The Department of Defense is moving out on implementing the Acquisition Transformation Strategy that Secretary Pete Hegseth announced last November. But amidst all the focus on new deals for munitions and the reworked PAE structure, one area of the strategy has largely stayed under the radar: a focus on modularity and multi-sourcing.
The department now has a chance to implement new standards for industry, and shouldn’t be shy about driving forward with these concepts. The reemergence of multi-sourcing, the widespread use of acquisition and contracting strategies with modular open systems approaches (MOSA), and a much greater focus on producibility could help create significantly more overall industrial base capacity, add new entrants to the defense marketplace, and reduce supply chain bottlenecks.
The benefits of these approaches are clear, but the path forward, for the moment, is not. So here is how the department can aggressively pursue them going forward.
One of the familiar criticisms of the defense acquisition system is that while it produces incredibly effective systems, over time those systems become proprietary franchises that forestall competition and reduce government flexibility while leading to brittle supply chains.
For example, concerns about DoD limitations on modifications and what kind of repairs they can make on the F-35 Lightning II originate in the proprietary nature of the technical data for the aircraft. DoD largely left responsibility for sustainment to the prime contractor as it developed the F-35 in the 1990s under the Total System Performance Responsibility (TSPR) model. TSPR is no longer used, but the agreements in the F-35 contracts remain.
Similarly, DoD generally leaves supply chain management responsibility to its prime contractors. Given the fiercely competitive nature of sub-contracting relationships and privity of contracts throughout defense supply chains, there is limited visibility for DoD or the primes in defense supply chains. This can lead to situations where unexpected shortages of parts or components, sometimes well down the supply chain, create significant turbulence.
The demand for solid rocket motors (SRMs), for example, has risen dramatically since Russia invaded Ukraine in 2022 because SRMs are used in precision-guided munitions. Even prior to the recent $1 billion agreement with L3Harris, this increase in demand led to significant DoD investments to build industrial capacity and several new entrants into the SRM market, but it has also exacerbated some of the existing challenges with long-lead items well down the supply chain.
The department has been moving away from TSPR and more passive acquisition models for some time. Building on these efforts, the secretary’s implementing memo for the Strategy outlines the use of modularity and “multi-source practices,” where applicable. This includes three sets of actions that could have a significant impact on how the Department buys and on the nature of the industrial base. Let’s look each of these in turn.
First, the memo calls for a two-for-production standard focused on having at least two qualified sources for “critical program content.” Current acquisition practices generally focus on cost efficiency, which helps lead to a multiplicity of single or sole sources for critical sub-systems and components. The new standard harkens back to the days of second sourcing in the 1970s and 1980s where, for example, the Air Force and Navy competed lot buys of missiles. According to some studies, these “split buys” reduced the lifecycle costs by twenty percent and increased reliability by a similar number as companies competed for larger shares of production opportunities.
The great “engine wars” of the 1970s and 1980s had similar results as Pratt and Whitney and General Electric competed for awards of the F-15 and F-16 fighter jet engines. The second sourcing arrangement reported savings of $2-3 billion over twenty years and doubling of reliability-per-1000-engineflight-hours. The post-Cold War drawdown largely led to an end of second sourcing efforts, but the late Jacques Gansler continually highlighted the potential merits of an alternate engine for the F-35. These debates have continued off and on, even as late as 2023.
It is well past time to relook at the viability of second sourcing for major sub-components like engines and smaller systems like missiles, but the department could also take an expanded view of this two-for-production standard for major systems.
The Air Force’s Collaborative Combat Aircraft (CCA) is clearly taking this approach with its acquisition strategy by looking to downselect multiple vendors for its Increments. With the establishment of government reference architectures and operational application programming interfaces (APIs), the Air Force is working to create a fleet of loyal wingmen aircraft to partner with manned aircraft on the battlefield. Anduril, General Atomics, and Northrop Grumman are currently building prototypes for Increment 1 and as many as twenty companies are looking to compete for Increment 2.
The focus on APIs and MOSA in CCA naturally leads to the second priority in the Secretary’s memo, module-level competition via MOSA. MOSA has been an emerging priority for DoD in recent years so this is the right time to drive its implementation throughout the acquisition system. Concentrating on creating common operational interfaces will enable DoD to compete sub-systems over the life of programs and therefore give companies across the industrial base opportunities.
In theory, MOSA will allow companies to innovate on capability solutions and for DoD to plug and play industry solutions. As Alan Shaffer and Erik Peterson correctly note, however, “Declaring MOSA is easy, enforcing it is not.” The department needs to ensure that purported open systems architectures are truly that, which will require close oversight and clear standards.
Finally, it is critical for the department to focus on scalable production strategies, the third point in the Secretary’s memo. Today’s high-end munitions are incredibly capable systems but are very difficult to produce rapidly at scale. While the department is rightly investing to scale the production of those systems, it desperately needs to start building systems that are much more producible at scale. Just as Liberty ships were manufactured at a rapid rate during World War II, we need families of systems that can be swiftly built at scale.
The USAF’s Family of Affordable Mass Munitions (FAMM) is premised on exactly that approach. Originally conceived by Program Executive Office Weapons, the intent is to create “affordable and highly manufacturable” missiles with much lower unit costs than today’s systems. In a recent hearing on the topic, Sen. Roger Wicker noted that “We need a crash program for a high-low mix of munitions…that must take advantage of simpler designs, and it must lead us to build those designs at scale through advanced manufacturing techniques.”
Ultimately, FAMM and related efforts could, as noted in the Secretary’s memo, could “decouple design from production to permit third-party surge manufacturing capacity.” Given that repeated experiences in Iran, Ukraine, and wargames examining potential conflict scenarios in the Taiwan Strait have demonstrated how quickly US forces blow through munitions stockpiles, producibility is now the name of the game. DoD and Congress must support producibility efforts through investments in programs like FAMM.
Another key element of producibility involves our allies and partners. Long-standing and more recent coproduction efforts in Japan and Poland, for instance, demonstrate the importance of building more systems in different places. The renewed DoD emphasis on international armaments cooperation, spurred by Congress’s creation of an Assistant Secretary with just that mandate, is an ideal opportunity to dramatically expand coproduction and exportability efforts that will build overall capacity.
Going Forward
As with all things in defense acquisition, these types of goals are much easier to outline than to accomplish. The history of defense acquisition reform is littered with noble efforts that did not achieve their objectives. Complexity, inertia, competing priorities, and many other factors make these types of reforms really difficult.
However, one of the strongest and most underappreciated assets that the Trump Administration has today is time. The strategy was completed in year one, leaving three full years for implementation.
Driving multi-sourcing, MOSA, and producibility are ambitious objectives that require strong leadership in DoD and close partnership with industry, but they are just what needs to happen to strengthen and grow our industrial base for the challenges ahead.
Jerry McGinn is Director of the Center for the Industrial Base at CSIS and a former senior defense acquisition official.
