Production, Quality & Manufacturing

Industrial Capabilities and Assessment

An industrial capability is a skill, facility, process, or technology needed to design, develop, produce, repair or maintain products used by the Department of Defense (DoD). Defense industrial capabilities include private and public industrial activities. The DoD always needs a good understanding if the current and future industrial base can meet the needs for all their acquisition programs throughout their lifecycle. To gain this understanding, the DoD will conduct Industrial Capability Analysis. This analysis helps guide decision-making and the development and implementation of legislation and policy. [1]

Handbook: DoD Handbook 5000.60-H “Assessing Defense Industrial Capabilities” April 1996

Industrial Capability Analysis

When the DoD is in danger of losing industrial capabilities because a supplier (plant, industry, company, etc.) is going out of business, merging with another company, or being bought out, an analysis must be performed. The analysis addresses the following issues:

  • Ability to cost-effectively design, develop, produce, maintain, support, and restart the program (if necessary),
  • The approach to making production rate and quantity changes in response to contingency and support objectives,
  • Critical planning and infrastructure considerations, including prime and sub-tier contractors,
  • Vulnerable suppliers,
  • Component obsolescence, and
  • DoD involvement in new and unique capabilities.

Industrial Capability Analysis Summary Report

The Industrial Capability Analysis Summary Report is a report summarizing the results of industrial capability analysis. It recommends an action or investment and addresses cost, schedule, effects on performance, and pertinent qualitative considerations. It defines how and when the action would be incorporated into the budget and, if possible, identifies budget offsets.

Industrial Capabilities Planning

Industrial Capabilities Planning should address the current and future status of unique manufacturing capabilities. The planning should:

  1. Assess the adequacy of industrial capabilities to meet acquisition needs. All manufacturing capabilities must be strategically analyzed to ensure that these capabilities are maintained throughout the life of the program.
  2. Identify all unique items projected to go out of production. For each item, planning should address:
    • Product/technology obsolescence
    • Replacement of life-limited items
    • Regeneration
  3. Identify all unique manufacturing capabilities. In addition to identifying unique items, any facilities or corporations that provide unique services or products also need to be identified.

Industrial Capabilities Legislation and Policy

Industrial capabilities legislation and policy puts into writing what actions need to be taken and why to ensure industrial capabilities meet out military needs.  U.S. Code, Title 10, Section 2240(a) and DFAR Subpart 207.1(c) states that “acquisition programs must assess the adequacy of industrial capabilities to meet acquisition needs. In order to ensure this happens, the DoD has implemented an Industrial Capabilities Policy that ensures all industrial capabilities are maintained throughout the life of a program” The government has implemented certain policies:

  • Preserve Essential Capabilities: When there is an indication that essential capabilities are in danger of being lost, an analysis must be performed to determine whether government involvement is necessary to preserve that capability.
  • Promote Commercial-Military Integration: A way of ensuring that essential capabilities remain available without the sole funding of government contracts is to rely on technology and an industrial base capable of meeting defense needs that is sustained by commercial revenue. It addresses integration by:
    • Using Existing Commercial Technology
    • Integrating Defense and Commercial Production
    • Research and Development of Dual-Use Technologies
    • Weighing International Risks and Opportunities

AcqLinks and References:

Updated: 7/22/2021

Rank: G1

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