Use the Defense Production Act to Jump-start Navy Munitions Production
The MOC
By
Samuel Byers
June 5, 2024
The Navy has expended an enormous quantity of munitions—by modern procurement standards—during the ongoing Battle of the Red Sea. The damning statistics speak for themselves. In a recent Foreign Policy article on the need for the Pentagon to buy more ammunition, authors Stacie Pettyjohn and Hannah Dennis point out that “[b]etween October 2023 and this February, U.S. naval vessels fired more than 100 standard missiles” against Houthi drones and missiles over the Red Sea; however, “the Navy is only buying 17 SM-2s and 125 SM-6s this year” to refill the service’s magazines. Given the numerous engagements since February, it is safe to assume that the Navy’s surface-to-air interceptor ledger is firmly in the red for 2024. The authors outline a similarly dire shortfall in the procurement of other key munitions.
What if this time next year, U.S. warships are still intercepting Houthi attacks on civilian shipping in the Red Sea? Even if this contingency is resolved, there’s no guarantee that the United States will not find itself in a similar situation in the near future. In a world where the seas are economically more important than ever, but Western naval dominance is eroding, the prudent course is to assume further disruption in the offing. Munitions procurement needs to be rapidly rescaled to account for this fact.
The President should exercise his powers under the Defense Production Act (DPA) to accelerate procurement of key munitions and expand the capacity of the defense industrial base. Even so, it will take sustained attention from Congress and the Pentagon to maintain a higher procurement rate over the long term.
Revise Baseline Assumptions—Now
For the past two years, the war in Ukraine has shown how ravenous for munitions modern warfare can be on land; now operations in the Bab-al-Mandab are making the same point at sea. In addition to the surface-to-air interceptors discussed above, U.S. warships and aircraft have struck Houthi targets ashore numerous times in the past six months, at one point expending over 150 Tomahawk missiles and other precision-guided munitions in a single night. Absent the political will to impose a decisive outcome, it is hard to see an end to the U.S. Navy’s Red Sea operations. There is little reason for the Houthis or their backers in Tehran to surrender the leverage they have gained over a major artery of international trade—and their example provides a model for other adversaries in future. Even if the Red Sea conflict ended tomorrow, the need would remain to expand naval munitions production capacity to meet future crises of similar—or greater—scale.
The figures cited by Pettyjohn and Dennis depict a procurement regime scaled to support peacetime operations and characterized a destructive “boom and bust” cycle that has eroded the capacity of the defense industrial base to meet growing demand. At the same time, procurement spending has increasingly become a “bill payer” for other items in the Pentagon budget—consistently cut to make room for growing fixed costs under a budget ceiling that does not keep up with inflation.
This model may have sufficed for the post-Cold War and Global War on Terror periods, when demand for high-end munitions was low and intermittent. It is out of step with the demands of an era of renewed great power competition. For instance, a potential war over Taiwan would see the U.S. military—and the Navy in particular—facing an acute scarcity dilemma when it comes to long-range and precision munitions. Multiple wargames have forecasted the depletion of key weapons inventories in a matter of days.
The Pentagon should set a new, higher baseline for annual naval munitions procurement based on the assumption that it will have to support combat operations similar to those in the Red Sea for an extended period of time. Even if the world is quiescent, increasing the size of American munitions stockpiles and investing in increased production capacity will leave the U.S. military better prepared for a potential conflict with our primary adversary, the People’s Republic of China (PRC). As senior DOD officials are fond of saying: “production is deterrence”.
The Defense Production Act
Since taking office in January 2021, President Joe Biden has exercised his authorities under the Defense Production Act multiple times to accelerate the procurement of everything from pharmaceuticals and computer circuit boards to critical components for hypersonic weapons and Virginia-class attack submarines. Using DPA authority to expand the procurement of key munitions would be well within the scope of the law and recent practice.
Title III of the DPA empowers the President to “incentivize the domestic industrial base to expand the production and supply of critical materials and goods” through mechanisms such as loan guarantees, direct government loans, and purchase commitments. The government reached several agreements with private corporations in 2023 to expand production capacity in the United States of key minerals such as graphite, lithium, nickel, and aluminum. Indeed, in June of last year, the Department of Defense used DPA Title III authority to provide $45 million to a company in Iowa expand production of a key component in missiles and other munitions as part of ongoing efforts to support Ukraine in its war against Russia. Similar investments targeted at key points in the supply chain could be used to further expand the industrial base’s capacity to produce key precision munitions.
Exercising these authorities under DPA would allow the President to jump-start the expansion of the defense industrial base for naval weapons in a similar way to how investments related to American support for Ukraine have trebled the production of artillery shells over the past two years, in addition to expanding other production lines. If we expect to face a confrontation over Taiwan or other crises at sea in the near future, there is no reason to wait.
Leadership on Both Ends of Pennsylvania Avenue
Political leadership is essential to break the Pentagon out of ossified procurement patterns that are out of step with modern needs. Over a decade ago, Secretary of Defense Robert Gates saw an acute need among American troops in Iraq and Afghanistan and used his delegated authority under the DPA—among other tools—to circumvent the usual acquisition process and quickly acquire and field thousands of Mine Resistant Ambush Protected vehicles. A similar mindset should apply here.
While the President can jump-start production of key munitions through the DPA, Congressional leadership will also be necessary to sustain a new, higher baseline for munitions procurement over the long term. Allocating additional funds to be used under DPA Title III in the short term; pushing for sustained, higher procurement budgets; and approving multi-year contracts to offer stability to the defense industrial base and avoid a return to the “boom and bust” cycle are all ways that Congressional leaders can help solve this problem.
Working together, both ends of Pennsylvania Avenue can help quickly expand the production of key naval munitions and sustain a larger industrial base in this sector going forward, ensuring that the United States Navy is better prepared to deter the PRC and tackle crises like the Red Sea in future.
Samuel Byers, Sr. National Security Advisor
The views expressed in this piece are the sole opinions of the author and do not necessarily reflect those of the Center for Maritime Strategy or other institutions listed.
Center for Maritime Strategy
By Samuel Byers
The Navy has expended an enormous quantity of munitions—by modern procurement standards—during the ongoing Battle of the Red Sea. The damning statistics speak for themselves. In a recent Foreign Policy article on the need for the Pentagon to buy more ammunition, authors Stacie Pettyjohn and Hannah Dennis point out that “[b]etween October 2023 and this February, U.S. naval vessels fired more than 100 standard missiles” against Houthi drones and missiles over the Red Sea; however, “the Navy is only buying 17 SM-2s and 125 SM-6s this year” to refill the service’s magazines. Given the numerous engagements since February, it is safe to assume that the Navy’s surface-to-air interceptor ledger is firmly in the red for 2024. The authors outline a similarly dire shortfall in the procurement of other key munitions.
What if this time next year, U.S. warships are still intercepting Houthi attacks on civilian shipping in the Red Sea? Even if this contingency is resolved, there’s no guarantee that the United States will not find itself in a similar situation in the near future. In a world where the seas are economically more important than ever, but Western naval dominance is eroding, the prudent course is to assume further disruption in the offing. Munitions procurement needs to be rapidly rescaled to account for this fact.
The President should exercise his powers under the Defense Production Act (DPA) to accelerate procurement of key munitions and expand the capacity of the defense industrial base. Even so, it will take sustained attention from Congress and the Pentagon to maintain a higher procurement rate over the long term.
Revise Baseline Assumptions—Now
For the past two years, the war in Ukraine has shown how ravenous for munitions modern warfare can be on land; now operations in the Bab-al-Mandab are making the same point at sea. In addition to the surface-to-air interceptors discussed above, U.S. warships and aircraft have struck Houthi targets ashore numerous times in the past six months, at one point expending over 150 Tomahawk missiles and other precision-guided munitions in a single night. Absent the political will to impose a decisive outcome, it is hard to see an end to the U.S. Navy’s Red Sea operations. There is little reason for the Houthis or their backers in Tehran to surrender the leverage they have gained over a major artery of international trade—and their example provides a model for other adversaries in future. Even if the Red Sea conflict ended tomorrow, the need would remain to expand naval munitions production capacity to meet future crises of similar—or greater—scale.
The figures cited by Pettyjohn and Dennis depict a procurement regime scaled to support peacetime operations and characterized a destructive “boom and bust” cycle that has eroded the capacity of the defense industrial base to meet growing demand. At the same time, procurement spending has increasingly become a “bill payer” for other items in the Pentagon budget—consistently cut to make room for growing fixed costs under a budget ceiling that does not keep up with inflation.
This model may have sufficed for the post-Cold War and Global War on Terror periods, when demand for high-end munitions was low and intermittent. It is out of step with the demands of an era of renewed great power competition. For instance, a potential war over Taiwan would see the U.S. military—and the Navy in particular—facing an acute scarcity dilemma when it comes to long-range and precision munitions. Multiple wargames have forecasted the depletion of key weapons inventories in a matter of days.
The Pentagon should set a new, higher baseline for annual naval munitions procurement based on the assumption that it will have to support combat operations similar to those in the Red Sea for an extended period of time. Even if the world is quiescent, increasing the size of American munitions stockpiles and investing in increased production capacity will leave the U.S. military better prepared for a potential conflict with our primary adversary, the People’s Republic of China (PRC). As senior DOD officials are fond of saying: “production is deterrence”.
The Defense Production Act
Since taking office in January 2021, President Joe Biden has exercised his authorities under the Defense Production Act multiple times to accelerate the procurement of everything from pharmaceuticals and computer circuit boards to critical components for hypersonic weapons and Virginia-class attack submarines. Using DPA authority to expand the procurement of key munitions would be well within the scope of the law and recent practice.
Title III of the DPA empowers the President to “incentivize the domestic industrial base to expand the production and supply of critical materials and goods” through mechanisms such as loan guarantees, direct government loans, and purchase commitments. The government reached several agreements with private corporations in 2023 to expand production capacity in the United States of key minerals such as graphite, lithium, nickel, and aluminum. Indeed, in June of last year, the Department of Defense used DPA Title III authority to provide $45 million to a company in Iowa expand production of a key component in missiles and other munitions as part of ongoing efforts to support Ukraine in its war against Russia. Similar investments targeted at key points in the supply chain could be used to further expand the industrial base’s capacity to produce key precision munitions.
Exercising these authorities under DPA would allow the President to jump-start the expansion of the defense industrial base for naval weapons in a similar way to how investments related to American support for Ukraine have trebled the production of artillery shells over the past two years, in addition to expanding other production lines. If we expect to face a confrontation over Taiwan or other crises at sea in the near future, there is no reason to wait.
Leadership on Both Ends of Pennsylvania Avenue
Political leadership is essential to break the Pentagon out of ossified procurement patterns that are out of step with modern needs. Over a decade ago, Secretary of Defense Robert Gates saw an acute need among American troops in Iraq and Afghanistan and used his delegated authority under the DPA—among other tools—to circumvent the usual acquisition process and quickly acquire and field thousands of Mine Resistant Ambush Protected vehicles. A similar mindset should apply here.
While the President can jump-start production of key munitions through the DPA, Congressional leadership will also be necessary to sustain a new, higher baseline for munitions procurement over the long term. Allocating additional funds to be used under DPA Title III in the short term; pushing for sustained, higher procurement budgets; and approving multi-year contracts to offer stability to the defense industrial base and avoid a return to the “boom and bust” cycle are all ways that Congressional leaders can help solve this problem.
Working together, both ends of Pennsylvania Avenue can help quickly expand the production of key naval munitions and sustain a larger industrial base in this sector going forward, ensuring that the United States Navy is better prepared to deter the PRC and tackle crises like the Red Sea in future.
Samuel Byers, Sr. National Security Advisor
The views expressed in this piece are the sole opinions of the author and do not necessarily reflect those of the Center for Maritime Strategy or other institutions listed.