Revitalizing Defense Through Private Capital Investment
As geopolitical tensions rise and U.S. military capabilities are tested by expanding global threats, a growing chorus of defense experts is calling for a fundamental overhaul of the American defense industrial base. In a recent article published by Defense One titled “To Rebuild America’s Defense Industry, Unleash Private Capital,” authors Mac Thornberry and Roger Zakheim argue that the United States must turn to private capital markets to invigorate and modernize its defense production infrastructure, which many observers say has atrophied in recent decades due to underinvestment and overregulation.
Thornberry, a former chairman of the House Armed Services Committee, and Zakheim, Director of the Ronald Reagan Presidential Foundation and Institute, contend that Washington’s overreliance on a small number of legacy contractors has not only slowed innovation but also impaired the military’s ability to scale production during times of crisis. The concentration of defense manufacturing capacity in a limited number of facilities, they note, has become a critical vulnerability—as illustrated by supply chain disruptions during the COVID-19 pandemic and the war in Ukraine.
Their article underscores an urgent need to modernize the defense industrial base through broader participation from the commercial investment sector. Specifically, they advocate for mechanisms that would incentivize venture capital and private equity to direct funding toward startups and mid-sized firms with dual-use technologies—those with both civilian and military applications. The hope is that this capital infusion could accelerate innovation and expand manufacturing capacity, while reducing the Department of Defense’s dependency on costly, long-term acquisition programs that often stifle agility.
The proposal comes amid intensifying calls from defense officials for a more robust and responsive industrial base. Recent experiences supplying arms to Ukraine have revealed deep strains in the U.S. defense production system, particularly in the manufacture of munitions like 155mm artillery shells. Analysts warn that if a major conflict were to erupt in the Indo-Pacific, America’s current production rates would be insufficient to sustain prolonged operations.
The authors point to recent initiatives such as the Department of Defense’s Office of Strategic Capital and the National Security Innovation Capital program as promising first steps, but insist that the scale of the current crisis demands more than pilot projects. They call for a comprehensive policy framework that would reduce bureaucratic red tape, guarantee long-term returns on defense-related investments, and provide targeted incentives to private investors willing to take risks on cutting-edge defense technologies.
Thornberry and Zakheim argue that this approach would not only enhance U.S. military readiness but also strengthen the broader industrial economy, creating high-paying jobs and bolstering domestic manufacturing. However, they acknowledge that realizing this vision would require political will, regulatory reform, and sustained commitment from both the executive branch and Congress.
As global strategic competition intensifies, particularly with the rise of China’s defense industry and its willingness to swiftly integrate civilian technologies for military use, the authors warn that time is running short. If the United States is to maintain its technological edge and fulfill its security commitments, they conclude, it must shift from a posture of preservation to one of transformation—one that fully embraces private capital as a critical engine for defense innovation and resilience.
