Early in 2003, revolutionary requirements and acquisition processes began germinating in the Defense Department. The processes had a common objective: to develop and field 21st century American warfighting capabilities based on functional capabilities, not specific platforms or missions. Only with the consistent application of this functional capabilities context at all levels of planning and execution-from the warfighter to senior DoD decision-makers and industry--can the Department effectively draw from the industrial base the functional capabilities required to win 21st century conflicts.

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.