Key Takeaways
- •Michael P. Duffey (Under Secretary of Defense for Acquisition and Sustainment) announced the department is on a "wartime footing," tripling PAC-3 and quadrupling THAAD production through new framework agreements.
- •Duffey defended the department's use of equity investments and multi-year procurement authorities to stabilize fragile supply chains, specifically citing a $1 billion investment to expand solid rocket motor capacity.
- •Rep. Sara Jacobs (D, CA-51) questioned the blacklisting of AI firm Anthropic, while Duffey argued the company’s refusal to remove usage restrictions on autonomous weapons created unacceptable operational risks.
- •Rep. Mike Rogers (R, AL-3) advocated for a $1.5 trillion defense budget to counter China, while Rep. Adam Smith (D, WA-9) emphasized fiscal constraints and the $38 trillion national debt.
- •The committee will prioritize domestic reindustrialization and workforce development in the upcoming NDAA to fill 400,000 manufacturing vacancies and eliminate dependency on Chinese critical minerals and materials.
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Hearing Analysis
Overview
On March 4, 2026, the House Armed Services Committee held a hearing titled "Speed to Scale: Revitalizing the Defense Industrial Base" to address the systemic atrophy of American manufacturing capabilities and the urgent need to modernize the Department of Defense (DOD) acquisition process. Chairman Joe Wilson (R, SC-2) opened the hearing by emphasizing that "peace through strength starts in our factories," noting that 30 years of post-Cold War consolidation has left the United States with dangerously low stockpiles and a workforce shortage of 400,000 manufacturing jobs. The hearing focused on how the DOD intends to utilize new authorities granted in the National Defense Authorization Act (NDAA) and the "one big beautiful bill" funding package to counter the industrial expansion of the People's Republic of China.
Key Testimony
The sole witness, Michael Duffey, Under Secretary of Defense for Acquisition and Sustainment, testified on the department's shift toward a "commercial-first" model and the implementation of the Speed Act. Under Secretary Duffey highlighted the successful rollout of munitions deals in January 2026, which utilized multi-year procurement (MYP) authorities to triple the production of Patriot missiles from 650 to 2,000 units annually. He argued that MYP is the most critical tool for providing the "demand signal" necessary for industry to invest in its own capacity. A significant portion of his testimony focused on the DOD’s new use of equity investments to stabilize fragile supply chains. He cited a deal with L3Harris Technologies (L3) as a model for this approach, where the government took an economic stake to incentivize L3 to invest billions of its own capital into the solid rocket motor industrial base.
Policy Proposals
Policy discussions centered on the FY 2026 NDAA and the President’s proposed $1.5 trillion defense budget. Ranking Member Adam Smith (D, WA-9) expressed support for acquisition reform but cautioned against the government "putting its thumb on the scale" through sovereign wealth-style equity funds, which might discourage fair competition. Rep. Smith also raised concerns about fiscal responsibility, questioning the viability of a proposed $30 billion battleship and emphasizing that the U.S. cannot "fight everybody everywhere all at once." Several members, including Rep. Robert Wittman (R, VA-1), pushed for the adoption of Modular Open Systems Architecture (MOSA) to allow for iterative software updates and better sustainment of platforms like the F-35 and the F-47.
Overview
The hearing identified several critical industry impacts. The maritime sector was a major focus, with Rep. Joe Courtney (D, CT-2) pressing for the execution of the Block VI contract for Virginia-class submarines and the Columbia-class program. Rep. Richard McCormick (R, GA-7) noted that U.S. shipbuilding is currently being "outproduced" by Japan, South Korea, and China. In the aerospace sector, Rep. George Whitesides (D, CA-27) sought updates on the B-21 Raider production goals at Plant 42. The munitions and energetics sector saw significant attention, with discussions regarding the Naval Surface Warfare Center Indian Head Division and the need for second-source providers for solid rocket motors to end the current "single-point failure" vulnerabilities.
Policy Proposals
A contentious exchange occurred between Rep. Sara Jacobs (D, CA-51) and Under Secretary Duffey regarding the department's treatment of artificial intelligence (AI) vendors. Rep. Jacobs criticized the DOD for blacklisting Anthropic and designating it a "supply chain risk" after the company refused to drop contractual restrictions against using its "Claude" AI for mass surveillance or autonomous weapons. She pointed out that OpenAI reportedly secured a contract despite having similar "red lines," suggesting the move against Anthropic was retaliatory rather than a standard procurement decision. Under Secretary Duffey defended the action, stating the DOD would not be "held hostage to the whims of a company's policy" regarding the employment of sensitive capabilities.
Overview
The partisan dynamics were largely collaborative regarding the need for reindustrialization, though they diverged on social and fiscal specifics. Republicans generally pushed for increased funding and the removal of "red tape," while Democrats emphasized workforce development, education, and the potential risks of government equity in private firms. Rep. Donald Norcross (D, NJ-1) and Rep. Sarah Elfreth (D, MD-3) focused on the "human side" of the industrial base, advocating for national programs to attract the next generation of skilled tradespeople into the defense sector.
Industry Impact
Regarding specific organizations, the Department of Defense was the central focus as it implements the Acquisition Transformation Strategy. L3Harris Technologies was praised for its partnership in the solid rocket motor sector. Anthropic was discussed in the context of being designated a supply chain risk, a move Rep. Jacobs compared to the treatment of Huawei and Kaspersky Lab. OpenAI was mentioned as a competitor that benefited from Anthropic's blacklisting. The Navy and Air Force were referenced regarding delays in submarine contracts and fighter jet availability rates, respectively. International partners, including Australia and the United Kingdom (via AUKUS), and the Republic of Korea, were identified as essential for co-production and workforce integration.
Overview
Next steps mentioned in the hearing include the department providing a workforce development roadmap to the committee and the potential for new legislative requests if current authorities prove insufficient to overcome regulatory "choke points." Under Secretary Duffey also committed to providing the committee with specific data on the purchasing power parity between the U.S. and Chinese defense budgets.
Transcript
Committee will come to order. I want to start by recognizing the tremendous dedication, professionalism and sacrifice of our service members engaged in Operation Epic Fury and those stationed around the world. I support the President's decision to carry out this operation, I believe it had to be done to protect Americans and our allies in the region. I recognize that some of my colleagues do not share that view, and we will engage, I'm sure, in a healthy debate on that issue in the days and weeks to come. In the interim, we should all work together to ensure our service members have the resources and capabilities they need to successfully carry out their missions. Toward that end, today we are meeting to examine the state of our industrial base and how we can best position it to fully support our warfighters. Peace through strength starts in our factories, our depots and our shipyards. But we lost sight of that after the Cold War. Over the last 30 years, our defense industrial base consolidated and atrophied. Skilled talent left the workforce, leaving hundreds of thousands of defense manufacturing jobs unfilled. Excessive regulation pushed small businesses, startups and private capital out of the defense business. And inconsistent demand signals discouraged prime contractors from investing in production capacity. As a result, our stockpiles of critical defense articles have fallen to dangerously low levels. And the very allies this administration is demanding step up must wait years for American weapons they need to shoulder greater responsibility. While America allowed critical manufacturing capabilities to erode, China did not. China's shipbuilding capacity dwarfs ours. They are outproducing us on ships, drones and munitions. And they have embedded themselves deep into our defense supply chains. The consequences are clear. There are growing doubts about our ability to sustain a protracted fight against China. And that's unacceptable. Last year, working closely with Mr. Duffey and the department, this committee made real progress reforming a slow, risk-averse acquisition system that contributed to the hollowing out of our defense industrial base. But acquisition reform alone is not enough. That's why this committee is making revitalizing the defense industrial base its top priority for this year's NDAA. We must invest in domestic reindustrialization and a skilled patriotic defense workforce from welders to machinists to engineers. We must provide certainty to the industrial base through expanded use of fully funded multi-year authorities. We must end our dependency on China for critical minerals and materials. We must incentivize increased production from new entrants, non-traditionals and traditionals alike. And we must implement the President's executive orders on arms exports to leverage allied purchases to support the expansion of the U.S. production capacity. Fortunately, both Congress and this administration understand the urgency of the moment. Deputy Secretary Feinberg's push to expand munitions capacity and rebuild America's arsenal of freedom is a critical step. Our committee has expanded multi-year authorities for critical munitions in the FY 26 NDAA to give industry the predictability it needs to scale production. And the President's call for $1.5 trillion defense budget is one I strongly support, makes clear we are working to back this effort with real resources. But this is a team sport. Industry must do its part by making significant investments in production capacity. Success also depends on rebuilding fragile supply chains from critical minerals to solid rocket motors. Congress made a multi-billion dollar investment through the One Big Beautiful Bill to address these choke points, and we expect close coordination on how those funds are used. In that context, I welcome the department's willingness to explore new financing tools to strengthen supply chain resilience. It's clear the status quo was not working. However, Congress needs clear answers on when equity investments are the right approach. This committee has long warned about consolidation in the solid rocket motor industrial base and bottlenecks it created for critical munitions. That's why we funded efforts to reintroduce competition into that sector. I hope to hear today specific plans for how the resources provided by Congress will be used to develop second source providers for solid rocket motors. Modern military power rests on the industrial strength of this country. It is the difference between deterring a major war and losing a war. I look forward to Mr. Duffey's perspective on how Congress and the department can work together to revitalize the defense industrial base. Thanks again to our witness for being here. And I yield to my friend, the ranking member, for any opening statement he may have.
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