the DIB’s health and profitability, risk slowing modernization, and could undermine the U.S. competitive advantage. This paper examines policies and practices to strengthen the DIB by exploring three pathways: integrating small, medium-sized, and non-traditional contractors; incentivizing reshoring and securing critical supply chains; and designing acquisition policies that balance efficiency with long-term resilience. Drawing on Department of Defense assessments, Government Accountability Office reports, and scholarly research, this study identifies gaps in existing policy and highlights best practices. The research provides a detailed analysis of how current policies impact DIB profitability and diversity, offering actionable recommendations for policymakers to enhance industrial resilience and innovation. Ensuring a strong, profitable, and diverse industrial base is a strategic necessity for accelerating warfighting capabilities and sustaining U.S. national defense in the 21st century.