Diagnosing Supply Chain Threats to Defense Innovation

Abstract

As the U.S. Department of Defense (DoD) shifts focus to an era of global power competition, the demand for rapid innovation and disruptive technologies has grown significantly. Prototyping remains a vital tool for advancing technological innovation, enabling early learning and risk reduction in developing complex systems. However, persistent supply chain challenges threaten the success of defense prototyping projects, causing schedule delays, and diminished effectiveness. This research identifies the underlying causes of supply chain disruptions specific to Federal Acquisition Regulations (FAR) governed prototyping efforts, offering a socio-technical systems analysis that accounts for stakeholder relationships, market dynamics, and regulatory frameworks. Through extensive data collection, including stakeholder interviews across agencies, organizations, and supply chain roles, 181 issues were identified and analyzed, revealing over 500 contributing factors. The disciplined analysis of these factors identified three systemic root causes: (1) the misapplication of production management strategies that focus on efficiencies at scale and low tolerance for risk; (2) pooled supply chain management functions, which marginalizes prototyping’s unique demands and creates inefficiencies; and (3) regulatory and organizational barriers to entry that deter non-traditional suppliers, hindering innovation. To address these systemic challenges, the thesis recommends restructuring organizations to better align with the unique demands and risks of prototyping while simultaneously creating pathways to reduce barriers for new suppliers. Resolving these issues will require a coordinated effort across the prototyping ecosystem. By addressing these root causes, the DoD can improve the efficiency and effectiveness of prototyping programs, ultimately sustaining U.S. technological superiority in an increasingly competitive global environment.