Industrial Base Analysis and Sustainment Support

Mission— Industrial Base Analysis and Sustainment Support

The Industrial Base Analysis and Sustainment Support (IBAS) program element line is one component of a broader Department of Defense (DoD) investment strategy to strengthen the competitive posture of the Defense Industrial Base (DIB) and secure domestic supply chains. Residing within the Manufacturing Capability Expansion and Investment Prioritization (MCEIP) Directorate within the Office of the Assistant Secretary of Defense for Industrial Base Policy (OASD(IBP)), IBAS investments are used both discretely and in combination with other DoD investment programs, such as MCEIP’s Defense Production Act (DPA) Title III, to ensure collaborative and non-duplicative investment supporting critical DIB and United States (U.S.) supply chain issues. The IBAS program element supports MCEIP priorities through investment in prime and sub-tier suppliers, which mitigate supply chain risks and eliminate production capacity bottlenecks in accordance with current Presidential, National Security Council, and Secretary of Defense guidance during times of presidential transition priorities, goals and objectives. IBAS program element investments are further synchronized across the Department through coordination with other research and development programs, including but not limited to the Defense-Wide Manufacturing Science and Technology Program (MSTP) residing in the Office of the Under Secretary of Defense for Research and Engineering (OUSD(R&E)). IBAS Support was established in accordance with 10 United States Code (U.S.C.) Section 4817, Industrial Base Fund. The ability of the United States to maintain readiness and to surge and sustain in response to an emergency directly relates to the capacity, capabilities, and resiliency of our manufacturing industry, and the DIB and relevant supply chains. IBAS authorities and flexibility are key components to building the industrial capabilities needed to innovate, produce, and sustain the weapon systems for today and tomorrow. The IBAS program element provides the Department with a unique capability to achieve the strategic aims of the Interim National Defense Strategic Guidance (INDSCG) and the 2023 National Defense Industrial Strategy, which call for a strong, resilient, responsive and healthy U.S. Defense Industrial Base that underpins current and future U.S. force readiness. This program element is uniquely positioned to improve the U.S. DIB’s competitiveness and ability to respond to the Department’s needs by applying focused investments to 1) monitor and assess the current state of the DIB, 2) address critical issues in the DIB relating to urgent operational needs, 3) address supply chain vulnerabilities, and 4) support efforts to expand the DIB. Global supply chain disruptions have become more common, with recent events highlighting risks and vulnerabilities that undermine our national security. Management Process – In order to successfully execute the FY 2026 budget, the IBAS Program Office within the OASD(IBP) will oversee the health of the IBAS portfolio and projects. The IBAS Program Office collaborates with relevant Military Department or defense agency technical leads to develop, coordinate, and execute acquisition strategies and implementation plans for each strategic focus area. FY 2026 strategic focus areas that will be executed in IBAS Project Code P819 include workforce, critical minerals and materials, castings and forgings, kinetic capabilities, energy storage and batteries, and microelectronics. Descriptions of each focus area are included in the P819 R-2a exhibit. The FY 2026 request for IBAS includes $273.379 million of discretionary and $2,054.991 million of mandatory (reconciliation) for a total of $2,328.370 billion. The mandatory funds support the Workforce, Critical Minerals and Materials, Castings and Forgings, Kinetic Capabilities, Energy Storage and Batteries and Microelectronics sectors. Further information for this reconciliation request is provided in Section 20004 (Munitions & Supply Chain) and 20009 (INDOPACOM Capabilities) of the Reconciliation Exhibit.

Mission— Industrial Base Analysis and Sustainment

Global supply chain disruptions have become more common, with recent world events highlighting risks and vulnerabilities that undermine our national security. The 2022 Industrial Capabilities Report (ICR) report outlined strategic focus areas and enabling capabilities, associated vulnerabilities, and recommendations to strengthen the DIB. The FY 2026 IBAS budget reflects the DoD’s commitment to ensuring our supply chains can provide our warfighters with decisive advantage. This budget includes investments to respond to Executive Orders, emerging and modernization priorities and technologies, and other defense requirements. The IBAS budget is the result of significant coordination for each strategic focus area via the Program Review Teams (PRTs), which developed an integrated and prioritized investment strategy to address the most pressing needs for each focus area, to include mapping to investment authorities. The FY 2026 IBAS budget reflects the outcome of the PRT recommendations and has been coordinated to complement adjacent investments by related programs including the Defense Production Act Title III and Manufacturing Technology (ManTech) programs, and within the Military Services. Accordingly, investments in the following strategic focus areas will establish, sustain, and expand domestic capabilities and capacities to build more sustainable and resilient supply chains. Workforce – The DoD relies on a skilled workforce to innovate, produce, and sustain our weapon systems. Decades of erosion across workforce development pipelines jeopardize and threaten our industrial base’s ability to remain competitive. Workforce is a critical enabler for all DIB technology, mission, and market sectors. Analytically informed IBAS industrial workforce investments catalyze the development of sustained, regionally focused public-private partnerships (between companies, state/local governments, academia, non-profits, industry associations, and other entities) to strategically close shortfalls in recruitment, training capacity/quality, and hiring/retention. Efforts will continue to focus on recruitment, training, placing and retaining skilled workers in support of defense priority states / regions coordinating with other interagency programs, and leveraging authorities from other departments to support priority defense programs. FY 2026's primary effort will be the continuation and sustainment of a major, multi-year, joint OSD-Navy endeavor begun in FY 2023 focused on ensuring the health and capacity of the DoD’s Maritime and Submarine industrial workforces. Critical Minerals & Materials - Nearly every DoD weapons system, information technology resource, and supply chain — from cutting-edge missile defense systems to petroleum refining-relies on critical minerals and materials, including rare earth elements (REEs). In particular, the supply chain for REEs is highly concentrated in China. Currently, China accounts for over 60 percent of REE mineral production and over 90 percent of downstream processing of those minerals to their end applications, most notably permanent magnets. A disruption in the REE supply chain, whether due to world events or planned for geopolitical reasons, significantly affects the DoD’s ability to manufacture a wide range of platforms and equipment and is thus a serious risk to national security. A resilient supply chain for REE oxides, metals, and magnets is required to enable continued manufacture and sustainment of DoD systems. To provide domestically made REE magnets, the entire REE supply chain must be supported: from mining REE ores, to processing and enriching the ores, to extraction of individual REE oxides, to metallization of each REE oxide, to creation of magnets using domestic REE metals, and finally to qualification of domestic magnets in end use defense applications. The DoD must also be ready to address shortfalls in other elements such as gallium, germanium, scandium, noble gases, and other materials used in traditional defense systems, microelectronics, hypersonics, and manufacturing processes which will require additional funding. To mitigate the most pressing REE supply chain risk, the DoD will utilize planned FY 2026 funding to partially fund a domestic metallization capability for REEs. This key supply chain node must be addressed to enable the manufacture of magnets from domestically processed metals and for use in other specialty applications. Significant additional funding beyond the current programmed level is needed to address other key critical mineral supply chain shortfalls that pose a threat to national security. Additional funding would allow the program to tackle further shortfalls in REE supply chains including sourcing, processing, magnet manufacturing, recycling, and qualification of materials into DoD supply chains. Additional funding would also enable addressing challenges with peripheral supply chains in processing chemicals, alternative feedstock & recovery projects for critical minerals and materials, and emerging critical mineral concerns due to global events such as export restrictions. Critical minerals and materials investments are necessary to establish a resilient, commercially sustainable domestic- and ally-controlled mine-to-magnet supply chain by FY 2027 in accordance with E.O. 14241 and U.S.C. 10 Section 4872. Furthermore, recent DFARS 252.225-7052 which require manufacturers for defense applications to source all materials for Samarium-Cobalt and Neodymium-Iron-Boron REE magnets from domestic sources by 2027. Significant investment in the REE supply chain is needed to comply with these laws and divest from reliance on Chinese controlled supply chains for REEs. Any delay in funding this capability will jeopardize the success of all domestic magnet-making efforts by the U.S. defense or commercial industrial bases. This would likely render defense manufacturers unable to comply with federal regulations concerning restrictions on REEs used in end products and could delay delivery of critical DoD systems such as the F-35, which requires over 900 pounds of REEs for each plane, and Virginia-class submarines, which require 9,200 pounds of REEs for each vessel. Many platforms will be affected if immediate action is not taken to secure the REE industrial base and develop a resilient supply chain for REEs. Energy Storage and Batteries – Due to the small DoD market share and customized battery requirements, the DoD is unable to fully leverage the large commercial investment in state-of-the-art energy storage technology. The nearly 100 percent foreign battery supply chain limits the DoD’s ability to field battery enabled weapons/platforms free of adversary supply chain control. To mitigate these risks, DoD is investing to develop domestic assured access to batteries through three focus areas: 1) Initiate studies to define the aggregate demand for energy storage and batteries across the DoD; 2) Pivot to commercial standards and batteries to the maximum extent possible; and 3) Establish internal DoD safety testing capacity for energy storage and batteries for future weapons systems. FY 2026 efforts will initiate recommendations from the DoD demand analysis and examine opportunities to apply commercial sourcing applications. Castings and Forgings (C&F) – Machine tools and cast and forged parts are critical to the development, procurement, and sustainment of all major defense systems. Cast and forged parts are found in 20 percent of the products representing the U.S. Gross Domestic Product. Continuous industry consolidation and offshoring since the 1960’s have hollowed out domestic capability, reducing or eliminating competition and increasing our dependence on other nations, including China. To mitigate these risks, the DoD will continue to invest in four strategic lines of effort: 1) Metalworking research and infrastructure supporting production and research in the organic and commercial industrial base; 2) Workforce Development to improve the C&F workforce’s size, capacity, skills, and cost-effectiveness; 3) Upstream Supply Chain Security to provide timely, assured access to reliable sources of supply for the raw, refined, and semi-fabricated metals, materials, and related capabilities required to produce C&F and alternative parts for DoD; and 4) Strategy Refinement informed by tools and analyses that enable DoD decision makers to sense evolving conditions, develop appropriate plans, and adjust efforts as conditions change. Kinetic capabilities, which include precision guided missiles/munitions, hypersonic weapons, directed energy weapons, small, unmanned aircraft systems (sUAS), counter-sUAS, and one-may-attack attritables, enable the military to project power, neutralize threads, and achieve strategic objectives in an increasingly complex global landscape. Moreover, robust kinetic capabilities provide the U.S. with a strategic advantage in international negotiations and diplomacy. To maintain the kinetic edge and ensure warfighters have the tools they need to succeed, continued investment in research, development, test, evaluation, manufacturing, and high-capacity production is required. The projects undertaken by this program are of paramount importance to the nation’s defense and security, and the support of government leaders in this critical endeavor is essential. The DoD will launch efforts to: 1) Address supply chain vulnerabilities of hypersonic weapons and the most critical munition, missile, and sUAS components; 2) Update material specifications, including production and quality testing requirements; and 3) Foster sub-tier suppliers and competition in the kinetic capabilities sector industrial base to improve production capacity while reducing costs. FY 2026 primary focus efforts will expand the hypersonics solid rocket motor and propellent industrial base. Microelectronics – Microelectronics components are the foundation of a modern economy and military systems. Various vulnerabilities such as lack of domestic advanced manufacturing capabilities and diminished capacity threaten the DoD’s ability to source microelectronics needed to sustain programs of record. To prepare the Department for increased global economic and strategic challenges, the DoD must take action to ensure access to the microelectronic components needed to sustain our defense programs and systems effectively and affordably. To maintain a competitive edge, the Department also needs a better strategy to transition leading edge technology developed by both government and industry to DoD programs of record. To respond to the threat and establish a secure and assured domestic supply chain, the DoD will pursue multiple lines of microelectronics efforts. Efforts in the IBAS Program are 1) Expanding the number of qualified domestic lower-tier suppliers providing leading edge microelectronics and packaging Global supply chain disruptions have become more common, with recent world events highlighting risks and vulnerabilities that undermine our national security. The 2022 Industrial Capabilities Report (ICR) report outlined strategic focus areas and enabling capabilities, associated vulnerabilities, and recommendations to strengthen the DIB.

Accomplishments & Planned Programs (1)