“Buy America” is a hardy perennial in debates over defense manufacturing in the United States.
Given the industrial capacity and supply chain security challenges demonstrated by the Ukraine war and the COVID-19 pandemic, some members of Congress argue that a central part of the solution is to strengthen laws to buy from American companies. To that end, there are draft provisions in the 2024 National Defense Authorization Act currently under consideration, including one requiring 75 percent domestic content of defense systems by 2029.
At the same time, however, the administration continues to emphasize the importance of working closely with allies and partners in preparing for and responding to international crises. This inherent tension is not new but has sharpened in recent years. While increasing domestic manufacturing is a critical priority, four specific realities demonstrate why additional Buy America provisions are counterproductive, unnecessary and ultimately harmful to our industrial base and our national security.
First, a buy-America-only approach is not reflective of how we fight. From last century’s world wars to recent operations in Afghanistan and Iraq, we always fight in coalition. To do that, we share intelligence and conduct operations with close allies and partners. We also develop standards for weapons systems through alliances such as the North Atlantic Treaty Organization. We have seen these common standards in action in Ukraine with international collaborative efforts to procure and increase the production of 155mm artillery shells. Those efforts would not have been possible without these standards.
Second, as the recent production awards to U.S., Canadian, Polish and Indian firms for the artillery shells illustrate, defense systems are the product of a global defense market. While U.S. companies comprise the preponderance of prime contractors for Department of Defense systems, there are significant capabilities provided by companies headquartered in partner countries.
For example, the world’s largest defense program, the F-35 Lightning II, has over 1,900 companies around the globe contributing to the production of this world-class fighter aircraft that 17 countries are purchasing. Moreover, the final assembly, checkout and sustainment for the F-35 is conducted at facilities in Texas and in Italy and Japan.
Non-U.S. organizations also produce many of the major systems for U.S. warfighters. From the venerable Bradley Fighting Vehicle to the Navy’s future frigate program and the finalists for the Army’s Optionally Manned Fighting Vehicle, allied-domiciled companies are playing primary or leading roles in developing these systems in the United States for use by American forces.
These programs underscore the third reality, namely that the direct contributions of U.S. subsidiaries of allied-headquartered companies significantly benefit our domestic industrial base. Hundreds of robust U.S. subsidiaries provide thousands of American jobs, producing products and providing services. United Kingdom-domiciled firms, for example, directly support 77,000 U.S. jobs in states across the country, per my inquiry from the U.K. embassy.
In addition, the international sales of defense systems produced in the United States comprise a significant portion of the revenues for U.S. defense companies, up to 25 percent in some of our largest primes. Aerospace and defense exports in 2022 totaled almost $105 billion and had a positive trade balance of $77.3 billion.
Additional provisions to buy American, however, will undermine the central rationale for this security cooperation that results in greater interoperability and closer interactions between DoD and allied militaries. Why should allies and partners continue to purchase American systems when their companies are excluded from the U.S. marketplace?
The final and most detrimental aspect of additional provisions is that they divert focus away from what the 2022 National Defense Strategy calls the “pacing” national security challenge, China. As COVID-19, Ukraine and the current crisis in the Middle East have demonstrated, the United States and our allies have significant industrial base capacity challenges and supply chain vulnerabilities, particularly with respect to China.
As Undersecretary of Defense Bill LaPlante has articulated in numerous venues, we are spending 3 percent of GDP on defense today as opposed to more than 6 percent in the 1980s. We definitely need to increase domestic industrial capacity, but we are not going to double defense spending so why risk the international industrial collaboration that is critical to our collective strategic competition with China by adding more buy America provisions?
Some in favor of additional provisions argue that existing exemptions will protect our closest allies, but the chilling effect of more requirements will almost certainly undermine those poorly understood exemptions. More broadly, who knows what capabilities will be the rare earth elements and 155mm shells of the future, and who will be best positioned to provide them?
There is more than enough work to go around. Instead of sticking it to our allies and partners, let’s focus on collaborative strategies to build the overall global industrial capacity we need to collectively address today’s profound national security challenges.
Jerry McGinn, Ph.D. is the executive director of the Greg and Camille Baroni Center for Government Contracting in George Mason University’s School of Business and a former senior DoD acquisition official.