Annual Industrial Capabilities Report to Congress
OFFICE OF THE UNDER SECRETARY OF DEFENSE FOR ACQUISITION TECHNOLOGY AND LOGISTICS WASHINGTON DC
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The Department desires that the industrial base on which it draws be reliable cost-effective and sufficient to meet strategic objectives. Stable robust Department of Defense DoD funding is the primary factor in sustaining those industrial capabilities supporting defense because such funding focuses market demand across a broad spectrum of industry segments to meet emerging and projected DoD requirements. Several other criteria also can be used to evaluate the extent to which the industrial base has the desired attributes of reliability cost-effectiveness and sufficiency. For example a reliable industrial base is one in which suppliers ship contracted products and services on time. Additionally, reliable firms are viable for the long-term when they are likely to be healthy for the long-term. That is, the Department would like the firms on which it draws to have a stable or expanding business base, earn fair operating margins for owners, and invest in internal research and development and capital equipment such that long-term viability, innovation, and competitiveness is likely. A cost-effective industrial base is one in which suppliers deliver contracted products and services at or below cost targets. Cost-effective suppliers require not only stable, well-structured weapon system programs, but also optimized acquisition strategies. A cost-effective industrial base maintains an adequate number of competitive suppliers in key and emerging technology areas. In addition to the number of suppliers in a given product area, another indicator of competitiveness and cost-effectiveness is the extent to which suppliers participate in non-defense dual-use U.S. markets and export products overseas. In fact, a positive trade balance within a market segment is a solid indicator that firms within that segment are world-class and provide cost-competitive products.
- Logistics, Military Facilities and Supplies