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Critical Technology Accessibility (2006)

Chapter:Critical Technology Accessibility

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Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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Critical Technology Accessibility

BACKGROUND

In 2003 the Defense Intelligence Agency (DIA) requested that the National Research Council (NRC) establish the Committee on Defense Intelligence Agency Technology Forecasts and Reviews (the DIA Committee) to conduct meetings with the intelligence community in order to develop study topics relating to technology warning. The committee was formed and met with interested parties to understand the methodologies and strategies for the application of identified technologies of interest to the DIA under development by the United States and by its allies.

The DIA Committee reviewed information from government sources on technologies under development abroad, by other nations, and met with the DIA to discuss the potential for these technologies to become study topics.

The DIA Committee was asked to produce a report based on its discussions with the intelligence community that examines the capabilities on which U.S. warfighters depend and identifies the potential for adversaries to threaten those capabilities by exploiting evolving technologies (NRC, 2005a). The report proposed a methodology for technology warning and tested this methodology against several scenarios in the subsequent chapters.

It was the intent of both the DIA’s Technology Warning Division (TWD) as sponsor and the NRC as convener that this first report would

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

Box 1-1
Statement of Task

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?

establish the foundation for a long-term collaborative relationship to examine technology warning issues, and so a standing committee was created for this purpose. The Standing Committee on Technology Insight—Gauge, Evaluate, and Review (TIGER) proposed five study topics to the TWD, which chose one of them. The Committee for Critical Technology Accessibility was then organized to respond to the two questions posed in the statement of task (Box 1-1).

INTRODUCTION TO THE ISSUE

There has been a steady increase in the influence of globalization as a part of the private, commercial, and national security activities of the United States (DSB, 1999; NRC, 2005a, 2005b). “Globalization” is defined here as a movement toward a marketplace for products that is global in extent and served by an industrial base for producing those products that is global

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

in extent as well. There are many reasons for the acceleration of this phenomenon. The committee will briefly discuss a few to justify its admonition against trying to roll back this inevitable trend.

The conclusion of the cold war erased the great pressure against global trade that had been part of the deadly struggle for survival between the Soviet Union and the West. Without that pressure, there has been diminishing reason to constrain trade, and economic opinion holds that open trade between societies will provide economic advantages to all parties.

In parallel, advances in information technologies (ITs) and the proliferation of IT products have given a large portion of the globe’s more than 6 billion people access to information. This phenomenon has stimulated innovation throughout the world by dispersing both the knowledge needed to make the products and an understanding of the rewards available to those who produce.

This situation has led to a monumental increase in economic activity across the developed world. From 1989 to 2005, world gross domestic product (GDP) increased from $17.4 trillion to $40.9 trillion and the U.S. GDP increased from $5 trillion to $11.7 trillion (World Bank, 2005). Although the United States maintained its position in economic activity, more than $23 trillion was added to GDP in the rest of the world. This increase in market potential has given rise to many new markets, particularly for the new IT products and their producers in many countries. It has driven down the price of products, vastly increased the number of consumer products, and broadened the base for economic growth in most parts of the world. Globalization is a fact of world economic activity testified to by statistics from the DoD (Box 1-2).

Box 1-2
Excerpt from Annual Industrial Capabilities Report to Congress

Examples include global commercial markets like information technology and integrated circuits where U.S. defense applications represent about 1 percent and 1-2 percent of the global market, respectively; and steel where direct DoD sales represent 0.4 percent of the U.S. market and 6.3 percent of the U.S. market when also including indirect DoD sales (commercial product purchases). (DoD, 2005, p. 7)

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

Fields that were just developed by American or allied country firms have evolved into global arenas, where key developmental and manufacturing activity is as likely (or more likely) to happen in Eastern Europe or Asia as in the United States or Western Europe. U.S. firms are investing large sums in China and India, with Intel, as an example, having announced a 5-year, $1 billion investment in India alone.1 Business models have also evolved significantly, with multi-billion-dollar technology firms such as Dell, Qualcomm, and Altera developing and designing their products, which are then manufactured by U.S. or Asian firms such as Taiwan Semiconductor Manufacturing Company. The intellectual property market has become global, with firms such as ARM in the United Kingdom and IBM licensing key intellectual property items to generate significant revenue.

The open source software movement serves as another development model: It promotes the sharing of intellectual property in order to build the best possible products in the shortest possible time.2 This philosophy opens up intellectual property to all players, not just paying customers, and leverages the capabilities of talented engineers and scientist on a truly global basis. Key open source products, such as the Linux operating system or the Apache enterprise server, are starting to be adopted by mainstream markets as multinational firms promote them.

These global market changes impact decision making on the acquisition of technology. The rapid evolution of products such as cell phones, which have an expected life of 2 years, drives technology cycles with much shorter time frames than military products, which typically operate for a decade or more. Global intellectual property markets enable engineers in other countries to have access to key U.S. dual use technologies and give U.S. engineers access to foreign technologies. Certain regions around the world have industrial policies to develop cutting-edge centers for technology and manufacturing, such as Singapore’s investment in biotechnology or China, Korea, and Taiwan’s investments in semiconductor manufacturing. As U.S. companies respond to these global market forces, they make business decisions that drive research and manufacturing capabilities offshore, with implications for military preparedness.

1  

For additional information, see http://www.rediff.com/money/2005/dec/05intel.htm. Last accessed on February 13, 2006.

2  

For additional information, see http://www.OSS-institute.org. Last accessed on February 9, 2006.

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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This trend means that many new products that support DoD’s mission are being created by this globalization process (Spencer, 2005). Design choices that favor improved system performance must include the possibility of using products from this global commercial marketplace. The massive global profits from these products provide the basis for investment in further advances in product performance. Because many products with improved function, price, and schedule will be available only from these global commercial sources, military systems designers will inevitably be faced with choosing between them and domestic products with nonoptimal performance. Further, the use of products from the global marketplace, coupled with continuous technology refreshment to keep up with the state of the practice, will continuously reduce ownership cost while increasing reliability and mission performance, making them appealing to defense engineers.

This situation prompted TWD to raise two sets of questions. The objective of this report is to try to answer these questions, to suggest further study that would be useful in pursuit of the answers, and to address some related topics that might help with the dilemmas implicit in the questions. Appendix C is a compendium of related reports that discuss the broader issue of globalization and may provide the reader with additional context for this report.

HOW TO ANSWER THE QUESTIONS

In attempting to answer these questions, one needs to understand a number of things. First, there are current considerations:

  • Which items are now being procured exclusively from foreign sources?

  • What would constitute substantial disruption of U.S. defense capabilities if access to these items were denied?

  • How likely is it that access will be denied?

  • How could the impact of denial be mitigated?

  • What might be the consequences of mitigating the impact?

And, for the longer term, still other considerations:

  • Which emerging technologies and products will be important to DoD capabilities?

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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  • What might be the industrial base for these technologies and products?

  • Are the risks of denial likely to be unacceptable for DoD?

  • How could these risks be mitigated?

The risks and impacts of foreign source denial3 are embedded in a larger supply management4 issue and are similar to the risks and impacts of other potential sources of supply disruption—for example, plant destruction by fire or explosion, floods, strikes, or transportation failure. Another cause of component denial is obsolescence. Since the technology for many products changes more frequently than the procurement cycle of the DoD, fielded systems often need replacement parts that are obsolete and no longer available from the open market. The likelihood of each kind of denial—supply disruption and obsolescence—must be assessed. Mitigation actions for both will have cost, schedule, performance, and other consequences. A decision maker must act in the context of his or her whole management responsibility.

THE RISKS AND IMPACTS of foreign source denial are embedded in a larger supply management issue and are similar to the risks and impacts of other potential sources of supply disruption—for example, plant destruction by fire or explosion, floods, strikes, or transportation failure.

3  

By “foreign source denial” is meant the risk that the foreign source of a product will deny the defense establishment access to that product.

4  

By “supply management” is meant the acquisition, transportation, storage, distribution, asset visibility, and depot operations of military operations and supplies.

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

A perspective on future access to emerging technologies and their products cannot be established on the basis of data alone. For each technology, there needs to be a collective assessment of the risks, their potential impact, and the consequences of mitigating those risks across the DoD and beyond. The committee does not believe such assessments exist nor does it believe there is a systematic effort to undertake them.

The committee looked for and did not find a database of foreign products/components being procured by the DoD and decided to not attempt to develop such 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, mitigation opportunities, and consequences. Finally, it did not develop a collective assessment of the technological and industrial trajectory of emerging technologies that promise to be key to our nation’s security. However, it did listen to government plans and perspectives, discussed the issues with recognized experts,5 reviewed past literature, and obtained and analyzed certain relevant information. In addition, the members of the committee arrived with substantial background, service, and expertise in these matters.

As a result, the committee believes that many important judgments can still be made with respect to the questions raised by the sponsor, and it has undertaken to do so in this report. As it attempts to answer these questions, the committee demonstrates some of the logic of what it believes must be a much more systematic and holistic approach to these assessments across the entirety of the defense and national security area. The elements of that approach are addressed following the members’ response to the questions.

QUESTION A: WHAT IS THE RISK OF DENIAL OF CRITICAL PRODUCTS FROM FOREIGN SOURCES?

Based on the information received and its own members’ knowledge, the committee was unable to identify any product or technology currently being solely procured from a foreign supplier that could significantly disrupt U.S. capabilities or operations. The committee did not come to this stark judgment without substantial debate and will present the underlying facts and assumptions for the reader’s examination.

5  

See Appendix B for a full list of presenters.

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

BASED ON THE INFORmation received and its own members’ knowledge, the committee was unable to identify any product or technology currently being solely procured from a foreign supplier that could significantly disrupt U.S. capabilities or operations.

First, the committee does not contend that it has performed a comprehensive and complete survey of all the items procured by DoD exclusively from foreign sources and on which the department depends for specific capabilities. The incomplete state of knowledge at DoD and its primary suppliers does not appear to permit such a survey at this time. However, the committee did consider the foreign content of many of the major DoD systems and how denial of access would impact DoD capability or operations. It also explored some worst-case assumptions to test whether detailed data were a prerequisite for making strategic judgments. While the committee does believe that a more detailed and structured approach to evaluating supply chain risk versus reward for all defense procurements is essential for assuring the nation’s defense capabilities, it does not believe that detailed information about foreign-sourced components will, by itself, lead to better judgments.

That is not to say that DoD’s systems do not have foreign content. Quite the contrary: Very few DoD systems do not have foreign content that is critical to their function (Gansler, 2006). However, as long as DoD manages its supply chain well, the impact of critical component denial can be mitigated.

To answer the questions proposed by the sponsor, the committee used the knowledge available to its members on current DoD systems, an understanding of the suppliers of these systems, and some understanding of the operational circumstances facing our forces.

The committee concludes that the nature of the scenarios in which the use of force would be considered and the diversity of the content found

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

in the systems of a major combatant command rules out the possibility that foreign denial of access to current products could have a substantial effect on combat capability at this time. There are several reasons for this conclusion:

  1. Over the last 60 years, the United States has created an industrial base for the domestic supply of 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 the 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 those systems.

  2. There are exceptions in that there are some strategic and critical capabilities for which the material components might well be nondomestic. For example, the capabilities for network creation and management and information management are strategic and critical for U.S. military forces as well as for those of its allies. However, the critical domestic capability for these functions is the ability to integrate systems and match them to the operational needs of the military organization. It is the systems integration ability that is so critical, not the individual components. 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 very soon.

  3. “You go to war with the Army you have.” The committee considered many of the planning scenarios used to evaluate future military force needs. It believes that most of them involve military action with the forces available at the time of the decision. This come-as-you-are type of operation does not provide an opportunity for a foreign source to deny the component and significantly impact current operations. The components should already be in the system. Further, there should be a reserve of materials for all components to serve as spares and provide additional capability during operations. If reserves planning is not done well, it will not only be foreign suppliers that are the problem. A shortage of material during opera-

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

tions can necessitate starting up the manufacture of a domestic part as well, and the lead time for that manufacture is likely to last much longer than the conflict. There was such a case in Operation Iraqi Freedom with batteries. The rate of usage was misjudged for the purpose of estimating the size of the reserves, and emergency action was required to produce a supply.

  1. The supply reserves provide a buffer if a foreign supplier denies access or if any number of other contingencies might interrupt access to a needed component. Many observers have noted that currently there are shortfalls in reserves and that procurement authorities are often reluctant to spend their resources for these reserves. The committee does not know whether this is a result of careful risk calculation or a management failure, but if this supply management function is done properly, it will provide a forward buffer of time between an action of denial and the impact of that denial. Denial action by a foreign source may be a warning of further strategic intent and will stimulate action in the supply management domain. Further, commonality of systems with coalition partners provides worldwide depots for certain parts and components.

  2. The globalized marketplace has rules of its own. Being an assured supplier is as important in the commercial sector as it is in the military. The mechanisms available for a determined adversary to selectively deny a U.S. military procurement while continuing to supply its global commercial clients would be complicated. The committee’s assessment is that such denial will not likely have substantial impact and that disadvantages to the supplier of becoming known as an untrustworthy supplier should act as a deterrent. The committee does not believe this deterrent can be fully relied upon to assure access to strategic and critical capabilities, because these suppliers, whether foreign or domestic, are still vulnerable to manipulation by a determined adversary. However, this market dynamic should be taken into account in the government’s assessment of the risks and rewards of sourcing supplies from the global market. This assessment applies not only to military products but also to the global transportation and distribution systems, which will involve foreign providers. Disruption of the global supply and distribution chain can have ramifications as serious as disruption of component supply.

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×
  1. A military force, especially in today’s joint warfighting environment, is a very diverse set of entities and does not contain many strategic, single-point failure modes. For the strategic and critical category of assets, sourcing has been determined under strict control regimes, and these failure modes are carefully monitored. For other capabilities, the failure modes are highly distributed. Although almost all the elements of current and future DoD force capabilities will have foreign content, the suppliers of this content are manifold, diverse, and not amenable to coordinated denial. Finally, not only are the suppliers a diverse group but the processes by which the components are procured are also diverse and not amenable to coherent action. The committee believes this diversity of sources will intensify:

Many authoritative observers, including leading U.S. aerospace executives, view increased globalization—including foreign outsourcing and other types of international alliances and collaboration—as a key strategy for maintaining a healthy U.S. industrial base following a decade of megamergers. (Lorell et al., 2002, p. 2)

The committee believes this answer and the elements of its rationale point to a more systematic approach to managing supply chain risk by the DoD in the future.

QUESTION B: HOW CAN THE FUTURE U.S. INDUSTRIAL BASE BE MANAGED TO ASSURE ACCESS TO CRITICAL PRODUCTS AND TECHNOLOGIES?

What about more strategic, long-term denial? The trouble with comforting come-as-you-are scenarios and military capabilities is that they do not foresee the possibility of a more strategic denial that could impact U.S. military capability.

If the United States were to become strategically dependent on a single or coherently manipulated 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.

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

IF THE UNITED STATES were to become strategically dependent on a single or coherently manipulated 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….

Current Capabilities

There are several industrial capabilities in the United States that the nation has chosen to retain to assure access to critical military capabilities. These so-called “national arsenals” are the basis for the strategic systems that are clearly critical to our security. The principle of domestic ownership and U.S. control is so natural that the matter of their retention has not often been questioned. As mentioned in an earlier section, these primary industrial capabilities are 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.

There is a subset of the industrial base, termed the “arsenalized” environment, that covers industries and technologies whose center of gravity is U.S. military consumption, and the large companies involved in the development and manufacture of these products are in effect captive to the military (in other words, they are “arsenalized”). In this environment, there will be explicit government controls over who manufactures the products, who has priority access to the products, and what export controls are required for any international business. Good examples of this environment are the nuclear submarines and submarine-launched ballistic missiles. For these capabilities, the military is the only customer of a captive domestic indus-

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

try, and they are considered strategically critical by the DoD. The committee’s review of several strategic and critical industries leads it to conclude that none of these industries should be left for foreign entities to take over nor are they likely to be. Because of the strict controls maintained over these industries, the committee does not see a serious risk of denial for their products. Even for these capabilities, there may be a temptation to enhance performance or cost by introducing foreign content with attendant risks. Given the controlled environment, the government will be able to avoid these risks by denying itself these performance or cost advantages. The particulars will be different for each case, but the choice cannot be avoided. It would be convenient if all-domestic options with full advantages were available to the designers, but the committee does not see that as a credible outcome given the globalization of the manufacturing sector.

Future Industries

For emerging industries, the situation is not quite as clear. The committee identifies four areas of future technological and industrial advancement that warrant discussion: (1) information technology (IT) components; (2) IT services; (3) nanotechnology; and (4) biotechnology.

The committee notes that it is not just the components or functional products in these sectors that count. The United States is currently dependent on foreign sources for much of its machine tool needs, and semiconductor component manufacturers in this country are substantially dependent on some critical foreign-sourced tools for their domestic production.

The committee cannot imagine a healthy U.S. economy without strong U.S. industrial participation in the IT sector. It does not think the United States must host a capability to make every product in this sector, but it does believe we must have within our domain some industries that are leading participants in this broad, global marketplace. In addition, DoD must continue to invest in specialized industrial capabilities for critical functions such as cryptology and radiation-hardened and electromagnetic-pulse-resistant component design and process development.

Without that investment the ability of both the national economy and the DoD to leverage this crucial set of products will be unacceptably compromised. Please note again that the DoD is and will be heavily dependent on the existence of a healthy domestic commercial sector to assure its system needs.

IT services include many forms of the capability to manipulate, store,

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

and exploit data and information. The committee sees no sign that the United States will somehow not participate strongly in this market sector, but it wishes nonetheless to aver that this capability is strategic and critical. Further, the IT sector includes still another issue of concern—namely, the hidden capacity for an unfriendly perpetrator to manipulate performance, a concern that the committee addresses later in the report.

It is difficult to project with precision the specific strategic and critical capabilities that will come from the nano and bio sectors. However, the potential of these technologies to separately and jointly create profoundly new materials and capabilities means that we must assume that they can and will produce strategic and critical capabilities for our security. One key example is DNA-based high-speed/high-capacity computing, where nano-bio synergisms become an enabler for IT. The power of these learning algorithms far exceeds that of today’s biosimulated neural net architectures (NRC, 2005a).

The committee believes that in each area the advances in technology will be largely driven by global commercial markets rather than by the U.S. military and national security agencies. The size of these markets and the research and development levels they support will overwhelm any financial participation by the U.S. government. For our nation and others, public and private investment is aimed at assuring that the national economy is positioned to gain value from these technology advances. The central thrust is not defense or national security.

Using Both Global and Captive Domestic Sources

Whether for future products and services or for the more mature products currently used by DoD, the committee can conceive of no sourcing strategy that does not include some use of the globalized marketplace while maintaining some “arsenalized” sources of elements critical to our national security. If necessary, DoD can, as it has in the past, invest in specialized capabilities that will assure its own missions and contribute to the nation’s participation in the global commercial marketplace. DoD can also, as it has done before, take advantage of products of the commercial marketplace either as is or with modifications.

For this strategy to be effective and for DoD to have assured access to these capabilities, the committee believes it will be necessary for the United States to have healthy commercial industries in each market sector. While the nation may not need to have within its sovereign domain the facilities

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

and capabilities to manufacture everything that DoD needs, it will be important for DoD to have access to trusted sources of domain expertise, including skilled systems designers and smart buyers of products and services that may have foreign content. This is not be likely to be the case unless we have healthy and competitive industries from which to draw these skills.

The committee’s recommended strategy is dependent on the broad-based economic health and competitiveness of the nation in more ways than just those arising from the globalization of the industries upon which DoD depends: namely, in order to afford the level of defense expenditures that characterized the last several decades.

Sustaining a healthy and competitive economy is one of the primary objectives of the nation. It depends on all parts of the government and involves risk and reward assessments well beyond the military dimension. The committee has not attempted to formulate a comprehensive strategy to achieve this grand goal but accepts it is as a manifest objective of the country and assumes that it will be achieved to some degree. While the committee believes that success will require the umbrella of an effective national security capability, it does not believe that the placement of defense expenditures will be a dominant economic factor. Instead, as in the past, we will be forced to deal with the trade-offs between performance, risk, cost, and schedule that accompany sourcing the materials for our security from a mix of global and captive domestic sources.

The Role of Systems Integration

Managers and operators know that they succeed when they are able to harness all the elements of an entity or a system and apply their attributes to the mission of the entity. For military operators, the integration of sensors and detection systems, maneuvering controls, target classification and weapons fire control provides for the fast and effective operation of the whole system. Each element of the system can be properly engineered, but if the elements do not work efficiently together, the system will not perform well.

Box 1-3 gives an example of what a systems integrator does. The integrator looks around the world for the best available technology, products, and software applications. Analyses must be conducted with regard to relative performance, reliability, supportability, produceability, ease of operation, ease of maintenance, technology refreshment cycles, obsolescence con-

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

Box 1-3
Example of Systems Integration

To demonstrate the concept of systems integration the following analogy is offered. Imagine that you have just brought home a new flat-screen HDTV, a surround sound system, a VCR, and a DVD player, each of which came from a different manufacturer, to work with your cable box. You now have five remotes sitting on your lap and you are trying to figure out which does what. You can operate the systems together by plugging in the correct leads and individually controlling each of the five remotes. Yes, this is confusing and probably you’ll need all five operating manuals near your chair, but it will work. Then you discover that by entering each manufacturer’s product codes into your cable remote, you can operate all of your equipment from that one remote control. Congratulations, you are now a systems integrator! Look at what you have accomplished: You have lessened complexity and eliminated steps, and now you can execute commands an order of magnitude faster than you could with the five remotes.

siderations, implications of commercial off-the-shelf (COTS) products and support from the commercial sustainment base, and total ownership cost implications, from design throughout the life and disposal of the system. The analysis of this vast array of information leads to decisions on product selection and overall systems design to produce the most effective system at the least ownership cost. All of this is inherent in the system integrator’s trade-space analysis.

Today we rely on systems integration as a mitigating factor in enabling the infusion of foreign technology. In the early days of the cold war our nation had a self-contained force and program management structure for major strategic and critical capabilities. The management construct for these systems provided for a very controlled process with adequate resources and authority to produce effective military systems. Examples include the application of nuclear power to submarines, land- and sea-based ballistic missiles, space surveillance and reconnaissance, and global communications, command, and control.

We now have many examples of major successes in warfighting systems that use COTS processing components and middleware for antisub-

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

marine warfare and surface ship combat systems. Commercial chips sets are used in military aircraft. The rigid enforcement of military-specific instructional set architecture that demanded programming in noncommercial languages has migrated to the use of standard commercial languages, applications, and tools. The result has been an extraordinary reduction in time to design and cost, with attendant increases in availability as well as continuous technology refreshment by leveraging the commercial industrial base. The integration of today’s defense electronics systems starts with open architecture principles and proceeds through ever-evolving spirals that lead to mission effectiveness and lower ownership cost.

One of the dramatic examples of successful systems integration with an open architecture is the Navy’s Acoustic Rapid COTS Insertion (ARCI) program. Use of an open, capabilities-based (versus requirements-based) business model allowed the Navy to acquire best-of-breed technologies across a broad range of communities. Acoustic superiority was enhanced by rapidly updating the submarine fleet with state-of-the-art functional capabilities, made possible through the integration of skills from the Navy, academia, and small and large businesses. These skills were woven into a “fabric” to capture the best of each organization’s strengths, which became known as the Advanced Processing Build.

Under this process, the sonar system was partitioned into processing strings to leverage the strengths of developers and to enable a sequential and incremental capability insertion plan. The ARCI prime contractor, Lockheed Martin, is the system integrator and provides system management; it also developed the active and passive spherical-array and high-frequency passive-array functions. Digital System Resources developed the towed-array functions, and the Applied Research Laboratory, University of Texas, developed the high-frequency active-array functions; Johns Hopkins University served as the test program lead. Raytheon and others continue working as a team under a well-defined plan. This dynamic interweaving of talents has provided dramatically enhanced submarine acoustic performance, with reduced development cost and increased system availability.6

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
×

The above is a dramatic example of why systems integration is one of the strategic and critical capabilities necessary to create superior military forces. It provides the ability to integrate disparate technical and operational elements into a coherent entity that is tailored to the mission objectives of the enterprise. Some of the ingredients of this capability include

  • Access to technical and operational understanding of all of the elements of the enterprise (this includes detailed understanding of the threats encountered as well as an understanding of the dynamics of the host platform; interactions for electromagnetic compatibility; requirements for heat, cooling, vibration, inertial loads, fuel, space, weight, moment, and so on).

  • The ability to create sophisticated algorithms and integrate them with a myriad of applications into open and scalable architectures.

  • Experience in integrating large systems or aggregates of systems and elements in order to apply hard-learned lessons related to configuration management, interface coordination, testing and validation, product data models, data exchange, and a myriad of processes and tools so critical to successful systems integration.

  • Confidence that no aspect of a problem is beyond the comprehension of the integrating organization. System integrators know that it is usually easier to search globally, find, and apply a solution than to try invent it from scratch. They have become accustomed to reliably finding, understanding, and applying solutions to obtain desired performance and achieve success. Through the system integration and trade-space analysis process, they can develop total systems that perform better, faster, and cheaper—sort of an industrial equivalent of the military loop of warfighting elements: observe, orient, decide, act (OODA) (Coram, 2002). When the trade space is expanded to include the global technology and industrial base, the ability to achieve better results is obviously magnified.

A Defense Science Board report on globalization and security states that globalization offers tremendous benefits for U.S. security that, if embraced by the DoD can counter the associated risks (DSB, 1999). The Heritage Foundation report The Military Industrial Base in an Age of Globalization makes the point that “not participating in the global defense marketplace will increase, not decrease, risk to the U.S.” (Spencer, 2005, p. 20). It goes on further to state as follows:

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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In providing the best systems, U.S. acquirers will look routinely beyond U.S. sources. This practice encourages innovation and provides better products at reduced costs. The question is not whether a given commodity, system, or material is available from a U.S. company on U.S. soil, but whether these products are competitively available through the global marketplace.

Systems integration, as performed by major defense industry prime contractors and by those responsible for integrating disparate systems into coherent forces in the field, is an essential national capability that must be sustained and enhanced through the global trade space (DSB, 1999). U.S. industry does not have a monopoly on the most cutting-edge technology, analytical tools, or precision manufacturing machines. It does, however, have the ability to integrate and deliver to the U.S. military the best and most lethal combat systems, which can observe, orient, decide, and act better than any others in the world.

However, experienced systems engineering professionals have recently expressed concern that U.S. competence in systems integration is not being exploited to its full potential by either the government or its serving industries. The primary reasons for their assertion are the growing bureaucracy and decreasing flexibility of the DoD acquisition process to trade off between total ownership cost, performance, and schedule, as well as DoD’s inability to effectively coordinate and integrate requirements across and within the respective services. These weaknesses on the part of the government also extend into the serving industries and weaken the ability of the industrial sector to do the sort of integrating of mission, capability, cost, and schedule trade-offs that it did in the past (NAVSEA, 2002; NDIA, 2002).

Ultimately, if the U.S. economy and broad industrial base are not healthy, the industrial sector could lose its ability to provide integration services to the government, and the broader U.S. technological base from which the DoD draws could weaken as well. This weakness will be reflected in the loss of skilled people and facilities that are necessarily the source of this expertise.

The committee suggests that monitoring and assessing U.S. national strength and competence in systems integration is a vital task. If that strength begins to deteriorate, it could signal the possible degradation of U.S. defense capabilities.

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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Managing the Exploitation of Globalized Commercial Markets

Many products valuable to the military are dominated by commercial markets and globally distributed suppliers, raising concerns about assured supply. Much of this concern about the reliability of foreign sources has been amplified in recent years by the increasing impact of global markets and globalized industries. Global commercial markets are immense and overwhelm the defense market, substantially diminishing the financial leverage once available to the government to influence the behavior of the commercial market.

However, the size of the marketplace and the promise of large quantities attract the competitive capabilities of a broad range of enterprises from across the globe. One result is the availability of advanced capabilities at greatly reduced prices. This gives a system/product designer unprecedented flexibility with respect to product cost. For example, the Global Positioning System receivers that are essential for our armed forces are more capable and much less costly than if DoD were the sole buyer. There is great leverage in the adaptation of commercially available capabilities for military purposes.

DoD already has some experience in dealing with globalization. In the early 1980s, there was great concern that the Japanese, led by their manufacturing capabilities, would displace United States integrated circuit components producers and leave DoD no alternative but to source from the Japanese. Following a set of recommendations by the Defense Science Board, the DoD intervened with several hundred million dollars and legislated collaboration initiatives between DoD and the component producers (DSB, 1987). Although there is still debate about the leverage provided by the DoD intervention, things did get better and there has been a 20-year period of solid performance by U.S. manufacturers.

In the early 1990s, there was a similar national concern about the trajectory of the flat panel display manufacturing sector. It was evident that the flat panel industry was leaving the United States and that DoD would be left with no alternative but to procure these items from foreign sources (NRC, 1995). In response, DoD organized a several hundred million dollar initiative to create and sustain a domestic supplier by subsidizing one or two companies and providing a limited but guaranteed market (Flamm, 1994). This business proposition was not robust enough to sustain the companies in the face of the overwhelming leverage of the commercial marketplace. In the end, the initiative failed and DoD procures flat-panel dis-

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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plays from foreign sources. Thus far, there have been no supply denial problems and the nature of the commercial marketplace provides substantial protection against an organized denial of these components. The manufacturing market is shared by several Japanese firms, some South Korean providers, and a growing Chinese presence. Although there have been some increases in the time for repair and return of these foreign-provided items that can impact system availability rates, this situation has been mitigated through the lay-in of additional spares. In the committee’s judgment, this is a useful example to consider as decision makers address their foreign content issues.

Currently, DoD has an arrangement with IBM to provide application-specific integrated circuits from a trusted foundry (Carlson, 2005; DSB, 2005). This contract provides near-current technology from a domestic supplier within a defined process for assuring the security of the design inputs and the delivered products. This intervention in the global marketplace is possible because there are cutting-edge domestic capabilities operated by IBM. Market forces might, however, make this a less desirable course of action for IBM in the long run. The committee believes this situation will require monitoring in the future.

The printed circuit board (PCB) industry is another good example of a globalized industry. The NRC recently issued a report on the PCB industry highlighting the critical risk to military requirements (NRC, 2005c). Key issues include these:

  • Because PCBs are customized to a product, they are unique to the product, whether it is an iteration of a DVD player or an avionics component for an airplane.

  • U.S. military acquisition makes up only a small fraction of global requirements.

  • U.S. production has decreased significantly, with the industry now centered in Japan, China, and Taiwan.

  • While the United States has a strong lead in R&D, other countries are developing their academic and R&D support for the PCB industry.

  • Industry technology cycles evolve quickly, with computer and cell phone life cycles driving shorter and shorter industry technology cycles.

  • Life-cycle requirements for U.S. military products exceed those for commercial components by a factor of as much as 10. Since updat-

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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ing the technologies in these products calls for a cumbersome testing process for both the product and the system it is in, it is preferable to have access to older manufacturing capabilities.

  • The United States has a significant requirement for maintaining products with obsolete technologies.

  • Because military volumes are smaller by several orders of magnitude than standard commercial runs, leading vendors prefer their profitable high-volume business or demand a very significant premium for the high-paperwork/low-volume military business.

Currently, the U.S. military has the ability to access PCB products in a variety of ways. It can access products from vendors in multiple locations; it can stockpile some products; it can work with domestic suppliers; and it can reverse engineer and build limited quantities when required. The diversity of global suppliers provides substantial protection against a coherent denial of these products by a single nation.

In addition to the issue of depending on globalized sources of PCB products, the U.S. military needs access to some dedicated domestic manufacturing facilities to deal with the long life-cycle requirements for very small production runs and access to older (including obsolete) manufacturing capabilities that match the systems being used.

Placing Trust in Foreign-Supplied Components, Software, and Services

One of the underlying premises of the argument for having domestic suppliers for military systems is that domestic suppliers can be trusted more than foreign suppliers to supply reliable products. The committee does not believe that is a sound basis for assessing the trustworthiness of suppliers and their components. More factors than nationality should be considered in the process of acquiring assured components.

First, a determined adversary can also gain access to a domestic supplier. As experience in the intelligence community has shown, there is a great threat from the trusted insider. Further, the supply management discipline must account for inadvertent as well as intended component malfunction, whether from foreign or domestic sources. The committee believes that much of the risk of foreign supplier performance can be mitigated by intelligent management of supply sources, component certification, and adequate testing.

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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As mentioned earlier, no foreign supplier can afford to be an untrustworthy supplier in the context of its predominant market. Procurement processes that take into account this motive will also mitigate the risk.

The committee believes that acquiring trusted components, software, and services is primarily a matter of sound supply management. It agrees that the nationality of the supplier can be an important factor but is only one of many. A component can be suspect in its availability or in its performance on many counts. In principle, the customer for the component must have procedures for certifying the trustworthiness of the supplier and its components. When the component is unique and specified for DoD, this process may take a very intrusive form. When it is a broadly available commercial component, the process will need to accommodate the motives and dynamics of that commercial sector.

An area of special concern is the hidden capacity for performance manipulation of software and services by an unfriendly perpetrator. As with the risk of faults intentionally embedded in integrated circuits, this potential risk is particularly troublesome because of the difficulties in inspecting and testing the products to detect the implanted flaws.

For this threat as well, the committee believes that a sound supply management process is an essential baseline for mitigation. To increase confidence in acquired software and services for truly critical and strategic functions, it will be necessary to acquire them from sources under a very strict control regime.

In the absence of a comprehensive control regime, it will be difficult to certify suppliers. Intelligence can play a role in assessing the potential for a supplier to manipulate a component. A coherent effort to do strategic damage to the United States is likely to have a detectable footprint. If the government becomes organized in its management of supply assurance and can identify areas of particular concern, intelligence assets can be enlisted to help in the process. The committee also notes that software and service products are often plagued by flaws or poor performance, so design choices for critical functions must use redundancy or other techniques for protecting against flaws of either variety—unintentional or intentional.

These judgments are not peculiar to foreign sources. Domestic sources that are not under a strict control regime are also vulnerable to adverse penetration. Both are liable to generate products with unintentional flaws.

The committee sees no single approach for assuring performance of software and services. Strict control regimes seem essential for truly critical functions. For situations where attractive products are accessed from an

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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uncontrolled global marketplace, mitigation will require accommodating design choices, rigorous inspection, and improved testing procedures.

The committee believes that DIA and the Assistant Secretary of Defense, Acquisition Technology and Logistics, should develop a concept and doctrine for exploiting the critical components available from the global commercial industrial base (Spencer, 2005). The price of avoiding all of these products because they come from foreign sources is too high in terms of system performance, cost, and schedule.

A STRATEGIC APPROACH

The issue of foreign participation in the creation of U.S. military forces has been complicated, troubling, and controversial for a long time. With all of the studies and reports produced on this subject, no set of policies or doctrine has emerged from this very political process that is generally acceptable to the many advocates for different approaches. Some are enthusiastic and cite the inevitability and promise of globalized markets. Others are very concerned by any substantial participation of foreign interests in the development of our military capabilities.

The committee has come to the judgment that progress can best be made by using a management process that accommodates the many advocacies of both the DoD and the Congress, within their current responsibilities and authorities. The risks and impacts of foreign component denial are similar to the risks and impacts of other potential sources of supply disruption. Mitigation actions for each potential source will have cost and other consequences. A decision maker must assess the likelihood of each type of supply disruption and the context of his whole management responsibility. The risks of foreign source denial are embedded in a larger supply management issue. The committee does not wish to imply that merely embedding this issue in the larger supply management issue will sweep the problem away. Supply management for the DoD is a daunting task without the complication of risks associated with foreign sourcing. It does argue, however, that if the government intends to be serious about this subject, it should deal with it in this way.

Key Assessments

  1. What are the sources of the critical components? Critical means that the component is essential for the function that is the reason

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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for the procurement. For most systems, components at any tier of the system can be critical.

  1. What are the risks identified with access to the foreign components? Whose judgment provided this risk assessment?

  2. How do these risks compare with the other potential risks to supply access? Whose judgment provided this assessment?

  3. What are the operational capability consequences of the various sources of access denial or uncertainty? Whose judgment provided these assessments?

  4. What are the opportunities for mitigating these risks? What are the penalties associated with these mitigation options? Whose judgment provided these assessments?

Addressing Strategic and Critical Capabilities

Strategic and Critical System Capabilities Requiring Specialized and Expensive Industrial Facilities

Consistent with current policies and practices, the nation should retain the domestic industrial capacity to provide selected strategic and critical capabilities. Several industrial capabilities in the United States have been chosen for retention to assure access to their products. These so-called “national arsenals” are for strategic systems obviously critical to our security. The principle of domestic ownership and U.S. control has been so natural that the question of their retention has not often been raised.

In the committee’s judgment, the capabilities that should be placed in this category of national arsenals include nuclear weaponry, submarines, space control, access to space, airborne stealth and countermeasures, and underwater stealth and countermeasures. These capabilities may be characterized as follows:

  • Each is an absolutely essential element of our nation’s security capability, and the committee cannot conceive of our nation being dependent on any other sovereign interest for its access.

  • A high degree of secrecy is an explicit element of their leverage for our security.

  • The industrial facilities for producing them are not part of the globalized marketplace. Such capabilities are created by nation states for national security purposes and the motivations that underpin their existence are exclusively national.

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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The committee’s review leads it to conclude that none of these capabilities should be or are likely to be left for foreign industries to fill and that there is therefore no prospect of their denial. It knows that some foreign products are and will be included in the makeup of these systems, but they will have been introduced under the management of a U.S. supplier under close government oversight who will have the opportunity, obligation, and competence to prohibit unacceptable risk for each capability. For this category of capabilities, there are strategic and critical industrial bases that must be sustained.

Strategic and Critical Capabilities Derived from IT

The United States needs the independent ability to create operational capabilities that are derived from the IT sector. Many of these capabilities are strategic and critical but do not rely on unique and heavy industrial facilities. Many of the components are an integral part of the massive, globalized commercial marketplace in this area. Because the technology advances in this domain are driven predominantly by the commercial sector, the committee cannot envision achieving superior capabilities here without some use of commercial products from a globalized industrial sector. The key to creating strategic and critical system capabilities is the ability to integrate these components into coherent networks and information systems that fit operational needs. Strategic and critical capabilities derived from IT include network-enabled operations; knowledge-based information management; and information operations.

It will be necessary to have access to the globalized set of products that can be integrated into the specialized systems needed for our nation’s security needs. The committee believes that such access will be routinely possible as it envisions the evolving global marketplace and the military system applications. This access will carry the risks of disruption or denial by foreign adversaries, and these risks must be accounted for as the components are applied.

It will also be important to have the engineering and information management skills to create specialized IT components that will not be available from the global marketplace. This will require the engineering skills and some custom facilities to be able to design and build specialized components. This will often be done in secrecy.

A world-class skill base will be needed to integrate IT components and software into coherent systems tailored to specific needs. In the committee’s

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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judgment, that is likely to be true for the United States over the long run if it plays a significant role in the global information systems marketplace.

The committee heard a compelling case for making sure that the nation does not lose all of its domestic capability to produce IC components. Current global trends show that other nations place great value on having a national capability for IC design and manufacture. China in particular is offering massive subsidies to U.S., Taiwanese, Korean, and Japanese producers to create facilities in China. This industrial sector is overwhelmingly dominated by commercial markets, and defense purchases are so small as to be strategically insignificant in financial terms. The committee does not believe the commercial marketplace will permit China to gain a monopoly position in this sector, so the risk of component denial is not large. However, the ubiquity of commercial IC parts throughout DoD systems and their importance to system functionality argue that this situation should be closely watched in case commercial marketplace behavior threatens strategic access.

Capabilities Not Considered Strategic and Critical

There are many capabilities that are properly considered important to U.S. security but that are not as uniquely essential as those in the first two categories above. For these, assured access to needed components can also be an issue and important to the nation’s operational capabilities. However, the breadth of the industries involved and the diversity of consequences makes it impractical to focus on all the industries. Component supply for this category needs to be managed to assure that DoD leadership understands the degree of risk and the degree of advantage that are inherent in having foreign suppliers. This category is typified by the broad set of capabilities normally referred to in DoD budgeting as General Purpose Forces. It includes many pieces of equipment used by the tactical forces that are acquired in large numbers to be applied across most prospective military scenarios. At the individual and unit level, they are vulnerable to many battlefield threats and the investments have not been made to make them invulnerable. DoD recognizes that some individuals and units will necessarily be placed at risk to achieve larger strategic gains and that the investment levels needed to avert this risk would jeopardize these truly strategic capabilities. It is against a broader standard for this class of assets that the committee envisions the risks and rewards of foreign sourcing will be assessed.

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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Risks and Rewards

There are myriad combinations of products, countries, situations, and scenarios that will give rise to concerns about foreign dependence: Middle Eastern oil, microchips and displays from Japan, PCBs from China, specialty metals from Africa, and many, many more. The concerns exist today and will continue through next week, next month, next year, and the next decade. The impact of any one combination will depend on many parameters, including the geopolitical situation of the moment, the nature of the capabilities at risk, the risks our leaders are prepared to take, and the preparations made in anticipation of denial, to name a few.

Officials at all levels can—and do—make calculated and subjective assessments of these potential events and decisions that cover both short-and long-term issues. The President can decide to reduce dependence on oil from the Middle East, DoD can decide that the risk of depending on foreign sources for flat-panel displays is worth the price and performance, and the Air Force might determine that the risk of foreign dependence in the Joint Strike Fighter Program is worth the advantage of foreign participation, to list a few examples.

The committee recognizes that there are risks at many levels of consequence in depending on foreign sources for components, supplies, and services. Some might pose risk to a platform and others, to a unit or a major force. Some might risk our survival as a country if left unattended. However, the committee cannot make any static assessment for this range of potential variables. China looms in the mind of many to be a possible source of mischief, and perhaps it will be, but our nation’s leaders have much time and many options to exercise before that mischief becomes anything more than a possibility.

The committee recognizes that there is no set of procedures that can guarantee that U.S. forces will not suffer from the lack of availability of needed supplies and components either now or in the future. Even the most stringent control regimes with completely domestic suppliers have led to tragic losses of life to enemy forces. There are many supply issues that could permit a coalition of unfriendly nations to cause strategic problems for the United States. Oil is such an issue. It exemplifies the decision issues of cost, mitigation, risk, and the involvement of both domestic and international politics. What can be achieved is a high level of informed judgment about risks and rewards in the full context of the mission of DoD and its subordinate organizations.

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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The committee believes that the way to address this broad set of concerns is to ensure that vigilance in the face of the potential risks surrounding foreign dependence is integrated into the regular management processes of the DoD.

A MANAGEMENT STRATEGY

In this section, the committee describes a set of actions for USD(AT&L), DIA, and others in the DoD that it believes will provide a credible basis for managing vulnerability and assessing risks, including the risks of foreign dependence. Some of the issues that guide the management approach include the following:

  • The likelihood, impact, and mitigation consequences of supply disruption should be dealt with together at the point in DoD that is responsible for these judgments.

  • Detailed data about foreign content are constantly changing.

  • The best place to collect real and accurate data on foreign content is at the point of procurement—perhaps the acquisition manager or the logistics manager.

  • The most authoritative judgments about the operational impact of vulnerabilities would come from the operational elements of the services, the defense agencies, and the combatant commands.

The committee concludes that the right management approach is to depend on the data and judgment of DoD acquisition and logistics officials as the first point of assessment of risk versus reward. Each of these officials has a supervisory chain that can provide guidance for coupling the program manager’s judgment to priorities beyond his purview. This same supervisory chain will have the opportunity to review the judgments at the program level and provide increased assurance that a broader perspective is being applied.

Finally, these data and judgments should be shared with the combatant commanders to permit them to assess the operational consequences of the vulnerabilities identified for their mission responsibilities.

The committee does not believe this process should be a significant new burden for the program manager and logistics/procurement levels. They should, as a matter of course, know the sources of supply for their function and should routinely identify risks to their product sourcing deci-

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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sions. They regularly make trade-off analyses of mitigation opportunities and consequences. Foreign components are but one of the sources of assurance concern. It is the committee’s judgment that obliging them to provide a regular product and supply chain assurance report that covers all significant sources of risk, impact assessment, and mitigation consequences could well be considered a reasonable part of their normal duties.

THE COMMITTEE CONcludes that the right management approach is to depend on the data and judgment of DoD acquisition and logistics officials as the first point of assessment of risk versus reward.

Testimony from government witnesses and committee member experience suggest that adequate data on foreign content are not currently available to either the government or its prime contractors. The information is not systematically required in the contractual arrangements. However, with an organized effort, the committee believes that a relatively efficient data collection effort can be added to the existing contractual vehicles. In any case, the committee cannot envision any other means to get the data needed for this or any other management approach. If foreign content is to be an important issue for the country, it must be made important at these points in the DoD process.

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 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 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 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

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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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 always taking place now, but to bring about a more comprehensive understanding of supply chain risks, more focus will be needed.

This process for managing vulnerability still does not provide for the creation of an aggregated, DoD-wide perspective. For this purpose, the committee believes the data and judgments developed by the process should be provided to a staff element at DoD for the analysis of aggregated trends and national-level implications. DIA TWD should be an integral part of this analytic process to enable the integration of information about supply chain vulnerabilities with intelligence about foreign sources or foreign intrusion into U.S. sources. The analysis should be concerned with particular areas:

  • Where there is a lack of accessible 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.

Furthermore, 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 DIA TWD: IT components, IT services, nanotechnology, and biotechnology. Of particular interest should be any developments at

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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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.

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 de-

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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velop a system for monitoring the risks of component unavailability within 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:

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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  • 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.7

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 DIA TWD: IT components, IT services, nanotechnology, and biotechnol-

7  

The entire DIBCS series may be viewed online at http://www.acq.osd.mil/ip/ip_products.html. Last accessed on February 13, 2006.

Suggested Citation:"Critical Technology Accessibility." National Research Council. 2006. Critical Technology Accessibility. Washington, DC: The National Academies Press. doi: 10.17226/11658.
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ogy. 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.

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DSB (Defense Science Board). 1987. Defense Semiconductor Dependency. Washington, D.C.: Office of the Under Secretary of Defense for Acquisition and Technology.

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DSB. 2005. High Performance Microchip Supply. Washington, D.C.: Office of the Under Secretary of Defense for Acquisition and Technology. Available online at http://www.acq.osd.mil/dsb/reports/2005-02-HPMS_Report_Final.pdf. Last accessed on February 14, 2006.


Flamm, K.S. 1994. Flat-panel displays: Catalyzing a U.S. industry. Issues in Science and Technology 11(1): 27-32. Available online at http://www.ksg.harvard.edu/sed/docs/k4dev/flamm_ist_1994.pdf. Last accessed on February 14, 2006.

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JCS (Joint Chiefs of Staff). 2000. Joint Vision 2020. Director for Strategic Plans and Policy, J5, Strategy Division. Washington, D.C.: U.S. Government Printing Office. June.


Lorell, Mark A., Julie Lowell, Richard M. Moore, Victoria Greenfield, and Katia Vlachos. 2002. Going Global? U.S. Government Policy and the Defense Aerospace Industry. Santa Monica, Calif.: RAND Project Air Force. Available online at http://www.rand.org/pubs/monograph_reports/2005/MR1537.pdf. Last accessed on February 14, 2006.


NAVSEA (Naval Sea Systems Command). 2002. Full Service Contracting Business Strategy Wargame. June 21.

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NRC (National Research Council). 1993. Strategic Technologies for the Army of the Twenty-First Century (STAR 21): Health and Medical Systems. Washington, D.C.: National Academy Press.

NRC. 1995. Maximizing U.S. Interests in Science and Technology Relations with Japan: Report of the Defense Task Force. Washington, D.C.: National Academy Press. Available online at http://www.nap.edu/catalog/9294.html. Last accessed on February 14, 2006.

NRC. 2001. Opportunities in Biotechnology for Future Army Applications. Washington, D.C.: National Academy Press. Available online at http://www.nap.edu/catalog/10142.html. Last accessed on February 14, 2006.

NRC. 2005a. Avoiding Surprise in an Era of Global Technology Advances. Washington, D.C.: The National Academies Press. Available online at http://www.nap.edu/catalog/11286.html. Last accessed on February 14, 2006.

NRC. 2005b. Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future. Washington, D.C.: The National Academies Press. Available online at http://www.nap.edu/catalog/11463.html. Last accessed on February 14, 2006.

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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.


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Unpublished

Jacques S. Gansler, “Critical Technology Accessibility,” Presentation to the committee on January 10, 2006.

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In 2003, the Defense Intelligence Agency asked the NRC to form a standing committee to help develop study topics about technology warning. One issue that was identified was the growing dependence on foreign suppliers of critical technology as a result of the increase in globalization of economic activity. Two important questions emerged for study: what is the risk of denial of critical products from foreign sources and what must the United States do to assure access to future critical products and technologies? This report presents an assessment addressing those two questions. It also provides an analysis of a strategic approach to manage the consequences of this trend towards increased globalization. Finally, the report offers a set of recommendations to implement this strategy and to increase assurance of access to critical technologies.

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