Need more weapons, now?
Not so fast . . .
Ramping up the industrial base is harder than it sounds . . .
Several recent conflicts, notably in Ukraine and the Middle East, have served to remind us that modern combat consumes prodigious supplies of munitions.
The latest news in this regard is President Trump reversing his position on Ukraine and coming to the rescue by agreeing to supply additional munitions to that nation . . . so long as Europe pays for them. Ukraine itself is reportedly producing over a million drones this year for use on that battlefield. Meanwhile, numerous air and ballistic defense missiles, including Patriots, THAADs, and SM-3 missiles were expended during several exchanges between Israel and Iran. The U.S. Navy recently used a substantial portion of its inventory of SM-3s and other missiles during combat operations against the Houthis in the Red Sea/Yemen region. Munitions shortages appear to be acute for other conflicts that might erupt in the Taiwan Strait or the Korean Peninsula.
This is not a new problem. Over a decade ago, then-Deputy Secretary of Defense Bob Work and I made two predictions. First, we said that small, smart, lethal things would dominate the future battlefield. Second, based on the rate at which the military services and congress were funding production at the time we would be woefully short of munitions in a future war. At the time nobody wanted to believe it. The services had a good line about “getting smaller before going hollow,” but when it came to jumping off the cliff of slightly decreasing their force structure to fund readiness (including weapons), they couldn’t bring themselves to do so. After all, the service chiefs’ legacies are often judged by their force structure “identity metrics,” which are numbers of ships, troops, and airplanes rather than numbers of weapons.
As for congress . . . unlike the resources, aircraft, ships, or soldiers pull in to a member’s district from basing, family spending, and maintenance . . . once a weapon is manufactured and placed in a magazine, it just sits there and ceases spending money. And force structure numbers (think 355 ships) are much more prone to politicization than weapons numbers, pressurizing congress to maintain the former at the expense of the latter.
That is, until now.
Low munitions stocks have suddenly gained attention, with finger-pointing galore. “How could this have happened?” In response, members of the defense industry are being asked, in some cases quite forcefully, why they cannot simply turn on the spigot and produce more weapons on demand.
Well, it’s much harder than it sounds.
First, unlike what we read in the history books about World War II, modern weapons are extraordinarily complex and difficult to design and produce. One does not simply convert an automobile plant to a tank or aircraft plant—much less a facility to produce very technically sophisticated weapons like radars and missiles—overnight. This is serious technical work, with very specialized components.
Second, weapons manufacturers only produce what the government tells them to by appropriating—and actually spending—money. In a stunning lack of foresight, two years ago the Defense Department ceased funding for the Navy’s SM-3-1B missile (which was vital to the defense of Israel and will be equally important elsewhere in the event of a medium or long -range missile exchange) . . . and has now asked how many can be built how fast. The Army stopped buying Stinger missiles years ago, and in the wake of the Russian invasion of Ukraine requested more to replace stocks transferred to Ukraine . . .
It would be fiduciarily irresponsible for the publicly held companies that manufacture these weapons to keep production lines active out of the goodness of their hearts. When a line is shut down, two predictable things happen: a highly complex supply chain consisting of unique and sometimes rare components and materials collapses, and the people operating the line either retire or change jobs. Both are hard to regenerate.
Third, manufacturing capacity and cost for weapons is highly dependent on the production rate demanded by the government. This is not a linear function. Low rates are inefficient and thus expensive. Once a line reaches full capacity, asking for anything more requires a step-function increased cost in facilities and people to establish another line. However, manufacturers are reluctant to invest the capital required to do so unless they’re assured the cost can be amortized over contracts that last longer than the typical budget timeline of one year. Multi-year contracts, which would help mitigate this tendency, are unpopular with congress but are much-needed.
There are several other complicating factors associated with increased production:
Often, components used in a high-demand missile (like the AMRAAM, which is also under pressure due to expenditure rates) are also used in other high demand missiles, adding to supply chain complexity and capacity issues.
Increasing production rates of certain components, such as rocket motors, which are difficult and dangerous to produce, can be very problematic. More rocket motor suppliers are in work, which will eventually help mitigate this problem.
Contractors are wary of fixed price contracts, in which they assume the risk for unexpected cost increases, some of which (such as inflation, tariffs, or difficulties with lower-tier suppliers) may be beyond their control. Yet the government is wary of cost-plus contracts that could reward sloppy behavior on the part of contractors. This could be mitigated if a specialized cost-plus method were devised that would assign risk for cost increases appropriately between customer and vendor, depending on reason, perhaps with a neutral third party as arbiter.
Government testing requirements—not only for new weapons but also for those in production—are dependent on the availability of government inspectors, some of which may have disappeared due to Department of Government Efficiency (DOGE) initiatives. And it is unnecessary and time-intensive to test all the “corner cases” for certain systems before they are fielded.
Guaranteeing that contractors can sell to foreign customers using Direct Commercial Sales, which are more profitable than more government-dependent Foreign Military Sales, would incentivize contractors to be more aggressive in building and maintaining production capacity.
The government could fund establishment of additional production capacity, partially relieving the need to obtain multi-year authorities from congress.
Congress’s inability to pass budgets on time is extremely disruptive to production of both new and existing systems. No company Chief Financial Officer would survive submitting a budget after it is due, yet this has now become customary for our elected representatives.
Once money is appropriated, it has to actually be spent, which means contracting officers working through a myriad of bureaucratic requirements to put the money to work. As if it wasn’t already hard enough, Department of Defense downsizing initiatives (ala DOGE) are cutting into the work force that must get this work done.
The ability to more rapidly qualify second sources of components would be very helpful in ramping up supply chains to support increased production rates.
Selective relaxation of environmental regulations when increases are required for national security purposes for increased capacity for rocket motors (as an example) could be helpful.
The prime contractors have in some cases demonstrated their ability to quickly ramp up production when properly supported. Yet there is a current narrative, eagerly fostered by ambitious tech startups, that the major defense contractors are bureaucratic and obsolete, and thus cannot maintain production rate agility. Yes, the startups have a few key advantages, such as private funding (and thus fewer public company concerns), a greater appetite for risk (including a willingness to create things the government has not yet asked for), smaller bureaucracies, and the willingness to pay larger salaries to highly technically qualified people.
To be sure, these ambitious startups clearly have a place in the Department of Defense’s future, and it is encouraging that the Department is openly fostering them. And there is plenty of potential for startups to partner with the larger contractors or to be incubators for those firms to produce at scale. I believe in this enough that I’ve started an early stage defense tech venture capital firm alongside two other former military members.
However, although the startups’ advantages can translate into putting together an adaptable new system more quickly, they do not necessarily address the thorny issue of rapidly scaling a large and complex supply chain and building lots of big, complicated things. They are largely unproven in this regard. And it is one thing to produce a bunch of drones with artificial intelligence, it is another thing to produce at scale something like a missile defense system that includes powerful, sophisticated radars and long-range interceptors.
The bottom line: it is simplistic to simply demand more munitions production without systematically and consistently maintaining the complex (and, unfortunately, expensive) underlying structure that provides it.
The Gritty’s Take
There’s been a lot of excited talk in my circles about flashy new defense tech start-ups. Frankly, it’s contagious. They’re fast-moving, innovative, and untethered from the “bureaucracy” of legacy contractors. They’re hiring aggressively, paying well, and, most potently, using a savvy social media strategy that speaks directly to my generation.
But I think some in my cohort are too quick to dismiss the legacy defense contractors outright because of that narrative. Don’t get me wrong, I’d love to field a cutting-edge, AI-enabled drone from one of these start-ups. More competition is healthy, especially in fast-moving areas like AI. And history shows the value of small, entrepreneurial groups in defense innovation.
Back in the 1970s and 1980s, the Pentagon trusted small, agile teams to take big swings. Lockheed’s Skunk Works built the F‑117 stealth fighter on a shoestring budget and fielded it in record time. That same spirit gave us GPS, stealth, and smart weapons.
Today’s start-ups carry that same spark around AI and autonomy. They move fast, take risks, and challenge norms. But here’s the issue: building one stealth aircraft in secret—or demonstrating one AI-enabled drone flight—is very different from cranking out thousands of jets, missiles, and radars every year. Start-ups might design the next breakthrough, but scaling that breakthrough, and building it reliably and under the scrutiny of government regulation is a whole different fight.
One final note… I believe the primes could do a better job marketing what they do to junior military members. There are two reasons for this. First, the fight for talent starts well before service members leave the military. Inevitably, we all take off the uniform, and some of us look to the defense industry for employment. Planting that seed early (through relatively inexpensive social media campaigns) can pay dividends for future recruiting. Second, for those who remain in uniform, today’s junior officers and enlisted will one day become senior leaders. How they perceive and value industry partners will be shaped by impressions formed early in their careers, making this as much about long-term client relations as it is about hiring.