SASC Wants to Reshape Industrial Base, Create ‘Innovation Base’

The Senate Armed Services Committee wants to widen the net of companies participating in the defense industrial base to take full advantage of home-grown technology.

If the Senate provisions in the 2021 defense policy bill hold in conference, there will be more protections on intellectual property and less reliance on foreign suppliers, the panel said in its overview of the 2021 National Defense Authorization Act. Details of the proposed bill are expected this week.  

The SASC, in a 20-page summary of the NDAA, said it wants to “reshape” the defense industrial base into the “National Security Innovation Base,” to promote its agility and resiliency, “mitigating risks” of relying on foreign suppliers, while at the same time investing with allies and partners. This will require a “whole of government approach,” the SASC said, which generally means coordination between Defense, Commerce, the State Department, and law enforcement.

The panel said it authorized $100 million over the Pentagon’s request for expanding domestic “and friendly” industrial capacity, including manufacturing technologies. The overall aim is to make the Pentagon’s technology development more “nimble, efficient, and responsive.”

The Senate version of the defense bill “ensures” the Pentagon is “exploring all pathways to expand domestic capacity,” while protecting proprietary and intellectual property and defense-sensitive data “from being infiltrated by the government of China.”

The bill directs the preparation of reports on how to ensure the supply of “microelectronics, rare earth minerals, medical devices, personal protective equipment, and pharmaceutical ingredients,” among other commodities where the supply base has shifted overseas. SASC wants analyses of the foreign industrial base and how it drives risk to the U.S. “from overreliance on China and their economic aggression.”

The bill would also expand the role of small businesses in meeting defense needs, extending programs for streamlined contracting and quick payment—authorities the Air Force has been bolstering for the last three years.

The language also directs the Pentagon to use “mission-based budgeting” tools to improve its decision-making and improve transparency to Congress, and ensure that each service’s budget “more accurately reflects” its actual budget. It directs the Defense Secretary to send Congress a report every year on the “enterprise business operations” of the Pentagon and “each defense agency and field activities.”

The bill will include some “enforcement” measures, ensuring more frequent delivery of software and updates to users, and “balancing the use of open source software with securing it.” It also allows for more “side-by-side comparative testing for one or more programs of record to introduce competition from and capture commercial innovation.”

In order to attract and better retain high-tech talent, the SASC version of the bill includes a pilot program “to offer higher compensation than normally allowed by the executive schedule for a limited number of positions requiring extremely high levels of experience managing complex organizations.” Under the pilot program, DOD would enhance pay for top research and development, and acquisition and technology positions.