From shipyards to semiconductors, watchdog warns of Defense Industrial Base risks


U.S. President Joe Biden holds a semiconductor during his remarks before signing an Executive Order on the economy in the State Dining Room of the White House on February 24, 2021 in Washington, DC. (Doug Mills/Pool/Getty Images)

WASHINGTON: At a time when the Defense Industrial Base (DIB) is under considerable strain, the Defense Department still lacks a “consolidated and comprehensive strategy to mitigate risks” to industry, according to a new watchdog report.

The report, published by the Government Accountability Office today, acknowledged that the Pentagon has spent “billions” and undertaken “numerous” initiatives to protect the industrial base, but says its strategy is currently being guided by four older, separate reports rather than one clear one.

“By including all elements in a consolidated strategy, DOD could better ensure that all appropriate organizations are working toward the same priorities, promoting supply chain resiliency, and supporting national security objective,” the report says.

Threats to the health of the industrial base have crystalized for Congress and top Pentagon leadership in the past couple years as the COVID-19 pandemic squeezed supply chains, but the report notes that for parts of the DIB weaknesses have been years or even decades in the making.

“For example, DOD reported that capacity and competition in the shipbuilding sector declined significantly over the past 50 years, with 14 shipyards that built Navy ships closing,” the report says. “Three other shipyards also exited the defense industry, and just one new shipyard opened — leaving only seven shipyards owned by four prime contractors.” (The report noted the Pentagon has spent over $1 billion in reported mitigation efforts related to Navy submarine and destroyer programs.)

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The GAO also highlighted the semiconductor market, noting that the Pentagon reported that between 1990 and 2019, domestic production for the tech decreased from 37% of the global market to 12%, while Asian markets have soared.

The report notes that DoD is mandated to produce an updated DIB strategy following the next National Security Strategy Report due later this year, but it was unclear if the updated strategy would be a single comprehensive one, as GAO suggests.

In all, GAO said it made six recommendations to the Pentagon, including developing “enterprise-wide performance measures to monitor the aggregate effectiveness of its efforts” as well as reports on its progress in protecting the DIB. The DoD, GAO said, “generally concurred” with the recommendations.

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