Putting the Industrial Base on a Wartime Footing

In his November 2025 speech on acquisition reform at the National Defense University, Secretary Pete Hegseth highlighted the goal of putting the industrial base on a “wartime footing”:

Building off this speech, the Pentagon’s new Acquisition Transformation Strategy calls for the department to “put the entire acquisition system and the industrial base on a wartime footing with the urgency and mandate to accept more risk, transition from a culture of compliance to one of speed and execution, and rapidly tackle the strategic challenges facing the nation," an agenda also highlighted in the new National Security Strategy.

The call to action is clear, but what does wartime footing actually mean, and what implications does this have for the industrial base?

Defining Wartime Footing

A wartime footing is defined as “the condition of being prepared to undertake or maintain war,” with the goal of being prepared to fight and win a war, or to deter one from starting. This requires some level of government planning, resource allocation, and prioritized military production. Given that the U.S. industrial base is overwhelmingly comprised of private sector firms, the Department of Defense (DOD)—recently designated the Department of War—relies on incentives, procurement reforms, investment, and targeted authorities, including tools like long-term contracts, subsidies, workforce training, and Defense Production Act (DPA) powers, rather than coercion or commandeering of industries. By contrast, a wartime economy occurs when the state directly shapes production, labor allocation, and consumption, and where consumer priorities are subordinated to the needs of the state. A peacetime economy occurs where military spending is at a predictable level to support production and innovation, but where military production is one economic sector among many. And a nonmilitary economy is one where the state dedicates no or very limited resources to the military and to defense production, a situation enjoyed by very few nations.

The most common metric for understanding a nation’s investment in defense is funding levels as a percentage of Gross Domestic Product. Using data from the Stockholm International Peace Research Institute (SIPRI), Figure 1 shows that the United States spent 3.4 percent of its GDP on defense in 2024, which is a relatively low historic amount for the nation. That said, with spending levels at nearly a trillion dollars, the United States invests more in defense than any other nation.

Overlaying a spectrum of economies provides a rough illustration of how levels of spending correlate with what type of economy. World War II very clearly triggered a wartime economy, and the Korean War briefly spiked to very high levels. Throughout the Cold War, the United States was on a wartime footing, highlighting the importance of deterrence against the Soviet threat. Since that time, the United States has spent in a more peacetime fashion, managing the defense industrial enterprise through acquisition programs. The attacks on September 11, 2001, and Operations Enduring Freedom and Iraqi Freedom drove an increase in spending, albeit not at the percentage of GDP as seen during the Cold War.

When looking at the GDP levels of defense spending of various countries compared to the United States, Figure 2 illustrates how defense prioritization has evolved for a number of close allies and adversaries since 2015.

For example, SIPRI reports that Ukraine dedicated 34 percent of its GDP to defense in 2024, clearly spending at a wartime economy level in its existential fight for survival against Russia. Russia’s 2024 defense spending is estimated at 7.1 percent, but exact numbers are difficult to determine and likely substantially higher, and this number may not capture the extensive Chinese support of the Russian industrial base. Russia’s state policies expanding support of defense, including repurposing production lines from civilian products, suggest that they are in a wartime economy as well. Israel dedicated 8.8 percent of its 2024 GDP to defense, with that investment showing the blurred line between a wartime economy and an economy on a wartime footing, since Israeli civilian production is continuing and not all of its economy is geared toward defense production. Poland’s 4.2 percent spending has doubled in the last 10 years as it is building to a wartime footing in response to Russia’s aggression in Ukraine. Other countries have seen defense spending rise substantially in recent years, but some do not spend on defense at all.

The big outlier in this data is China. SIPRI estimates that China is spending 1.7 percent of its GDP on defense, although this is heavily caveated given the lack of transparency and civil-military fusion in the Chinese economy. However, analysts estimate that China’s increase in productive capacity, supply chain dominance, stockpiling of supplies, and investment in new systems, including aircraft carriers and fighter jets, indicate that the nation is very much on a wartime footing. The dramatic Chinese defense build-up has been extremely visible throughout the Indo-Pacific.

How to Put the Industrial Base on a Wartime Footing

There are three steps to putting the industrial base on a war footing. The first is to spend more on defense. Getting to 5 percent of GDP would put the United States in line with Cold War or Gulf War defense levels that would enable greater numbers of forces, increased procurement of weapons systems, and greater investments in readiness. The 2024 report of the Commission on the National Defense Strategy, Senator Roger Wicker’s Peace Through Strength paper, and numerous other sources have articulated clear and compelling rationales for increasing funding on defense to 5 percent of GDP or higher to meet the profound national security challenges of today.

There is little argument with the reasoning behind these calls to action. But there are meaningful fiscal challenges. Competing budgetary priorities, deficit spending, and the national debt make it very difficult to substantially increase defense spending absent an existential threat or direct attack on U.S. forces or the homeland. Indeed, the $876 billion projected for 2024 interest payments on the national debt is greater than the DOD’s authorized budget of $841 billion.

These fiscal challenges, as well as the surfeit of venture capital and private equity funding focused on defense, have helped fuel a focus on incentivizing private capital investment in defense. Whether through discounted loan programs such as those established in the Office of Strategic Capital or other efforts outlined in the DOD’s strategy, there is a clear and appropriate focus on increasing private capital investment in defense to help build overall capacity across the industrial base.

While increased levels of defense spending are clearly essential, putting the industrial base on a wartime footing requires more than a list of specific systems to buy or even factories to build. It also requires a rethinking of how to engage with the industrial base and with allies and partners to ensure flexibility, resilience, and surge capacity. This will require the transformation of the acquisition system to focus on speed, scale, and sustainment. This is urgent, and the Pentagon’s new Acquisition Transformation Strategy lays out a plan to get there—with implementation as the biggest challenge.

Thus, the second step is to invest in the systems and platforms that will be required at the outset of a conflict, ensuring readiness from day one. The secretary emphasized speed throughout his speech, and multiple efforts outlined, such as the commercial-first approach and distinct preferences for faster contracting solutions, underscored this emphasis. While the strategy’s priority on speed is critical, speed is not enough. The United States has focused on innovation and speed for over a decade now, since the establishment of the Defense Innovation Unit and other experimental organizations. While the results have been substantial—Other Transactions Agreements rose 220 percent between 2018 and 2023 alone—there are no clear mechanisms to measure the effectiveness or transition of these prototyping efforts to programs of record.

That is where scale comes in. As Secretary Hegseth stated, “speed to delivery is now our operating principle,” noting the mine-resistant ambush protected (MRAP) vehicle as an exemplar of what can be done. The DOD went from the drop of the request for proposals to having over 16,000 MRAPs roll off the assembly line within three years during the wars in Iraq and Afghanistan. Delivering at this speed and scale required tremendous leadership, simplified requirements, utilizing existing designs, and multisourcing. The fact that this famous example of acquisition success took place almost 20 years ago, and there is nothing so impactful in more recent years, underscores the profound need for transformation. The DOD’s disestablishment of the overly deliberative and slow Joint Capabilities Integration and Development System, the creation of a 2-to-production standard, and numerous other initiatives are focused on speed to delivery and scale.

Additionally, working closely with allies and partners to help expand capacity and achieve flexibility will enhance deterrence, given that one of the United States’ greatest strengths is its network of allies and partners. The Acquisition Transformation Strategy outlines efforts to radically transform the department’s arms transfer and security cooperation enterprise, including building exportability into system design at the front end of the acquisition life cycle and moving the Defense Security Cooperation Agency and Defense Technology Security Administration from Policy to Acquisition and Sustainment within the Office of the Secretary of War.

The third step to an industrial base on a wartime footing is sustainment—the ability to maintain, repair, and replace adequate levels of capabilities needed to prevail in prolonged conflict. This requires decisions today to ensure that the United States successfully sustains a resilient, surge-ready defense industrial base to succeed during a high-intensity conflict in the Indo-Pacific. Adequate stockpiles of critical munitions and long lead time items, secure supply chains without single points of failure, and production that can rapidly scale to meet operational demands necessitate investments now in second sourcing, surge-capable production lines, including with commercial industry, modular open systems approaches, and other efforts outlined in the department’s strategy.

Finally, preparation is necessary to ensure the industrial base—not simply the defense industrial base, and not just the U.S. industrial base—is ready to meet the demands of the moment, whatever that may require. The DPA is a strong authority built just for that purpose, but the DPA authority has unfortunately lapsed since the end of September. Congress should reauthorize the DPA and use it to revitalize industrial mobilization planning and other functions that have gone unused for decades. The use of purchase commitments, for example, could help create durable industry demand signals for areas such as critical minerals. Revitalizing the use of voluntary agreements can help government and industry work closely together to improve the production of munitions, materials, and other industrial capacities. Finally, the ability to form a National Defense Executive Reserve is a powerful authority to form on-call groups of individuals in case of national emergencies.

Despite the challenges the United States faces, some successes provide instructive precedents. World War II’s Arsenal of Democracy and the “MRAP Mindset” show that a strong vision and maniacal focus can drive change. Without that level of focus and leadership, transformation will be evolutionary, never revolutionary. Fortunately, there is tremendous bipartisan consensus on the need for change from the normal ways of doing business. It is time for government and industry to get after it and put our industrial base on a wartime footing to operate with the speed, scale, and sustainment necessary to prevail in any future fight.

Jerry McGinn is director of the Center for the Industrial Base and senior fellow with the Defense and Security Department at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Cynthia R. Cook is a senior fellow with the Center for the Industrial Base in the Defense and Security Department at CSIS.

The authors would like to thank Celia Barrie for her excellent work on the figures, as well as Seth Jones and Christine Michienzi for their thoughtful reviews.