Developing an Allied Nations Defense Industrial Base Accelerator

Earlier this year, the US Department of Defense (DOD) announced that it would elevate and resource the Defense Innovation Unit (DIU), which rapidly fields key technologies for US warfighter requirements. The management restructure provides DIU with unprecedented scope for engagement across the US government’s defence structure.

This is a good move. An even better move is DIU’s commitment to building with and in allied nations a more robust supply chain of critical technologies and resources. As the Ukraine conflict has taught us, rapid fielding of technology and translation of operation manuals are critical, and this needs to be done in trusted international partnership arrangements. No one country can achieve this alone – there needs to be collaboration across allied nations’ governments, industry, small businesses and innovators, particularly from warfighter units, as well as from academia and the private sector.

As we enter an increasingly contested Indo-Pacific region, momentum across allied nations is growing to align defence industrial initiatives. This includes harmonising research and development activities by universities, encouraging private capital investment into the sector and, most importantly, providing a rapid, agile and simple path to procurement – which brings the capability to the warfighter.

Since 2021, three non-profits – Pacific Impact Zone, Pacific International Center for High Technology Research, and the Technology Accelerator – have been briefing governments, academics and officials from Japan, Australia, the UK, India and other allied nations on their Allied Nations Defense Industrial Base Accelerator (DIBX). This has been supported by a range of subject matter experts in all countries, as well as other not-for-profit organisations like the International Security Industry Council.

There is overwhelming support for the DIBX, which is about to fully launch its programs based on changes to Reciprocal Defense Procurement Agreements and the new US Other Transaction Guidebook.

The DIBX provides key and timely solutions to defence acquisition delays and barriers to allied nations’ collaboration. The US Office of the Undersecretary of Defense Acquisition and Sustainment and its defense, pricing and contracting team led by John Tenaglia have updated and clarified policies in sync with the recent surge of bilateral and multilateral agreements that will grow the industrial bases of the US and allied nations.

The importance of international cooperation for a defence industrial base

VIEW ALL

In the face of regional provocation by China, allied nations must build and sustain their individual and collective defence industry bases. Efficiencies are gained by pooling resources and efficiently developing capabilities. This leads to increased interoperability, technological advancement, and standardisation while strengthening diplomatic relationships and fostering economic growth.

A robust defence industry is vital for each allied nation’s security and sovereignty. Given geopolitical dynamics, technological advancements, and economic interdependencies, this is accomplished through increased bilateral and multilateral co-development of innovation. Fostering international cooperation is essential to build and sustain a strong defence industry base. Some of the benefits include:

• Pooling resources and expertise: International cooperation allows nations to pool their resources, expertise, and technologies, enabling them to develop advanced defence capabilities more efficiently and cost-effectively. Collaborative efforts in research and development, joint procurement programs, and information sharing enable participating countries to overcome individual limitations and access a wider range of resources. By sharing costs and risks, countries can collectively invest in cutting-edge technologies, research facilities, and infrastructure, leading to mutual benefits and the overall strengthening of defence industry bases.
• Enhancing interoperability and standardisation: Defence operations often require multinational cooperation, such as joint military exercises and peacekeeping missions. Through international collaboration, defence industry bases can align their equipment, procedures, and communication systems, promoting interoperability and standardisation among partner nations. This harmonisation improves the efficiency and effectiveness of joint operations, streamlines logistics, and reduces potential obstacles in crisis situations. Ultimately, it enhances the collective defence capabilities of participating nations and ensures a more coordinated response to shared security challenges.
• Mitigating technological gaps: The rapid pace of technological advancement in the defence sector demands continuous innovation and adaptability. No single nation possesses all the necessary expertise and capabilities to develop and maintain cutting-edge defence technologies across the entire spectrum. International cooperation allows countries to bridge technological gaps by leveraging complementary strengths and expertise. Collaborative projects facilitate knowledge transfer, joint research, and technology sharing, enabling participating nations to collectively address emerging threats, develop advanced systems, and maintain a competitive edge in an evolving global security landscape.
• Strengthening diplomatic and strategic relationships: Cooperation in defence industry matters not only strengthens national security but also cultivates diplomatic and strategic relationships among partner nations. Collaborative initiatives create opportunities for military and political leaders to engage in dialogue, build trust, and foster mutual understanding. Such relationships help establish a foundation of cooperation and goodwill, leading to stronger partnerships in other areas beyond defence. Moreover, collaborative defence projects often involve long-term commitments, creating interdependencies that discourage conflicts and promote stability among participating nations.
• Economic benefits: International cooperation in defence industry endeavours can have significant economic benefits. Joint development programs, defence trade, and technology sharing foster industrial partnerships, stimulate domestic industries, and create employment opportunities. Collaborative projects also provide avenues for research and development investments, which can spur innovation and technological advancements across various sectors, including civilian applications. Furthermore, the defence industry often serves as a catalyst for technological spin-offs, enhancing national competitiveness and promoting economic growth.

The US as a leader in the Indo-Pacific – bringing it all together

The US has a crucial role to play in fostering defence industrial cooperation among allied nations, particularly in the Indo-Pacific region. Such collaboration is essential for several reasons, including cost-effectiveness, interoperability, technological advancement, and collective security. But how to achieve this goal?

This challenge was the subject of a visionary report, titled A “Build Allied” Approach to Increase Industrial Base Capacity, by Dr Jerry McGinn, executive director, and Professor Michael T. Roche, visiting Fellow, of the George Mason University School of Business.

In the report, the authors argue that developing an effective Build Allied approach will help the US DOD create surge capacity, with both speed and scale, and industrial resilience in support of the US National Defense Strategy objectives.

However, this is not an easy task and will require sustained support and leadership by the US government, as well as other governments in the region. It will also require more agile and innovative policy approaches.

The recently updated Other Transaction (OT) Guidebook issued by the Office of the Under Secretary of Defense for Acquisition and Sustainment reflects a key paragraph that was directly encouraged by the Defense Industrial Base Accelerator and supported by subject matter expert Ben McMartin.

The guidebook provides some helpful levers to help both government and the private sector to bring foreign partners together in this common goal. The guide provides advice and lessons learnt on the planning, publicising, soliciting, evaluating, negotiation, award, and administration of OTs, including all three types of OT agreements: research, prototype, and production.

Importantly, the guide notes that OT managers should “consider the level of foreign participation it is willing to allow in the program. Foreign providers may be excellent sources of technology and may be more advanced than US options. Certain sources of supply may only be available from foreign sources. There may be legal restrictions that would limit foreign participation or restrict it completely, but OTs have been very successful in the past in utilising foreign performers to broaden the potential technology options.”

We welcome these kinds of policy enablers and look forward to working with all our key partners to help realise the vision laid out by the government. To build a true allied nations endeavour that will contribute to the next century of peace, stability and prosperity in the Indo-Pacific region – and beyond.

Bernice Kissinger is a US dual-use technology leader, the executive vice-president and chief executive outreach officer of a US non-profit, the Tech Accelerator, the chief operating officer of the International Security Industry Council and is developing dual-use innovation labs in Australia and Japan.