DATA & FIGURES
The study found that 10,000 new firms have entered the market in the past two years, with $120 billion in contract obligations awarded to nontraditional companies in FY 2025. The Pentagon's 2027 budget request for munitions allocated 49% to low-cost munitions, rising to 70% by 2031. The US has also seen a significant increase in the production of rare earths, from 95 tons in 2022 to 8,900 tons in 2025. Foreign Military Sales have more than tripled, from less than $20 billion in 2015 to more than $80 billion in 2025
THE SCENARIO
The US industrial base is facing increasing pressure to sustain a major war, with recent conflicts consuming weapons at a ferocious rate. The study finds that the US defense industrial base is becoming more prepared to meet this demand, but still faces numerous challenges, including issues with manufacturing lead times, critical munitions and materials stockpiles, and supply chain security. The US government is taking steps to address these challenges, including investing in defense companies such as L3Harris Missile Solutions and implementing the America First Arms Transfer Strategy
DIRECT QUOTE
"It's a monopsony, Government sets the market. Government can regulate the market. So, if the government wants different outcomes, it changes how it buys" — Jerry McGinn, Co-author of the study for the Center for Strategic and International Analysis
BBN INSIGHT
The Positive Side: The increase in new companies entering the defense field and the investment in defense companies such as L3Harris Missile Solutions could lead to increased competition and innovation in the sector, driving down costs and improving the quality of defense products. The US government's commitment to defense production, including the implementation of the America First Arms Transfer Strategy, could also lead to increased exports of US arms and cooperative multinational projects, supporting domestic reindustrialization and expanding production capacity. The Negative Side: The study's findings highlight the numerous challenges facing the US industrial base, including issues with manufacturing lead times, critical munitions and materials stockpiles, and supply chain security. The erosion of domestic rare earth manufacturing capacity and the rise of Chinese control could also have significant implications for the US defense industrial base, making it more difficult to sustain a major war