The Department of Defense relies on a robust and capable defense industry to develop, field, and maintain high quality goods and services vital to our national security. Just as we depended on a healthy and stable industrial base to build the "Arsenal of Democracy" during World War II, today we continue to rely on the defense industrial base to ensure that our military personnel are supplied with the world's best equipment, logistics support, and information systems. The current strategic environment facing our nation dictates that more must be done to change the way the Department of Defense does business. Over the past two decades, the Department has consolidated and contracted around platforms that possessed singular capabilities with little to no cross-mission functionality. The Department's future requirements demand timely investment in a broad and flexible portfolio of systems, capable of detecting, deterring, and when necessary, defeating both conventional and unconventional threats across the entire spectrum of conflict. The Department will continue to rely on market forces to create, shape, and sustain the industrial, manufacturing, and technological capabilities necessary to provide our fighting forces with systems that can engage and win full-spectrum warfare. However, when absolutely necessary the Department will intervene to create and/or sustain competition, innovation, and essential industrial capabilities. On April 6, 2009, Secretary Gates offered the most fundamental restructuring of the Department of the past twenty years, taking the unprecedented step in post-Cold War history of terminating or restructuring major acquisition programs that were not meeting performance, cost, or whose schedule rendered them no longer essential in the rapidly changing threat environment.

By law, the Secretary of Defense must submit an annual report to the congressional armed services committees on the actions, investments, and assessments conducted in support of the U.S. defense industrial base (DIB). The FY 2020 Industrial Capabilities Report satisfies the requirements pursuant to title 10, U.S. Code., Section 2504, and provides context to the challenges facing the U.S. DIB. It is published as a convenience to those who may wish to have a quality professionally printed copy of the manual.

The US and international defense industrial sectors have faced many challenges over the last twenty years, including cycles of growth and shrinkage in defense budgets, shifts in strategic defense priorities, and macroeconomic volatility. In the current environment, the defense sector faces a combination of these challenges and must struggle with the need to maintain critical aspects of the defense industrial base as defense priorities change and as defense budgets reduce or plateau. Moreover, the defense sector in the US is interconnected both with defense sectors in other countries and with other industry sectors in the US and global economies. As a result, strategic decisions made in one defense sector impact the defense sectors of other countries, as well as other areas of the economy. Given her academic, corporate, and Department of Defense experience as a leading economist and policy-maker, Dr. Nayantara Hensel is perfectly positioned to examine the interrelationship between these forces both historically and in the current environment, and to assess the implications for the future global defense industrial base.