Executive Summary

There has been a steady increase in the influence of globalization on private, commercial, and national security activities in the United States. This influence has created new products, driven down the price of products, increased the volume of goods consumed, and broadened the base for economic growth in most parts of the world. Globalization is a fact of world economic activity (DSB, 1999; NRC, 2005a). This trend means that many useful products will be available only from non-U.S. commercial sources. American military systems designers will inevitably be faced with enjoying improved performance, price, and schedule from global products or suffering the penalties of nonoptimal performance by choosing domestic products that are deemed more trusted.

To gain an improved perspective on the issue of dependence on foreign source suppliers, the Technology Warning Division (TWD) of the Defense Intelligence Agency (DIA), with the assistance of the Standing Committee on Technology Insight—Gauge, Evaluate, and Review (TIGER), identified the need for a new study. The National Research Council (NRC), asked to respond to that need, organized the Committee on Critical Technology Accessibility to carry out the study. The statement of task for the committee is as follows:



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 1
Critical Technology Accessibility Executive Summary There has been a steady increase in the influence of globalization on private, commercial, and national security activities in the United States. This influence has created new products, driven down the price of products, increased the volume of goods consumed, and broadened the base for economic growth in most parts of the world. Globalization is a fact of world economic activity (DSB, 1999; NRC, 2005a). This trend means that many useful products will be available only from non-U.S. commercial sources. American military systems designers will inevitably be faced with enjoying improved performance, price, and schedule from global products or suffering the penalties of nonoptimal performance by choosing domestic products that are deemed more trusted. To gain an improved perspective on the issue of dependence on foreign source suppliers, the Technology Warning Division (TWD) of the Defense Intelligence Agency (DIA), with the assistance of the Standing Committee on Technology Insight—Gauge, Evaluate, and Review (TIGER), identified the need for a new study. The National Research Council (NRC), asked to respond to that need, organized the Committee on Critical Technology Accessibility to carry out the study. The statement of task for the committee is as follows:

OCR for page 1
Critical Technology Accessibility The NRC will impanel an ad hoc committee of experts to respond to the following questions: A. What products/components/technologies currently being solely procured from foreign suppliers could significantly disrupt U.S. defense capabilities if access to them were denied (through conflict, embargo, treaty, etc.)? What countries are the principal suppliers of these products/components/technologies? What would be the impact of such denial? What is the risk that such denial may occur? What alternatives should be considered and in what time frame? B. What emerging technologies/products that, if the United States chooses not to pursue domestic production, could significantly disrupt U.S. defense war fighting capabilities if access to them were denied? What countries might be the principal suppliers of these products/components/technologies? What would be the impact of such denial? What alternative procurement methodologies should be considered for future acquisitions and in what time frame? The committee looked for but did not find an existing, exhaustive database of foreign products/components being procured by the Department of Defense (DoD) and decided to not attempt to develop such a database on current foreign sourcing across the vast numbers of DoD systems. Nor did the committee assess, for each foreign component, the impact of denial on operational capability or try to understand the particular mitigation opportunities and consequences. Finally, it did not develop a collective assessment of the technological and industrial trajectories of emerging technologies that promise to be key to our nation’s security. The size and scope of such an effort would have exceeded the time and resources available to the committee, and it became clear from the information provided to it and from its deliberations that this was not the right approach. However, the committee did listen to government plans and perspectives, discussed the issues with recognized experts,1 and independently reviewed source material and past literature. In addition, the members of the committee arrived with substantial background, service, and expertise in these matters. As a result, the committee believes it can still make many important judgments with respect to the task, and in this report it has undertaken to do so. As it addresses the relevant issues, it demonstrates some of the logic that would underly a more systematic approach to these 1   See Appendix B for a complete let of presentations to the committee.

OCR for page 1
Critical Technology Accessibility assessments across the whole of the defense and national security establishment. The elements of that approach are addressed following its response to two overarching questions. QUESTION A: THE RISK OF DENIAL OF CRITICAL PRODUCTS FROM FOREIGN SOURCES Based on the information they received and their own knowledge, committee members were unable to identify any product or technology currently being exclusively procured from a foreign supplier that could significantly disrupt U.S. capabilities or operations should it suddenly become unavailable. Some of the reasons for this conclusion include the following: Over the last 60 years, the United States has created an industrial base for the domestic supply for every major strategic and critical military capability that requires specialized and expensive facilities. In particular, it has retained the industrial capabilities to produce nuclear weapons; missile defense systems; space systems and space control capabilities; armored vehicles; submarines and ships; aircraft; aircraft stealth and counterstealth; and underwater detection, classification, and targeting as well as underwater stealth and counterstealth. This does not mean that these primary systems do not have foreign content, but that the nation is able to manage the content, advantage, and risk associated with the foreign components in these systems. For network creation and management and information management, the critical domestic capability is the ability to integrate systems and match them to the operational needs of the military organization. The individual components of the network are important, but the systems integration ability is critical. The United States has a capable industrial base for integration, and there is little risk that it will be subject to dominance by a foreign supplier. The committee believes that most of the scenarios for future conflict involve military action using forces available at the time of the decision to go to war. This come-as-you-are type of operation does not provide an opportunity for a foreign source to deny the component and thereby impact significantly current operations, because the components should already be in the system. Further, there should be a reserve of materials for all components to serve as spares

OCR for page 1
Critical Technology Accessibility and provide additional capability during operations. If reserves planning is not done well, it will not only be foreign suppliers that are the problem. The often-cited example of the potential vulnerability to denial of foreign components—the case where a Swiss manufacturer stopped the shipment of guidance components for the Joint Direct Attack Munition (JDAM) bomb during Operation Iraqi Freedom—is actually proof of the opposite: namely, robustness of the global supply chain. An alternative supplier was identified and qualified within 48 hours and no deliveries of JDAM bombs were impacted.2 Today’s U.S. joint warfighting force is a very diverse set of things and contains few, if any, single-point failure modes. Further, although almost all the elements of a current and future DoD force capability will have foreign content, the suppliers of this content are manifold, diverse, and not amenable to coordinated denial. For these and other reasons, the committee believes that the risk-versus-reward assessments of foreign dependence are primarily supply management issues and must begin with defining and assessing risk, impact, and mitigation consequences. From a technology warning perspective, identifying and analyzing any changes to these mitigating circumstances should be a priority. QUESTION B: ASSURING ACCESS TO FUTURE CRITICAL PRODUCTS AND TECHNOLOGIES If the United States were to become strategically dependent on a foreign industrial base for items that are critical or for which the regeneration of a U.S. industrial base would take a long time, the risk would be unacceptable. The committee does not see any signs of that at this time, but the possibility should be taken into account when determining what the U.S. industrial base needs to be for defense purposes. The committee identified four areas of future technological and industrial advancement that warrant discussion: (1) information technology (IT) components; (2) IT services, 2   Testimony to the United States-China Economic and Security Review Commission of Gary A. Powell, Acting Deputy Under Secretary of Defense (Industrial Policy). Available online at http://www.acq.osd.mil/ip/docs/china_economic_and_security_review_commission_8-22-05.pdf. Last accessed on February 7, 2006.

OCR for page 1
Critical Technology Accessibility which include many forms of the capability to manipulate, store, and exploit data and information; (3) nanotechnology; and (4) biotechnology. The committee also identified another area of concern, systems integration capabilities. The committee cannot imagine a healthy U.S. economy without extensive U.S. industrial participation in the IT sector. It does not think the United States must be able to provide every product in this sector, but it does believe it must have within its domain companies that are leading participants in the global marketplace. Without that, both the national economy and DoD’s ability to leverage this crucial set of products will be unacceptably limited. For IT components, which include many forms of the ability to manipulate, store, and exploit data and information, the committee sees no prospect that the United States will somehow fail to participate strongly, but it does wish to put on record its judgment that this sector is strategic and critical. The potential of nanotechnology and biotechnology to both separately and jointly create profoundly new materials and capabilities means it must be assumed that U.S. industry can and will produce strategic and critical capabilities for our nation’s security. The advances in both technologies will be largely driven by global commercial markets rather than by the U.S. military and the national security agencies (NRC, 2005b). For DoD to have assured access to these capabilities, it will be necessary for the nation to have healthy commercial industries in both sectors. DoD must therefore monitor progress in these sectors and intervene if necessary to assure a safe outcome for the nation. Though not a technology or an industry in the same sense, one of the strategic and critical capabilities for a superior military force is the ability to integrate disparate technical and operational elements into a coherent entity that can achieve the mission objectives. This systems integration capability needs to be sustained, and the committee suggests monitoring and assessing U.S. strength and competence in this area. A GLOBALIZATION MANAGEMENT STRATEGY Globalization is an irreversible trend. This means that many new products that are and will be useful for DoD’s mission are being created by this globalization process (Spencer, 2005). Design choices that favor improved system performance must allow using products from the global commercial marketplace, and many useful products will be available only from these

OCR for page 1
Critical Technology Accessibility global commercial sources. The use of components and services from foreign sources brings with it risks and uncertainties that DoD needs to address. From its deliberations the committee concludes that dealing with foreign sourcing is embedded in a larger supply assurance issue. Therefore, it is persuaded that the right management approach is to depend on the knowledge and judgment of the DoD acquisition and logistics officials as the starting point for an assessment of risk versus reward. Each of these officials has a supervisory chain that can provide guidance to couple the program manager’s judgment to priorities beyond his purview. This same supervisory chain will also have the opportunity to review the judgments at the program level and will ensure that a DoD-wide perspective is applied. The committee does not believe that the process should be a significant burden for the program manager and the logistics and procurement levels. Both should as a matter of course know the sources of supply for their function. They should routinely identify risks to their product sourcing and risks to their supply chain management decisions. They regularly analyze the trade-offs between mitigation opportunities and consequences. Foreign components are but one source of a broader assurance concern. Obliging these officials to regularly report on all significant sources of product assurance and supply chain risk, impact assessment, and mitigation consequences could well be considered a reasonable part of their normal duties. This method of collecting data and judgments about the data runs the risk of being turned into a pro forma exercise that generates paper but does not contribute to an improved perspective. This fear is amplified by the fact that for the process to work this particular set of issues is to be added to the process currently used to work essentially all of the programmatic issues of the DoD and it does indeed produce a lot of paper. However, it is the process by which problems thought to be important—such as performance, cost, and schedule—are dealt with. If foreign dependence is to be an important issue for the DoD, it should be dealt with by the same process used for other problems thought to be important. If foreign dependence is not thought to be important, this suggestion will not help much nor will any other management approach. There is an important role for the executing industrial contractor in this process. Most of the necessary data will actually be produced by the contractor. Some of the risk versus reward analyses will also be made by the contractor. Some of this process is already taking place, but to bring about a

OCR for page 1
Critical Technology Accessibility more comprehensive understanding of supply chain risks, more focus will be needed. To translate these judgments into action, the committee sets forth the following recommendations. Since all of the issues are embedded in the acquisition and logistics processes, the committee gives USD(AT&L) primary responsibility, but envisions a special role for DIA’s TWD. RECOMMENDATIONS The committee’s recommendations reflect several of the themes put forward in the body of the report. The impact of component denial is not a static estimate. The risks entailed in depending on a foreign-produced component are embedded in the strategy of supply management and the diversity of the impacted operational system or force. The size and power of the globalized commercial marketplace are such that we must find a way to exploit the marketplace’s value for our security. The risks and benefits of this exploitation are at least as much an issue of acquisition and logistics strategy as they are of estimating foreign intent. The viability of the future assured domestic supply of critical components for the DoD is dependent on the health of the U.S. industrial base in these sectors. The committee believes that any systemic approach to determining the vulnerabilities and risks of foreign supply for DoD must involve the DoD organizations responsible for acquisition and logistics as well as DIA’s responsibility for estimating the capabilities and intentions of foreign countries. Therefore, the committee’s recommendations are directed at USD(AT&L) as well as DIA. These recommendations might be considered as going beyond both the original statement of task and the stated portfolio of responsibilities of the sponsor (DIA TWD). However, the committee believes the subject warrants the integration of the technology warning function into a broader context of supply chain risks and assurance. Without this broader context, warning cannot be properly evaluated. While this issue of warning is partly an intelligence function, it must also comprehend technical details at the system level and at the level of lower tier suppliers to the systems as well as the operational significance of the risks of supply availability. Recommendation 1. USD(AT&L), in collaboration with DIA, should develop a system for monitoring the risks of component unavailability within

OCR for page 1
Critical Technology Accessibility the procurement and operating elements of DoD. The committee does not believe it is practical to create a detailed database for this purpose. Rather, the responsible procurement and operational authorities in the armed services, the defense agencies, and the combatant commands should regularly assess their vulnerabilities and the sources of these vulnerabilities and recommend mitigation action. A self-certification approach by USD(AT&L) should direct the services and defense agencies to annually prepare a product and supply chain assurance report that identifies important vulnerabilities, potentially significant operational consequences, and recommended mitigation actions. This will require supporting assessments by subordinate organizations for each service and agency. This body of data, assessments, and recommendations will form the primary source of authoritative information from which DoD-wide judgments can be made regarding supply chain vulnerability and impact. It will also be an important framework for the TWD in executing its technology warning responsibilities. The committee believes that the current set of DoD directives and guidance documents available to the program managers and their respective supervisory chains are an adequate tool for establishing the priorities for each DoD procurement activity. These data and judgments should be shared with the combatant commanders to permit them to assess the operational consequences of these vulnerabilities for their missions. USD(AT&L), in cooperation with DIA, should analyze these annual reports to identify DoD-wide vulnerabilities that might not be detected by the individual services and agencies and to warn of worrisome trends in the integrity of the supply chain, ensuring it is not compromised by foreign supply sources. A small staff element at the OSD level would be adequate and appropriate. DIA TWD should be an integral part of this analytic process to enable the integration of information about supply chain vulnerabilities with intelligence relating to foreign sources and foreign intrusion into U.S. sources. The analyses should be made available to the services, agencies, and commands as they are produced. The analysis should be particularly concerned with the following areas:

OCR for page 1
Critical Technology Accessibility Where there is a lack of war reserves or stockpiles. Where a weapon system is uniquely in the U.S. inventory and therefore cannot tap into worldwide depots. Where developing an alternative source of supply requires significant lead times. Where the DoD has developed sole-source, single-solution capabilities. Where critical technologies have migrated offshore or been developed there in their entirety. Annual updates of the guidance documents should be made available to the program managers and their respective supervisory chains based on the analysis of the program reports from the acquisition, logistics, and operational organizations and other relevant factors. Recommendation 2. USD(AT&L), in collaboration with DIA, should develop a system for monitoring U.S. industrial health in strategically important global commercial market sectors that are critical to the availability of components for DoD. If trends toward unacceptable risk are identified, USD(AT&L) should formulate actions to mitigate the situation. It appears to the committee that this monitoring responsibility is directly within the charter of the Office of Deputy Under Secretary of Defense (Industrial Policy) and it should be the lead office. The Defense Industrial Base Capabilities Study (DIBCS) series undertaken for the Office of Deputy Under Secretary of Defense (Industrial Policy) has several features that appear to be a good basis for monitoring industrial health.3 The committee believes that the set of major strategic and critical U.S. industrial capabilities identified earlier justify the investment of large DIA TWD resources to monitor for and analyze major changes in global capabilities. These capabilities include network creation and management and information management; the integration of IT components; and systems integration. Subsequently, these capabilities must be matched to the needs of particular military organizations. There are four areas of future technological and industrial advancement that also warrant close monitoring by 3   The entire DIBCS series may be viewed online at http://www.acq.osd.mil/ip/ip_products.html. Last accessed on February 13, 2006.

OCR for page 1
Critical Technology Accessibility DIA TWD: IT components, IT services, nanotechnology, and biotechnology. Of particular interest should be any developments at the interfaces of these four technologies. Finally, the DIA TWD should focus its management resources on tracking global capabilities in nuclear weapons; missile defense systems; space systems and space control; submarine construction; aircraft stealth and counterstealth; underwater detection/classification/targeting and underwater stealth and counterstealth; and electronic intelligence acquisition and analysis. Recommendation 3. USD(AT&L), in collaboration with DIA, should organize a systematic method of assessing the health of military systems integration in and for the DoD as well as that of potential coalition partners and adversaries. The committee believes this task will require broad experience and judgment and should be undertaken with the assistance of expert external advisory bodies. REFERENCES DSB (Defense Science Board). 1999. Final Report of the Defense Science Board Task Force on Globalization and Security. Washington, D.C.: Office of the Under Secretary of Defense for Acquisition and Technology. Available online at http://www.acq.osd.mil/dsb/reports/globalization.pdf. Last accessed on February 14, 2006. NRC (National Research Council). 2005a. Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future. Washington, D.C.: The National Academies Press. NRC. 2005b. Avoiding Surprise in an Era of Global Technology Advances. Washington, D.C.: The National Academies Press. Spencer, Jack, ed. 2005. The Military Industrial Base in an Age of Globalization: Guiding Principles and Recommendations for Congress. Washington, D.C.: The Heritage Foundation. Available online at http://www.heritage.org/Research/NationalSecurity/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=81559. Last accessed on February 14, 2006.