By Robbin Laird

I was not amazed but concerned when one of the few comments which VP Harris made in her acceptance speech about the U.S. military was this one: “As commander-in-chief, I will ensure America always has the strongest, most lethal fighting force in the world.”

Leaving aside the Blitzkrieg withdrawal from Afghanistan for which she was one of the key players in doing, how on earth will her economic promises and program do that?

The United Stats and its allies face a daunting challenge to build an arsenal of democracy to protect our collective interests in a world of multi-polar authoritarian powers shrinking the rules based order.

In fact, I think the “last supper” during the Clinton years needs to be over-turned in favor of a much much broader industrial base than represented by a small group of industrial primes.

We need a serious re-configuration of what we consider the defense industrial base with a real inclusion of smaller companies than is being pursued currently.

Recently, Michael Shoebridge, focused on the defense industrial challenge facing Australia. Shoebridge, a well-known Australian defence analyst, argued that the current Australian government’s lackluster investment in Australian defence industry, made little sense given the stark situation facing U.S. defence industry.

As I have argued in various of my books on Australian defence,. the challenge is to build out an alliance wide arsenal of democracy rather than hope for the United States suddenly to become one even if one was pursuing a “Make Great Again” agenda.

We are way past those times and need comprehensive and creative cross-alliance industrial efforts that require old ITAR and trade policies to be replaced, and not at the speed the State Department operates.

In his recent article on the defence industrial base challenge, Shoebridge provided a compelling argument which follows:

We’ve had recent announcements from AUSMIN and AUKUS, the two acronyms describing our peak US-Australia alliance system that combine to show Australia’s defence strategy in action. 

Together, they demonstrate that Australia’s plan is to rely on US industrial power supplying the critical things our Australian Defence Force will need in the event of a war in our region. Those things include missiles, munitions, spares and even replacement aircraft and tanks. And let’s not forget Virginia class submarines, along with Aegis combat systems and Vertical Launch Systems for the Navy’s surface fleet. We’re also relying on a growing direct US military presence here in Australia, as our own military struggles to maintain even existing levels of capability.

But US planners and analysts have realised America is no longer the boundless arsenal of democracy. The net result is that right at a time when Americans themselves are self-diagnosing their defence industrial vulnerabilities and weaknesses in increasingly blunt, urgent ways, Australian planners have doubled down on their assumptions of endless US supply and support. That’s a horribly dangerous mistake for us and for our US ally.

Why is Australia’s strategy based on this foundational assumption of US supply?

A few factors come to mind: a great dollop of inertia that makes it easy to continue a decades-long practice of relying on the giant US defence industrial base, along with lazy assumptions that Australian companies can’t supply our military needs because they can’t scale and can’t produce the technological wizardry we expect from the US. And the experience of limited wars like Iraq and Afghanistan, which were all about sending limited Australian force elements that plugged into US logistics systems to replenish anything big they used – US missiles being an obvious example from Iraq. As long as our ADF turned up less needy than South Pacific militaries, it was all good.

The most damaging reason, though, is an almost wilful blindness to real US defence industrial capacity – and weakness –  at a time when Americans themselves are recognising this and calling for major change.

We need to take some time to understand that the US defence industrial base is now unable to meet the needs of the US military itself, let alone have the spare capacity to provide everything our military plans to receive from US suppliers in a time of conflict. 

Instead, “in a conflict with China, the United States would largely exhaust its munitions inventories in as few as three to four weeks, with some important munitions (e.g., anti-ship missiles) lasting only a few days. Once expended, replacing these munitions would take years.”

And we need to give up on the overriding assumption that the US can simply scale up when required to fight and win a protracted war with us as plug in forces at their side.

That means we need to do more to meet our military’s needs from our own domestic economy and Australian defence companies. This will require a radical shift in behaviour, policy, plans, procurement and budget direction. The good news is there is latent capacity in existing Australian defence and broader industry for our Defence Department to take advantage of.

So, to the dose of reality. 

This comes from the July 2024 report by the Commission on the National Defense Strategy, which has now been submitted to the US Congress and US President Biden.  It’s 113 pages long, but an easy if disturbing read.

To save your time and to distil its key findings and reasoning, I’ve copied selected paragraphs below, simply following the order of the report itself.  This avoids me paraphrasing the Commission’s words and lets their diagnosis speak for itself.  I’d like to be able to tell you there are other sections of the report that counterbalance the dire assessment below, but unfortunately, that’s not true. 

Instead, here are 30 paragraphs that should make Australian ministers and senior officials rethink fundamental assumptions and plans for how we are spending the $765 billion allocated to our military and defence organisation over this next ten years.

Commission on the National Defense Strategy Report of July 2024

Excerpts from Report’s summary:

The Commission finds that, in many ways, China is outpacing the United States and has largely negated the U.S. military advantage in the Western Pacific through two decades of focused military investment. Without significant change by the United States, the balance of power will continue to shift in China’s favor. The US Department of Defense’s (DoD’s) “business practices, byzantine research and development (R&D) and procurement systems, reliance on decades-old military hardware, and culture of risk avoidance reflect an era of uncontested military dominance. Such methods are not suited to today’s strategic environment.

There are recent examples that demonstrate that DoD can move quickly, break with tradition, and engage industry, including the rapid stand-up of the Space Force, the Defense Innovation Unit, the Office of Strategic Capital, and the Replicator Initiative, but these examples remain the exception rather than the rule. The larger elements of DoD must follow suit. DoD leaders and Congress must replace an ossified, risk-averse organization with one that is able to build and field the force the United States needs.

The U.S. military lacks both the capabilities and the capacity required to be confident it can deter and prevail in combat. It needs to do a better job of incorporating new technology at scale; field more and higher-capability platforms, software, and munitions; and deploy innovative operational concepts to employ them together better. The war in Ukraine has demonstrated the need to prepare for new forms of conflict and to integrate technology and new capabilities rapidly with older systems. Such technologies include swarms of attritable systems, artificial intelligence–enabled capabilities, hypersonics and electronic warfare, fully integrated cyber and space capabilities, and vigorous competition in the information domain. Programs that are not needed for future combat should be divested to invest in others.

The U.S. defense industrial base (DIB) is unable to meet the equipment, technology, and munitions needs of the United States and its allies and partners. A protracted conflict, especially in multiple theaters, would require much greater capacity to produce, maintain, and replenish weapons and munitions. Addressing the shortfall will require increased investment, additional manufacturing and development capacity, joint and coproduction with allies, and additional flexibility in acquisition systems. It requires partnership with an industrial base that includes not just large, traditional defense manufacturers but also new entrants and a wide array of companies involved in sub-tier production, cybersecurity, and enabling services. The United States should coordinate and partner with its allies in mutually beneficial ways to increase industrial capacity, especially since the U.S. industrial base is unable to produce everything needed.

The comparison to [the Cold War] period is apt in terms of the magnitude of the threat, risks of strategic instability and escalation, and need for U.S. global presence. It does not reflect many significant differences between that period and today. Among these are advances in technology that fundamentally change the character of war and the shift from the government to the private sector as drivers of investment, R&D, and procurement and commercial production of hardware and software.

Excerpts from Report’s body:

In Ukraine, where the threat is existential, we see innovation in practices, technology, and concepts at a speed largely foreign to the U.S. government. Government culture, structures, and regulations generally were created during peacetime with no major threat to U.S. security or way of life. That world is gone, but the system remains too ossified and slow to adapt and execute the systemic change that is needed. p.2

China is in fact outpacing U.S. defense production and growth in force size and, increasingly, in force capability and is almost certain to continue to do so. China announced in March 2024, for example, that its defense budget would increase by 7.2 percent for the coming year. p.4

Even as its military grows stronger, China is not biding its time; it has taken the initiative in operations with a marked increase in hostile and harassing behavior, routinely pushing the boundaries with incursions into Taiwan’s airspace and territorial waters, violating international law in the South China Sea, and seeking to normalize unlawful behavior and establishing advantageous conditions for future coercion or conflict. p.6

Although war against China, over Taiwan or otherwise, is not inevitable, the United States should take seriously Xi Jinping’s call for the PLA to be prepared to invade Taiwan by 2027 by being prepared to deter Chinese aggression. Deterring Chinese aggression against Taiwan is critical for U.S. national security interests. Beyond the military and diplomatic implications, an invasion would have massive economic consequences for the U.S. and global economies because of the contraction in trade and the impact on supply chains. p7.

The Commission agrees strongly…that “business as usual at the Department is not acceptable,”2 but we see continuing evidence that the “barnacles of bureaucracy” are slowing change and innovation.3 In one estimation, the largest challenge to achieving the goals laid out in the NDS is the business practices of DoD itself.4 The Commission saw several examples of DoD implementing new concepts and experimenting with different ways to do business, but these tend to be at the margins, as end runs around the typical processes, and at small scale rather than overhauling central personnel, research and development (R&D), and procurement mechanisms or acting at the scale required. p.15

The Defense Industrial Base (DIB)  is currently unable to produce the weapons, munitions, and other equipment and software needed to prepare for and engage in great power conflict. Consolidation and underinvestment have led to too few companies, gaps in the workforce, insufficient production infrastructure, and fragile supply chains. p.17

Furthermore, DoD remains organized around an outdated model of technological innovation that relies on large “programs of record” that lack flexibility and restrict development and updates to limited industrial partners. Numerous reports have observed DoD’s innovation adoption problems, all of which note that most technological advances, including in the majority of 0the fields DoD calls fundamental to its success, are occurring in the private sector due to the shift from government to private R&D funding. p.17

Defense funding should be robust and stable in order to build and maintain additional production capacity, including surge capacity in time of wartime mobilization. DoD should spend the majority of its R&D and procurement funds on modern technology that can be updated and modernized easily and at low cost. p.18

Technology and Technology Adoption

The U.S. military, underpinned by the national security innovation base, has employed cutting edge technology to its decisive advantage for decades. The assumption of uncontested technological superiority has given the United States the luxury to build exquisite capabilities, with long acquisition cycles and little tolerance for failure or risk. Given that peer-level competitors (such as China) are incorporating technology at accelerating speed and that even relatively unsophisticated actors (such as the Houthis) are able to obtain and use modern technology (e.g., drones) to strategic effect, DoD will have to continue to develop, adopt, and iterate new technologies at greater speed and scale and at an affordable cost. p.29

Unfortunately, DoD R&D and procurement systems were built around a closed network of defense-funded organizations and traditional defense companies. This does not reflect today’s innovation environment, which exists across the private sector and is largely driven by commercial interests. Effectively harnessing the national security potential of this new environment will place the United States (and others) on the cusp of a revolution in military affairs.

To illustrate this dynamic, DoD has identified 14 critical technologies that are “vital to maintaining the United States’ national security.” Of the 14, only three (directed energy, hypersonics, and integrated sensing and cyber) are defense specific; the others are emerging fields and areas where the private sector plays the lead role in research, development, and implementation and where DoD needs to focus on adopting and adapting technology rather than driving its innovation. p.29

The NDS cites the need to “increase collaboration with the private sector” and “be a fastfollower where market forces are driving commercialization of military-relevant capabilities,” but DoD has had difficulty for years in implementing this vision. In 2018, the Defense Innovation Board noted that DoD does not have an innovation problem, it has an innovation adoption problem. This remains true today. p.30

Overcoming the cultural and institutional barriers to innovation at speed and scale is a critical requirement for achieving the goals of the NDS. It will require the concerted attention of senior DoD leaders and Congress to replace legal, regulatory, and cultural barriers with the mindset and exhortation to solicit, identify, test, procure, and adapt new technology. p.30

DoD must confront the institutional processes and incentives that favor continuing existing programs, such as long planning cycles, overly specific requirements, inflexible budget lines, long-standing relationships with providers, proprietary technology, familiarity in using existing equipment, political support, ostensibly less risk of schedule delays and cost overruns, and fears that replacing existing programs will lead to operational gaps. p.31

The Commission has seen numerous examples in the private sector in which these incentives are reversed, driven by the financial motivations to solve operational problems quickly. But identifying and adopting new technology, especially as provided by less traditional suppliers, is disruptive. The Commission believes that DoD needs to better identify the operational capabilities it needs rather than establish overly prescribed technical requirements. Private sector companies can then propose existing or developing technology to meet those requirements in creative ways. p.31

The U.S. security clearance system also impedes innovation by delaying nontraditional defense companies in conducting work with warfighting applications. Recent reforms have reduced the average time to process an application for a security clearance,  but the system still limits the ability of government officials to share details on defense operational needs and priorities and engage iteratively with private sector workers. The cost and delay in obtaining clearances disadvantages the smaller and nontraditional defense companies that DoD relies on to diversify its supplier base. p.31

We believe that there is a high probability that the next war would be fought across multiple theaters, would involve multiple adversaries, and likely would not be concluded quickly. Both China and Russia independently have global reach and have committed to a “no-limits friendship,” with additional partnerships developing with North Korea and Iran, as described previously. p.37

Previous NDS Commissions have warned that DoD has systematically underinvested in munitions, choosing to raid these accounts as quick fixes to solve budget shortfalls. The Ukraine war and the Israel-Hamas war, however, vividly demonstrate that modern wars are likely to be protracted and consume a lot of munitions, from the relatively basic 155-mm artillery rounds, to Army Tactical Missile System (ATACMS) missiles, to air defense interceptors, and the United States simply does not have enough of such munitions on hand. p.43

The Joint Force routinely uses munitions that are significantly more expensive to produce than their targets, including in Operation Prosperity Guardian in the Red Sea to maintain freedom of navigation. DoD needs to develop additional options to keep the cost of munitions relative to the value of their intended targets in check. To do this, DoD should embrace digital architecture, open architecture, and modularity in munitions design and production.  Over the longer term, directed energy has particular promise to restore magazine depth at an affordable cost. p.43

Reestablishing deterrence in the Indo-Pacific and establishing a posture to deter and, if necessary, prevail in conflict requires an urgent increase in force structure and access. In terms of forces, the United States will need more undersea assets (particularly Virginia-class submarines but also large, uncrewed underwater vessels); long-range bombers with sufficient stocks of antiship munitions; uncrewed, runway independent systems; and long-range fires. p.45

The Defense Industrial Base and Defense Production

U.S. industrial production is grossly inadequate to provide the equipment, technology, and munitions needed today, let alone given the demands of great power conflict. p.51

As multiple senior DoD officials have recognized, “Production is deterrence.” But today, the United States has a DIB with too few people, too few companies, declining and unstable financial support, and insufficient production capacity to meet the needs of the Joint Force in both peacetime and wartime. Failure to restore the former might of U.S. defense production capability and capacity not only would render the objectives of the 2022 NDS unachievable but also would gravely erode the credibility of U.S. deterrence, undermine U.S. support to allies and partners in a crisis or conflict, and leave the Joint Force ill-prepared and ill-equipped to fight and win a conflict. p.51

Insufficient defense production capacity impedes the Joint Force’s ability to deter or prevail in a protracted conflict, especially with China and particularly in terms of munitions. Defense experts have extensively documented that DoD “has long failed to invest adequately in stocks of preferred munitions,” which remains true even after DoD’s efforts to boost munitions production in response to Russia’s 2022 invasion of Ukraine. As a result, unclassified public wargames suggest that, in a conflict with China, the United States would largely exhaust its munitions inventories in as few as three to four weeks, with some important munitions (e.g., anti-ship missiles) lasting only a few days. Once expended, replacing these munitions would take years. p.53

Allies and partners rely on U.S. defense production capacity to a significant degree, so U.S. defense production will be required regardless of who is fighting. For example, one analysis found that, aside from the United States, “no country in NATO . . . has sufficient initial weapons stocks for warfighting or the industrial capacity to sustain largescale operations . . . . At the height of the fighting in Donbas, Russia was using more ammunition in two days than the entire British military has in stock. p.54

DoD has struggled to provide Ukraine with sufficient quantities of weapons and equipment. Despite laudable efforts by DoD to ramp up production in support of Ukraine, Russia is on pace to produce nearly three times more artillery munitions than the United States and Europe combined. In some cases, DoD hesitated to provide certain weapons to Ukraine out of concern that doing so “would undercut the readiness of U.S. forces for other possible conflicts.” Even with sustained funding, some U.S. weapon inventories are unlikely to be restored within five years. In Asia, Taiwan faces a many-year delay on billions of dollars’ worth of weapon orders from the United States, driven primarily by limitations in the U.S. DIB. p.55

End of excerpts from report

Implications and conclusions for Australia

Australia’s defence strategy needs a new foundation to replace the existing one of unthinking reliance on US scale and resupply. Australia now needs to have a defence industry that can produce many more of the essential ‘consumables of conflict’ like munitions, missiles, drones and parts to support our own military than at any time since the First World War. 

We won’t get there if we think the answer is increased dependence on the closed ecosystem of our incumbent big foreign defence primes, because innovation and technological change is no longer predominantly not coming from this sealed defence industrial system, as the US has itself recognised, nor is the volume of consumables that are required. 

We need to be able to bring Australian companies who are not in the defence sector in to supply our military with innovative systems that our resources and ag sectors are using every day that our military needs but can’t get from traditional defence suppliers. And we need to take advantage of the disruptive power of our medium and small companies.

And co-production of US weapons and systems – like the short range GMLRS missile system – is not an answer, because building those missiles will draw on the same constrained US supply chain as domestic production in the US.  (That’s the experience of Japan with co-production of Patriot missiles – it is unable to expand production from 30 to 60 missiles owing to an input from Boeing US being in short supply, with US production (no doubt for Ukraine) given priority.)

Change won’t happen with the policies and plans we have now in the form of the National Defence Strategy, the Defence Industrial Development Strategy and the Integrated Investment Program, and it won’t happen with the current incarnation of the Defence organisation and its existing business processes, including CASG, ASCA, the ASA, ASD and the Defence centre.

To start real change, though, it’s essential that we understand the ground truth about the America we have as a key ally – its weaknesses and its strengths.

If collective defence in the Indo Pacific is to be effective, the days of turning up expecting US logistics to meet our every need are over.

Our military needs to have realistic expectations and plans around US supply in times of war, because some US supply of key items is essential.  But our ADF actually needs to be much more self-reliant. And it needs an Australian industrial base outside the sealed US defence industrial eco system to make that happen