Interview with Dr. Laura Taylor-Kale, Assistant Secretary of Defense for Industrial Base Policy (IBP)
Dr. Taylor-Kale was confirmed by the Senate in this recently established position on March 30, 2023. Editors of Defense Acquisition magazine met with Dr. Taylor-Kale in her Pentagon office on Aug. 4, 2023, to discuss her role. Here she reviews the administration’s plans for broadening the defense industrial base, building a defense industrial workforce for the future, and the key role of global partnerships in meeting U.S. strategic objectives. Her professional background includes international economic positions with the State and Commerce Departments, the Council on Foreign Relations, and World Bank. Dr. Taylor-Kale holds a B.A. in economics and anthropology from Smith College, an M.P.A. in development economics and demographic studies from Princeton University, an MBA in finance and management from New York University, and a Ph.D. in management science and engineering from Stanford University.
Q. You have a full plate of responsibilities for bolstering the defense industrial base and maintaining a key U.S. advantage. You have extensive experience in economics and international relations. How has that background uniquely prepared you for the challenges of this role?
A. I see industrial base policy, really, as the nexus of national security, economic policy, and foreign policy. So, having the experiences, particularly in the economic and foreign policy agencies outside of DoD, really helps me to bring the perspective of a broad set of stakeholders.
The issues that we work on in IBP are pretty far-reaching in scope. The amount of interaction that we need to have with those stakeholders—with Congress, the State Department, Treasury, Commerce, the FTC [Federal Trade Commission], Homeland Security—means that having a broad set of experiences is really useful.
In particular, my time serving at the Commerce Department has been helpful because I was a deputy assistant secretary for manufacturing, and the former DASD [deputy assistant secretary of defense] for industrial policy position was actually my counterpart. And, so, I knew the role. I knew the set of responsibilities well; and having worked on the commercial side of things, I see the linkages between commercial industry as well as the traditional defense industry.
I think we’re also seeing now that the intersection of commercial and defense is much broader, so it’s really important to be able to understand that at various levels of our supply chain. It also gives me an appreciation of the importance of small and medium-sized businesses for commercial industry in general and for the defense industrial base.
And then, lastly, we particularly need to coordinate across the interagency in our efforts implementing the CHIPS and Science Act and economic security issues like those of the Committee for Foreign Investment in the United States. So, having that international and commercial background is particularly helpful.
I would also note that a lot of what we do now has a global element. As an economic officer in the Foreign Service at the beginning of my career, I was working overseas in Africa and Asia, particularly focused on industrial development in developing countries, and then with Treasury and the international financial institutions in economic diplomacy. I’m able to apply my background to what we do with our global partners and allies in what I call production diplomacy.
Q. As you mentioned, many of the IBP initiatives involving supply chain risk management and supply chain resilience involve a lot of different organizations, both within the DoD and other parts of the government. What kind of challenges and opportunities does that present, and what is your office’s approach to harmonizing all of these efforts?
A. That’s a really important question because it gets at what I think are core challenges that we’re facing in industrial policy. There’s always a tension between current and future needs and requirements. How do we address the necessity of continuing to produce and sustain current weapon systems and then also think about what the next generation looks like? That tension is one that we’re constantly facing. But, in particular, this moment that we’re in—following the COVID-19 crisis and Russia’s invasion of Ukraine—has really brought to a head the importance of supply chain resilience in maintaining levels of production for key systems.
Ten or 15 years ago, we didn’t talk much about munitions, right? We talked primarily about the cool, next generation systems that we needed to build. And what we’re saying now is that it’s not either/or—it’s both. We have to do both at the same time. That’s what these crises have really helped us to see and appreciate. Having the importance of supply chain resilience really at the forefront of the minds of leadership in the department and the White House as well as throughout the broader American public, I think, is particularly important in framing the work that we’re doing in IBP.
The secretary and deputy secretary of defense asked us to develop the first ever National Defense Industrial Strategy and align the activities across the DoD to ensure that we have a stronger industrial base in 5, 10, 15 years. So, that tension of how we address today’s needs versus future capabilities is one that we’ll be focusing on in the strategy. But developing the strategy, in and of itself, is a forcing mechanism to really drive the discussion, set priorities across the department, and get buy-in from all of our key industrial policy stakeholders.
One key guiding force is Executive Order 14017, which was put out in February 2021. In early 2022, we released a report entitled Securing Defense-Critical Supply Chains. That report outlined five key sectors that the department is focused on—microelectronics, castings and forgings, kinetic capabilities, energy and battery storage, and critical minerals and materials. So, as we develop the National Defense Industrial Strategy, we’re also focusing a lot on these five priority sectors.
We have an investment road map that we’re continuing to develop alongside the strategy that takes into account how best to utilize Defense Production Act authorities and the Industrial Base Analysis and Sustainment [IBAS] funds that we can use to address critical vulnerabilities. We’ve announced several investments over the last few months to increase domestic capacity for critical minerals and materials and building resiliency in the munitions supply chain.
We’re really proud of the work we’ve been doing and also how we have taken the authorities and resources that Congress has given us over the years and applied them toward getting capabilities to our Warfighters.
We’ve announced several investments over the last few months to increase domestic capacity for critical minerals and materials and building resiliency in the munitions supply chain.
Q. Another area that we’re interested in is the role of small businesses in rebuilding the industrial base. Even though the dollars awarded to small business have gone up over the last 10 years, the number of small businesses supporting DoD has decreased. What, in your view, can be done to increase small business participation in DoD acquisition?
A. Small businesses are key to increasing competition and the diversity of suppliers in our industrial base. There are different kinds of small businesses. You have the “mom-and-pop” shops, or the companies where just a few people manufacture one particular item that is needed for some of our key systems to work. There are also a lot of very innovative startups that are really important in bringing in new technologies in software and manufacturing.
At the beginning of 2022, we released the Small Business Strategy, and within it there are three key lines of efforts for expanding small business participation in the industrial base.
The first is implementing a unified management approach for small business programs and activities. The second is ensuring that the DoD’s small business activities align with national security priorities. And the third is strengthening the department’s engagement and support of small businesses.
Each of these efforts really focuses on ensuring that small businesses are aware of contracting opportunities within the DoD. That’s where the acquisition workforce can be especially helpful to make sure that we’re talking to various kinds of small businesses that have key capabilities and can bring innovative ideas into the industrial base. Each of the program offices can help promote and ensure small business participation and look for additional suppliers to participate in their programs.
If there are any acquisition professionals who would like assistance identifying small businesses to be part of programs, they are welcome to reach out to our Office of Small Business Programs.
Q. Alongside our industrial partners, which opportunities should we be working to strengthen our defense industrial base in the short run when so many of our manufacturing capabilities are outsourced or outplaced abroad? It was recently reported that a major defense contractor has thousands of supply chain entities in China, a situation from which it finds it impossible to disentangle itself.
A. This is an important question and a key set of responsibilities that we have in IBP to get at supply chain diversity and security, but also economic security. I think it’s critical for us to ensure that we have a robust and diverse set of suppliers that can support the multitude of programs and systems we have. At DoD, we are working to qualify second- and third-tier sources and suppliers for key components.
This is increasingly important as what’s happening more broadly in the economy and the geopolitical sphere really brings to a head supply chain visibility and data collection efforts. This is an ongoing process that we have to work between the Office of the Secretary of Defense and the military services, but understanding where the critical vulnerabilities are allows us to apply our tools, authorities, and investment programs to address them.
You brought up contractors having supply chain entities abroad, and you can see how expanding our domestic capacity of key suppliers is really crucial to strengthening the defense industrial base. The CHIPS and Science Act is a historic investment that the administration is making in onshoring semiconductor manufacturing. While defense requirements may not be the largest share of the overall demand for semiconductors, it’s a critically important piece. It’s not just about how many semiconductors defense contractors are buying or how many the Defense Department needs. But really this is a national security imperative, and the ability to have domestic sources will be important for us now and as we think about the technologies of the future. IBP is playing a key role leading the coordination of CHIPS implementation for the department, setting up an office where we’ll liaise with the Commerce Department and the rest of the interagency.
Lastly, it’s important to think about the workforce as an important piece of the defense industrial base and the security of the supply chain. If you don’t have the workers, how are you going to build the materials? How are you going to increase production lines?
My office, through the IBAS program, invests in workforce programs and has pilots across the country—starting with students in middle and high school and building skills on up through community colleges—to ensure that the domestic industrial base has the skilled workforce it needs to meet the requirements of the department.
It’s not just about how many semiconductors defense contractors are buying or how many the Defense Department needs. But really this is a national security imperative, and the ability to have domestic sources will be important for us now and as we think about the technologies of the future.
Q. Building on a few things you just said, what role do our allies and partners play in ensuring that we are able to deliver the capabilities needed by the Warfighter worldwide?
A. Our allies and partners are of absolute importance to us. This summer, I traveled with the Secretary to Europe and met with various industry leaders in the EU [European Union]. A common refrain from stakeholders throughout the trip was the presence of a trans-Atlantic industrial base, and I think that’s important to note. Our allies and partners are crucial for ensuring that we have a secure and resilient global industrial base.
As I mentioned, I think of our role here in acquisition and sustainment as often focused through the lens of what I’ve called production diplomacy. And by that, I mean that there are ways in which we are coordinating with the National Armaments Directors [NADs] from allied and partner countries to support increases in global production. This has been very important for Ukraine and our security assistance.
We have collaborative efforts, including exploring multiyear and multinational procurement, material standardization, and interoperability and interchangeability. And as we’re bringing together materials and supplies from across allies and partners, we’re cognizant that we need these parts and pieces to work together. So, if the Ukrainians have one system and need to get supplies from another place to repair it, does that work? Thinking about that has been an important part of the work of the National Armaments Directors as well as industry engagements on supply chain risks and mitigation through our efforts with the Ukraine Defense Contact Group [UDCG], the National Technology and Industrial Base, AUKUS [Australia, United Kingdom, United States], and the European Union defense agencies. And our bilateral agreements really focus on a robust set of engagements around production diplomacy.
I can’t emphasize enough how important the UDCG has been as well as the National Armaments Directors meeting under its auspices. Their working groups meet regularly, involving the United States as well as various partner nations. They discuss areas like sustainment, integrated air defense, working collaboratively with the Ukrainians on lessons learned, and surging production capacity for key munitions. The body is something that A&S [Acquisition and Sustainment] really leans forward on.
So, the effort to think about our production capabilities not just as a domestic issue but really as an international or diplomatic issue is one that the under secretary has driven hard. I think it has been particularly important and effective and has shown real results.
Q. As you mentioned earlier, one of the biggest challenges facing the DoD is the lack of skilled laborers with the ability to maintain and build ships and aircraft and combat vehicles. How do you plan to address this shortage?
A. The workforce issues require working closely with industry. Without a robust workforce, we won’t have a strong industrial base. So, we’re leading a number of programs to address this challenge.
The National Imperative for Industrial Skills, which was developed in 2018–2019 and launched in 2020, is a skills imperative through which our IBAS program has invested in various pilot programs. About 18 are designed to meet immediate skilled workforce needs in dense defense industrial base regions of the United States.
We’re also trying to get students excited about working in the industrial base. We have a program called Project MFG, or Project Manufacturing, that is designed to inspire the next generation to enter manufacturing—and it does some really cool things, like holding individual and team manufacturing competitions. The ability to work with high school students, sometimes even younger, and get them excited about math and science while giving them the background to go into engineering, the trades, or this range of skill-based programs—that’s all part of helping strengthen the industrial base.
We also have the Accelerated Training in Defense Manufacturing program that brings skilled technicians into areas where there are skill gaps in the defense industrial base.
Q. At DAU, we’re focused specifically on the acquisition workforce and training acquisition professionals. What do you see as the role of the acquisition workforce in strengthening the defense industrial base and, more specifically, what action should our program offices be taking now to make us more successful down the road?
A. I can’t overemphasize that the acquisition workforce is critical. The acquisition workforce is at the front lines, working with industry. They’re interacting and engaging every day with industry and are often the face of the customer and the department.
So, I think it’s important that our acquisition professionals understand the small business goals that the department has set out. We are committed to exceeding our benchmarks on goals, and that requires the participation of all of our program offices.
I also think it’s important that our acquisition workforce understand that they’re an important part of supply chain visibility efforts. Having that touchpoint with industry on a daily basis is incredibly valuable: Our acquisition professionals can sometimes understand better than we can what the subtiers and the sub-subtiers in our programs are doing. So, it’s important for us to maintain those lines of communication and understand that those offices have that firsthand visibility most other parts of the department just don’t have.
Finally, our acquisition executives and professionals need to understand and situate themselves within the broader policy priorities of the department. For example, we talked a lot about global partners and allies. It’s important for acquisition professionals to understand that they’re at the front lines of being able to implement and prioritize a lot of these broader policy objectives, knowing that our work with our global partners and allies is necessary for us to be able to both help Ukraine and think about potential challenges in the Indo-Pacific as well. It’s really about balancing the priorities of today with the capabilities that we need for tomorrow.
You noted shipbuilding in particular, and this is something IBP, IBAS, and the Navy have been very much engaged on and working together. IBAS, in coordination with the Navy, has invested almost $200 million to improve industrial workforce skills, particularly with respect to shipbuilding, and use both federal and state programs to expand recruitment pipelines in underserved communities.
It’s important for acquisition professionals to understand that they’re at the front lines of being able to implement and prioritize a lot of these broader policy objectives, knowing that our work with our global partners and allies is necessary for us to be able to both help Ukraine and think about potential challenges in the Indo-Pacific as well. It’s really about balancing the priorities of today with the capabilities that we need for tomorrow.
Q. Is there anything else that you wanted to highlight about your office in particular or DAU?
A. It’s all about understanding the full picture of the work we do within IBP. We have the Office of Small Business Programs. We have the Industrial Base Resilience Group, which includes our analysis team and our investment program. There is the Manufacturing Capability, Expansion and Investment Program, and our economic security shop, which deals with global investment, including the Committee on Foreign Investment in the United States, and analyzing defense industry mergers and acquisitions. And if all that sounds like economic jargon, it’s actually a really important, fundamental part of the work we do for the industrial base because it involves understanding and deterring adversarial capital investments in the industrial base.
We have groups focused on both domestic and international industry involvement. A lot of what we’re trying to do is engage closely with industry to ensure that partners have a place to come to when they have challenges, questions, and concerns about what’s happening in the department or in the industrial base. And as I mentioned, we have this new office that we’re calling the CHIPS Coordination Cell (C3) that will focus on implementing the CHIPS and Science Act.
So, it’s important for our acquisition professionals to know the breadth and also the depth we have to really ensure that we have the secure, robust, resilient supply chains required to get capabilities to our Warfighters and meet our national security requirements. I think this is an exciting time to be in industrial policy in general and thus an exciting time to be in the department. The work that we do has vital importance to our Warfighters, and any time our acquisition professionals or the DAU want to reach out to us, our doors are open.
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