The National Defense Industrial Association (NDIA) rated the health of the defense supply chain a “C” on its first annual Vital Signs report, in part because of the defense industrial base’s deteriorating cybersecurity efforts.
Despite an “A”-rated demand for defense goods and competition environment, industry security tanked the defense supply chain’s total score. Earning just 63 points out of 100, an increase in cyber vulnerabilities and other threats hurt the defense industrial base’s rating.
NDIA also raised concerns with the defense industry’s shrinking workforce. By the organization’s estimates, the workforce is down over 2 million employees since its peak in the mid-1980s. Specifically, the availability and cost of skilled labor concerns NDIA.
“2020’s mediocre ‘C’ grade reflects a business environment characterized by highly contrasting areas of concern and confidence,” NDIA explains in the report. “Deteriorating conditions for industrial security and for the availability and cost of skilled labor and materials emerge from our analysis as areas of clear concern. Favorable conditions for competition in the defense contracting market and a rising demand for defense goods and services reflect recent year-over-year growth in the defense budget.”
Conditions in the political and regulatory space further hinder the defense industrial base’s ability to thrive. Congressional interest in major defense acquisition programs and budgeting processes decreased while restrictive regulatory rules around the defense supply chain increased.
Overall, NDIA noted that while the “C” score still indicates a satisfactory ability to meet mission requirements, it could stunt potential growth.
“The fast-moving era of great power competition requires more, including the delivery of extraordinary capabilities to reverse the erosion of the capability advantages we hold over our competitors,” the report states. “Further, the vulnerabilities shown in this study –industrial security and production inputs to include workforce – indicate a need for urgent attention and action.”
