A new battery of tests that aims to assess the overall health of the defense industrial base over time reported a barely-passing “C” grade in the inaugural edition, issued earlier this month.
The report card — dubbed “Vital Signs” by analysts at the National Defense Industrial Association and Govini — is partly a follow-on response to a first-of-its-kind report the Pentagon issued in 2018. That assessment showed some worrisome signs about the defense industry, but was a snapshot in time. NDIA officials said policymakers need a more repeatable deep-dive to understand the key problems on an ongoing basis.
From a Wall Street perspective, the industry is in very good shape. Publicly-traded companies in the sector are profitable, and have historically-high amounts of cash on hand even though they’re spending heavily on new plants and equipment. On a scale of 0 to 100, the NDIA report scores those measures — collectively called “competition” — at 96.
But that category is only one of eight in the report, and the picture is less rosy in many of the others.
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