Read the full editorial here

Want to bring back American manufacturing? Start here.

By cutting red tape and supporting innovation, the Pentagon can jump-start an American manufacturing comeback

By Roger Wicker and Katherine Boyle

America is on the cusp of a manufacturing revival. For the first time in decades, investors, policymakers and entrepreneurs are aligned to build factories, assembly lines and supply chains that will power a second American-led century. The Pentagon is in the perfect position to lead the way.

Reindustrialization can — and should — start within our defense industrial base. National security and economic strength are, after all, intertwined. In the 20th century, American manufacturing dominance fueled both peacetime prosperity and wartime advantage. But the decoupling of industry from defense — which occurred gradually over the past 50 years — has left our weapons stockpiles depleted. Today, we struggle to produce enough munitions, ships and systems to protect ourselves and our allies.

What happened? In the 1960s, central planning replaced the Pentagon’s agile, market-driven model. Bureaucracy supplanted innovation. Overregulation turned quick decisions into years-long ordeals: it takes four times longer to complete the acquisition cycle today than it did in the 1970s. As a result, the number of prime defense contractors has plummeted by nearly 80 percent in the past few decades and small security-related businesses have fallen by 40 percent. Now, just a handful of firms handle most weapons contracts.

One glaring flaw is the “cost-plus” contract, which reimburses expenses and adds a negotiated profit, thereby removing incentives to control costs. The system took root during World War II and the Cold War, when government was willing to absorb all the financial risk to swiftly develop new weapons. However, as the industrial base shrank, companies faced less pressure to deliver. This process has often resulted in weapons systems that are a decade late and billions over budget.

Meanwhile, our adversaries exploit commercial efficiencies that we ignore. As NASA has learned through its arrangements with SpaceX and Blue Origin, private companies can dramatically reduce costs while rapidly increasing the speed of innovation, even on the most complex programs.

Our procurement system still requires suppliers to fill out endless pages of cost documentation for every item purchased, which is debilitating for smaller companies that don’t have accountants and IT specialists. No wonder they have left the market.

The Pentagon’s current system favors process over results and incumbents over merit. In 1960, U.S. defense research and development constituted 36 percent of global spending; in recent years it’s fallen to just over 3 percent. Commercial firms invest far more. Meanwhile, private capital has surged into defense start-ups, reaching $34.9 billion in 2023 alone. That’s because in the age of artificial intelligence, advanced drones and 3D printing, innovators are building new products with wide application -- which the defense industry seeks out. Without reform, the influx of investment and rapid development of new technology could stall.

That’s why one of us (Wicker) introduced the Forged Act, introducing a plan to cut red tape, unleash innovation and empower decision-makers. This effort, inspired by multiple bipartisan commissions, would end overreliance on noncommercial procedures such as cost-plus contracts. The legislation, which has been folded into the National Defense Authorization Act now before the Senate, complements projects like the American Dynamism initiative of the venture capital firm Andreessen Horowitz, which channels private investment into defense and manufacturing start-ups. Together, they can create a powerful synergy between government reform and entrepreneurial energy.

The act would transform Pentagon procurement. Many defense products, such as engines, require modifications that do not alter the underlying technology or business processes of their commercial counterparts. However, due to perceived risks, procurement officials often impose additional defense-specific business requirements that inflate costs by 18 percent. In response, companies establish separate federal business units with dedicated production lines, thereby duplicating costs and limiting dual-use efficiencies.

We aim to flip the script by making commercial procedures the default; a much broader range of products and services will be treated commercially unless otherwise justified. Fortunately, President Donald Trump understood the value of this reform and adopted it in an April executive order on Ensuring Commercial, Cost-Effective Solutions in Federal Contracts.

By exempting new defense contractors from burdensome defense-specific rules, we keep them innovative and hungry. These are the firms that can accelerate adoption of new technology. Traditional prime contractors will benefit as well; they will be able to trim compliance layers, escaping a culture of box-checking.

Enacting these changes won’t just strengthen the Pentagon, it will ignite economic growth. Imagine every capable company joining the defense base, with entrepreneurs contributing solutions even if defense isn’t their main business. From routine parts to the latest in artificial intelligence, government can and should be a preferred customer for a wide range of commercial companies and start-ups.

And while several of these approaches have been tried before, most have never been adequately funded. The reconciliation defense bill passed this year includes tens of billions of dollars to jump-start advanced manufacturing approaches, from munitions and shipbuilding to spare parts and small drones.

The defense tech revolution is surging at a critical moment for our national security. We face rising threats, yet defense now accounts for just 10 percent of federal spending. That’s down from 60 percent in the 1950s. We need to increase our defense budget, but we don’t want to pour more money into a faulty process.

Restoring the Pentagon’s free market roots is essential for security and prosperity. Bold policy changes and a new workforce culture can rebuild our arsenal — and simultaneously revive American dynamism.