Organic Industrial Base –
REQUIREMENT:
The United States’ (U.S.) Organic Industrial Base (OIB) is a bloodline for the Nation’s defense. Nested in a vast ecosystem of organizations and industries providing support to the Nation, the OIB maintains, repairs, overhauls, and modifies weapon systems for the Nation’s Armed Forces. The OIB provides an assured sustainment capability free from vulnerabilities that plague the commercial sector and larger Defense Industrial Base (DIB). Just as blood carries oxygen throughout the body to permit it to function optimally, a government-owned and operated weapon system sustainment capability supports global reach and readiness. The OIB bloodline must effectively deliver this capability in peacetime and have the capacity to increase flow when the United States must surge or mobilize its resources in response to an event.
Congress recognizes the importance of the OIB. The Fiscal Year (FY) 2020 National Defense Authorization Act (NDAA) Section 359 directed the Secretary of Defense to develop strategy to improve covered depots and ensure the OIB maintains the capacity and capability to support the readiness and material availability goals of current and future Department of Defense (DoD) weapon systems. In response, each service offered maintenance plans and proposed several investment initiatives, but none published an open-source strategy update. An environment marked by Great Power Competition (GPC) requires the OIB to develop a more integrated strategy framed on value creation, that improves readiness and maintains technological superiority.
METHODOLOGY:
Previous Eisenhower School reports established a Readiness Enabler Framework to assess the OIB through elements of governance, finance, materiel, infrastructure, and human capital. These reports offered process improvements to the framework and recommendations for surge capabilities. Building upon these foundations, Academic Year 2021’s OIB Industry Study (IS), comprised of professionals from multiple government departments, agencies, and countries, spent four months examining OIB structure and processes. These professionals analyzed challenges presented by the Office of the Secretary of Defense (OSD) and depot leaders, and researched commonalities and differences with private industry.
This report emphasizes capacity as a common theme across the Readiness Enabler Framework. Industry defines capacity as maximum output that can be generated from unlimited resources, but based on fixed property, plant, and equipment footprint. The OIB defines capacity as depot capacity or the amount of workload facilities are designed to accommodate, and measures depot capacity in Direct Labor Hours (DLH). Sufficient capacity is necessary to act as a shock absorber when the nation requires an immediate surge or mobilization. However, the OIB must also retain capacity to support its steady-state depot-level maintenance operations. This report explores the challenges associated with retaining capacity for national emergencies while maximizing capacity during peacetime and provides recommendations to address each.
FINDINGS:
The report offers OIB strategy recommendations and fresh approaches to address challenges confronting the OIB now and expect to grow in complexity with intensifying competition and advances in technology. This report will explain the current challenges the OIB faces, challenges on the rise, and why this report’s recommendations are worth consideration. The report also identifies private industry practices that may help the OIB further develop its strategy and integrate elements of value creation, readiness enabler investment, business expertise, process management, and policy modernization for intellectual property, technical data, and software.
RECOMMENDATIONS:
The Eisenhower School’s OIB IS recommends the following initiatives to improve U.S. readiness for military engagement against near peer competitors by expanding the OIB’s production capacity. Recommendations will be explained further throughout the report:
- Change how the DoD communicates industrial capacity by augmenting DLH with supporting information, deliverables, and needs through a common methodology.
- Establish a DoD waiver of 48 CFR § 31.205-17, Idle Facilities and Idle Capacity Costs, to allow the cost of idle facilities that support surge capacity under DoD contracts.
- The DoD should partner with the U.S. Coast Guard (USCG) to support the expansion of the Coast Guard Yard to accommodate the servicing of Littoral Combat Ships, Frigates, and Destroyers as a wartime surge capability strategy.
- Develop an aggregate facility-based capacity metric for depots; updated metrics permit improved communication, infrastructure investment decisions, and partnership opportunities.
- Establish an additional concentration within the Eisenhower School for National Security and Resource Strategy specifically for sustainment professionals. Curriculum to be aimed at preparing military and civilian leaders to run the business operations of OIB with focus on increasing the understanding of operations management, facilities management, production, and manufacturing.
- Use the Air Force’s Technology Repair Center (TRC) Core Competencies framework to develop and implement a cross-capabilities and capacity model. A DoD-wide listing of each depot’s equipment and repair capabilities would allow the OIB to market and leverage the enterprise’s full scope of organic capability to prevent unnecessary workload pushes to commercial sources and maximize reinvestment into the WCF.
- Update carryover policy to allow four to six months of annual carryover by activity group and transition from allowable carryover rate calculations.
Read the report →