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.

Section 2504 of title 10, United States Code, requires that the Secretary of Defense submit an annual report to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives, by March 1st of each year. The report is to include: "(1) A description of the departmental guidance prepared pursuant to section 2506 of this title. (2) A description of the methods and analyses being undertaken by the Department of Defense alone or in cooperation with other Federal agencies, to identify and address concerns regarding technological and industrial capabilities of the national technology and industrial base. (3) A description of the assessments prepared pursuant to section 2505 of this title and other analyses used in developing the budget submission of the Department of Defense for the next fiscal year. (4) Identification of each program designed to sustain specific essential technological and industrial capabilities and processes of the national technology and industrial base." This report contains the required information.

In light of Section 881 of the National Defense Authorization Act for Fiscal Year 2017, which expanded the legal definition of the National Technology and Industrial Base (NTIB) to include the United Kingdom and Australia, this report informs NTIB partners on barriers and opportunities for effective integration. The expansion of the NTIB is based on the principle that defense trade between the United States and its closest allies enables a host of benefits, including increased access to innovation, economies of scale, and interoperability. In order to reap the greatest benefits of a new era of NTIB, this report uses the lessons learned from study of the present state of integration to identify areas of opportunity for policy reforms and greater cooperation.

The United States’ National Technology and Industrial Base (NTIB) is a congressionally-mandated policy framework that is intended to foster a defence free-trade area among the defence-related research and development sectors of the United States, Canada, Australia and the United Kingdom. To date, however, the NTIB has only managed to facilitate limited bilateral cooperation between some members, falling well short of its goal. The US defence export control regime is one of the biggest barriers to NTIB integration. Specifically, bureaucratic fragmentation, its failure to treat trusted allies differently from other partners and its leaders’ reluctance to attempt politically costly reform are significant barriers to progress. Canberra’s ability to maintain its own competitive military advantage and to serve as an effective ally of the United States in the Indo-Pacific is threatened by real and growing opportunity costs in an age of rapid strategic and technological change that Australia and Australian industry face as a result of slow NTIB implementation. Australian leaders should elevate NTIB progress to the political level and accelerate efforts to make a strategic case in Washington as to why extensive and ambitious implementation of NTIB’s original vision is urgently needed.