Executive Summary

To effectively mature and transition Department of Defense (DoD) manufacturing science and technology advances into production, DoD must have access to a robust and responsive U.S. industrial base, which is often driven by advanced manufacturing technologies. The Manufacturing USA institutes are considered crucial and game-changing catalysts that are bringing together innovative ecosystems in various technology and market sectors critical to DoD and the nation. The committee fully supports the goals of the DoD Manufacturing USA Strategy, and it makes recommendations to expand the reach, impact, and utilization of the Manufacturing USA institutes across the whole of DoD.

Since 2012, DoD has invested $600 million directly in its Manufacturing USA institutes with the understanding that the initial federal investment included (1) core funding and (2) one-time, start-up funding to establish the institutes within a period of 5 to 7 years. As the institutes now begin to reach year five, DoD is evaluating the effectiveness of the institutes in fulfilling their goals and the best ongoing roles for the federal government, including ongoing funding options, to ensure optimal benefit to U.S. competitiveness. Appendix B, Table B.1 contains a list of the institutes’ generic offerings identified by the study committee, including which offerings rely on core funding.

Thus, at the request of the National Institute of Standards and Technology (NIST) and DoD, the National Materials and Manufacturing Board was asked to complete a fast-track study to review the role of DoD’s investment to date in establishing its eight institutes as public–private partnerships and its engagement with each institute after it has matured beyond the start-up period.

The present study of the Committee on Strategic Long-Term Participation by DoD in Its Manufacturing Innovation Institutes consists of two parts—this report and a separate workshop summary, which will be published in the months after this consensus study is completed. This consensus study

1. Focused on the business models used to stand up and operate, on a long-term basis, the eight DoD institutes (Chapter 1);
2. Evaluated lessons learned in developing and implementing the public–private partnerships adopted in those institutes and what changes may be needed (Chapter 2);
3. Received input regarding alternate public–private partnerships developed in the United States and other countries (Chapter 3);
4. Evaluated the potential values and costs that would accrue to DoD from further long-term engagement with the institutes under various scenarios and funding structures (Chapter 4); and
5. Identified topics to be addressed in a follow-on Phase II study (Chapter 6).

This report represents the consensus of the committee on the study findings and in particular the optimal long-term role of DoD with its Manufacturing USA institutes, plus its recommendations for follow-on topics to be addressed in future studies.

It should be noted that the focus of this study is fairly narrow—to provide advice to DoD for use in its developing a long-term strategy for engaging with its eight Manufacturing USA institutes. This fast-track effort is not intended to evaluate the effectiveness of those institutes for advancing the manufacturing capabilities of the United States, nor whether the institutes are structured to meet the original expectations of the President’s Council of Advisors on Science and Technology reports that recommended their creation. Some of these larger-picture issues are, however, recommended for coverage in the longer-term, Phase II study discussed in this report.

COMMITTEE’S KEY RECOMMENDATIONS

Recommendation. Next Steps Toward Continuation of DoD-Sponsored Institutes. Based on the committee’s finding that the institutes provide value of benefit to DoD goals, the committee recommends that DoD conduct a formal review of each institute to support decisions on renewing, re-competing, or canceling current agreements. The review criteria should be tied to meeting the goals of the DoD strategic plan. The review should also examine whether the institutes’ budgets are appropriate based on the stakeholders’ assessments of the value of each institute offering. Procedures used by other DoD programs, such as DoD’s University Affiliated Research Centers, should be considered for these reviews.

Recommendation. Long-Term Engagement Model. Assuming implementation of the recommended formal review, the study committee developed five business model options for DoD’s long-term engagement with its existing and potential future institutes:

• Option A—Current model with planned reduction in DoD support for core activities based on the projected Office of the Secretary of Defense (OSD) Manufacturing Technology (ManTech) budget in fiscal year (FY) 2019 to FY2023;
• Option B—Current model with improvements to processes, offerings, and value-based core funding with potential continued funding within final budget constraints;
• Option C—Transition to DoD customer model;
• Option D—Transfer core responsibilities to the National Program Office at NIST; and
• Option E—No core funding of institutes beyond initial investment.

Based on analysis of options presented in Chapter 4, the committee recommends that DoD implement a hybrid business model that combines (1) the Option B model for continuation of core support (within budget constraints) and (2) the Option C business model for expansion of DoD customer-sponsored projects. This combination should be implemented with contractual agreements (including an Other Transaction Authority business interface) that support DoD’s roles both as a continued co-investment partner in core activities and as a customer of research and development (R&D) and workforce development solutions that meet DoD needs. This recommendation implies a significant addition to the functions of the OSD ManTech office, in conjunction with other DoD organizations, to assist the institutes in connections with DoD customers in the ManTech, science and technology (S&T), and acquisition and sustainment (A&S) communities. It also implies a transition period as the emphasis shifts to a primary focus on DoD customer projects with continuation of DoD support for core activities becoming secondary and covering those most essential. For this recommendation to succeed, it is essential that the institutes learn about DoD needs and develop and market their capabilities relevant to those needs. It is also essential that the relevant DoD stakeholder organizations understand and engage with the institutes as active members of the public–private partnerships, customers, or both.

Recommendation. Improvements to Institute Operations. Implicit in the recommended hybrid engagement model combining Options B and C are improvements to institute operations, drawing on the stakeholder input summarized in Appendixes C and D. The committee recommends that the OSD ManTech office

work with the institutes to implement as many of these improvements as possible within budget constraints. In many cases these improvements will reduce time and cost. High priority should be given to the following improvements, listed in no particular priority order:

• Linking to DoD and federal R&D. Better link the manufacturing institutes to DoD and other federal research efforts at R&D agencies, including through technology development planning and coordination in technology areas being pursued by the DoD Manufacturing USA institutes.
• Improving acquisition and contracting policies. Explore the use of contracting vehicles that can increase flexibility, reduce barriers for subject matter experts and small and medium-size enterprises, and minimize the time from proposal to award.
• Ensuring project relevance to DoD. Develop projects that support DoD needs through advancement of manufacturing readiness level (MRL)/ technology readiness level (TRL) of the technology of interest. Conduct critical technology and manufacturing readiness reviews to support TRL and MRL claims.
• Developing relevant performance metrics. Develop metrics that more accurately reflect the performance of the institutes relative to DoD goals. Conduct critical reviews, possibly by independent third parties, to assess performance of the institute.
• Understanding barriers and engaging the entire supply chain. Some of the technologies being developed by institutes require adoption by full supply chains for implementation at scale. Thus, in addition to improved outreach to small and medium-size enterprises, efforts should be made both to understand the barriers to adoption of these technologies in supply chains and to work with partners to overcome those barriers.¹
• Advancing best workforce education practices. DoD Manufacturing USA institutes should be encouraged to collaborate in developing optimal and more joint workforce development efforts, including taking advantage of online and related technologies. DoD Manufacturing USA institutes should be mindful of the need both for applied training in the new technologies and for workers to understand fundamental principles so that the training remains relevant as technology changes.
• Improving cross-institute collaboration and networks. Since companies will need to implement a number of new advanced manufacturing technologies, the network among the institutes needs further participation and collabora-

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¹ Susan Helper and Thomas Mahoney, “Next-Generation Supply Chains,” Mforesight, June 2017, http://mforesight.org/projects-events/supply-chains/.

Recommendation. Senior DoD Support for Institute Engagement with DoD Customer Communities. Within the hybrid engagement model combining Options B and C (Recommendation 2 above) is an important expanded role for the OSD ManTech office to assist institutes in engaging customers in the S&T and A&S communities. This role will require leadership support in OSD and the services and agencies. The committee recommends top-level communication from the undersecretaries for research and engineering and A&S to the appropriate service and agency leaders to raise visibility of the institutes and to request points of contact for the OSD ManTech office to work with. For S&T, this senior-level communication should facilitate connections to explore intersections in technology roadmaps between DoD S&T roadmap leaders and the institutes. For the acquisition community, the communication should request focal points for a few specific target programs that might benefit from solutions the institutes can provide, similar to the programs of record that have been successfully identified as transition targets for the Navy ManTech program. For the sustainment community, the communication should facilitate discussions with the institutes regarding depots’ needs for skilled workforce development and technology insertion opportunities.

The future of Manufacturing USA hinges upon the unique value that it brings to its stakeholders: government, industry, academia, and others. If it cannot fulfill its mission, Manufacturing USA will not be sustainable in the long run. The study committee collected inputs from different stakeholder groups for topics critical to the long-term success of the DoD Manufacturing USA institutes and therefore important topics for future in-depth study. The inputs were amalgamated into the following list:

1. Evaluation criteria for DoD Manufacturing USA institutes.
2. Relationship and linkage of the institutes to DoD and the federal research system.
3. Institute linkage to DoD acquisition, operations and maintenance, and related processes and projects.
4. Best practice adoption of education and workforce development efforts.
5. Current role and expansion of the cross-institute networks.
6. Better integration of industry supply chains into institute demonstration facilities.
7. International participation.
8. Strategic assessment process of emerging international advanced production capabilities.

The keynote speaker at the workshop summarized the challenge to DoD as follows:

The committee acknowledges that the breadth of the proposed topics may be more than a single committee can undertake in a single study. Consequently, the committee recommends that DoD prioritize the identified topics for future follow-on studies such that each can be executed with a realistic scope and carried out in a reasonable length of time and budget.