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In the 1986 World Cup, Diego Maradona scored his infamous “Hand of God” goal — an obvious handball that went uncalled, because the referee did not have the tools to see it. Today, soccer has addressed that vulnerability with sensors and video review, ensuring the game is adjudicated fairly. U.S. defense industrial policy faces a similar challenge. In America’s defense industrial base, the issue is not a lack of oversight, but distorted incentives that steer work toward private vendors even when the organic industrial base is well-positioned to perform it. When the organic industrial base is deprived of work, it loses workforce proficiency, struggles to absorb fixed costs, and weakens the surge capacity required for a large-scale conflict.
If the United States wants a more strategically aligned outcome, it should modernize the “rules of the game” using targeted market-based incentives to encourage stronger collaboration between the public and private sectors and ensure critical work is performed where it best supports national security. A tiered, targeted tax incentive for private sector firms to complete work at, or in partnership with, a depot would encourage collaboration, expand total repair capacity, and sustain the workforce and capabilities required for long-term readiness.
As I have previously argued in these pages, the organic industrial base — the nation’s twenty-three government-owned depots and arsenals that repair, overhaul, and sustain military equipment and provide surge capacity in wartime — is losing its capacity to sustain enduring weapon systems. In many cases, original equipment manufacturers, which build new systems, retain the technical data required for repair, overhaul, and remanufacture of those systems. This leaves depots, which maintain and overhaul fielded equipment, forced to compete with the private sector and dependent on negotiated access to perform work they are otherwise capable of executing.
A few factors have shifted demand for sustainment work toward the private sector. Reduced procurement of new systems concentrates workload demand on sustaining legacy platforms. Meanwhile, acquisition strategies, intellectual property constraints, and industry-driven political pressure often channel work toward original equipment manufacturers. The Army, for example, recently put in a request for a proposal that would move maintenance work for the UH-60 Black Hawk, traditionally performed within the organic industrial base, to private vendors. This is just one incident in a broader trend in which sustainment workload, particularly labor-intensive repair and remanufacture, is no longer anchored within government depots.
From my vantage point as a depot commander, the uncertainty in workload — which drives up cost, and strains workforce stability — is a growing challenge. As it stands today, workload allocation is driven by programmatic decisions, intellectual property constraints, and short-term incentives that are not consistently in line with long-term readiness requirements.
Recent operations highlight the urgency of this problem. In the opening weeks of the conflict with Iran, the United States expended thousands of precision munitions, exposing the gap between consumption rates and the industrial capacity to replenish them. Analysts warn that stockpiles of key systems could be depleted within weeks under sustained demand, while production timelines stretch into years.
At the same time, these munitions are central to deterrence in the Indo-Pacific, where U.S. forces should be prepared for a potential high-intensity conflict with China. These shortfalls — seen in munitions today and emerging in other sectors — are not simply a matter of capacity, but of how the system allocates work. Short-term cost, schedule, and program-level execution are prioritized over projected long-term repair capacity, workforce proficiency, surge capability, and the further development of technical data and repair capabilities.
The risk is visible, and likely to persist: A 2022 Government Accountability Office report found that key Army helicopter fleets did not consistently meet readiness targets from 2011 to 2021, underscoring the demand on the current sustainment system. Many in the Pentagon are aware of the problem but lack a policy tool designed to shape private-sector behavior in support of long-term readiness.
There is strong precedent for using tax incentives to shape private sector behavior in support of national objectives. The Research and Development Tax Credit, introduced in 1981, was designed to stimulate private investment in innovation. By most estimates, each dollar of tax credit has generated between one and four dollars of additional research spending. In 2021, U.S. companies received more than $32 billion in research and development tax credits while investing $69 billion in research and development. More importantly, this policy demonstrates how government can share risk with private industry, reducing uncertainty while directing investment toward areas critical to national priorities.
The Low Income Housing Tax Credit provides a second example. Since its enactment in 1986, it has supported the development of millions of housing units and reshaped private sector investment toward affordable housing. Rather than replacing private industry, the policy altered what private developers chose to build. Over 3.5 million housing units have been constructed since its inception.
More recently, clean energy manufacturing incentives have shaped both the scale and location of private investment. Since passage, companies have committed hundreds of billions of dollars to domestic production of energy technologies. These policies have not merely subsidized activity but have shaped how firms organize production in response to national priorities.
Taken together, these cases illustrate a consistent principle: Well-designed tax incentives can redirect private-sector behavior, not just marginally increase it. Applied to defense sustainment, a tax credit tied to work performed at government depots would use a familiar policy tool to preserve organic capability while strengthening industrial resilience.
A Tax Credit for Defense Sustainment
A targeted federal tax credit would better integrate public and private capacity by reducing uncertainty for private firms through a shared-risk model. In effect, the policy would use the tax code to shape where sustainment work occurs. The credit could be tiered, with larger incentives tied to the share of manufacturing, remanufacturing, or component repair completed at an organic industrial base site.
In practice, firms would receive a tax incentive when they perform maintenance, repair, or component work at an organic industrial base site or in partnership with a government depot. Such a policy would not displace private industry or mandate where work is performed. Instead, it would expand total workload by pairing proprietary, contractor-led modernization with labor-intensive repair and structural work performed at government depots. These complementary roles would increase throughput for all parties.
This, of course, sustains a skilled workforce and preserves critical repair capabilities. For example, even a modest tax credit applied to a major aviation sustainment program could generate meaningful savings for industry while increasing workload at government depots, improving cost absorption and lowering overall sustainment costs.
Workload alone, however, is not sufficient. The organic industrial base depends on a skilled workforce that is increasingly under strain. Across the defense industrial base, machinists, welders, and specialized technicians are aging out faster than they are being replaced, making it more difficult to expand capacity. In some depots, the challenge is already acute. In my experience, roughly a third of the Corpus Christi Army Depot is retirement eligible. As a result, depots are implementing mentorship programs at local high schools to promote the trades and develop early recruiting pipelines.
A single, depot-centered tax credit to increase and stabilize workload at government depots could address both challenges by providing the predictability needed to support hiring, training, and workforce development. In this sense, the policy would not only increase throughput but also support the regeneration of critical skills that underpin long-term readiness.
Without incentives to shape where sustainment work is performed, the system will continue to optimize for near-term efficiency while underinvesting in the balanced public-private capacity required for large-scale conflict. While previous analyses have highlighted how these dynamics marginalize organic capability, the more immediate challenge is how to modify the underlying incentives that drive these outcomes.
Skeptics will argue that defense sustainment is fundamentally different from other markets. They are right. This is not a purely commercial market, and workload cannot be allocated solely on efficiency. Defense depots operate as industrial non-profits under a break-even model, and should recover their full operating costs. As workload declines, fixed costs are spread across fewer labor hours, driving up rates. Increased workload, particularly from commercial participation, would improve cost absorption, lower depot labor rates, and increase sustainment buying power across the Department of Defense, while retaining critical organic repair capacity.
The Department of Defense should balance readiness, surge capacity, workforce preservation, intellectual property constraints, and long-term industrial resilience. The government already shapes outcomes through acquisition decisions, intellectual property frameworks, and funding priorities. Since the Department of Defense already has the authority to direct workload through contracting decisions, acquisition strategy, and policy guidance, why not simply mandate that more work be performed at government depots? The answer lies in flexibility and durability.
Directing workload through contracting authority can be effective in the short term, but it is often constrained by program-level priorities, budget pressures, and political friction. A tax credit, by contrast, functions as a market-based mechanism, encouraging firms to integrate public-sector capacity into their sustainment models while preserving flexibility in execution. For example, a program overseeing Black Hawk helicopter sustainment could structure a contract in which the original equipment manufacturer retains responsibility for proprietary upgrades, while partnering with a government depot for structural or component repairs, qualifying for the incentive while increasing total throughput across both entities. In this way, the policy aligns behavior at the point of decision, rather than relying on top-down directives that are vulnerable to shifting priorities, leadership changes, and funding cycles, and does not displace private-sector activity.
Like any policy instrument, a tax credit needs to be designed carefully. A poorly designed credit could subsidize work that would have occurred regardless, becoming a transfer rather than an incentive. It could also prioritize volume over strategic value if eligibility is not carefully defined. Any such policy would therefore require clear eligibility criteria, strong oversight, and metrics tied to readiness outcomes.
The U.S. defense industrial base tends to produce outcomes that make sense for individual actors but fall short of national requirements. Private firms seek revenue stability in an environment characterized by fluctuations in demand and critical material shortages. Program offices prioritize execution. Depots require workload to maintain workforce and affordability. Taken together, these incentives erode the organic capability required for sustained operations in a contested environment.
A targeted tax credit for work performed at government depots would help correct this imbalance. Unlike direct mandates, it would do so through a flexible, market-based mechanism, encouraging integration rather than compliance, and expanding capacity across both public and private sectors. It would encourage industry to treat the organic industrial base as a force multiplier rather than as a competitor, stabilizing workload and sustaining critical skills.
Absent a mechanism like this, the United States will continue to shift sustainment workload away from its organic base, even as it pays more overall and accepts greater risk. Maradona’s “Hand of God” goal became famous not because the game was flawed, but because the referee lacked the tools to enforce its rules. Defense sustainment faces a similar challenge: outcomes that diverge from strategic requirements not because of bad actors, but because of competing incentives. The game does not need to change but it does need to be called correctly.
Kevin J. Consedine is an Army aviation officer and the commander of the Corpus Christi Army Depot, one of the Army’s primary aviation sustainment centers. A former aviation battalion commander in the 82nd Airborne Division with multiple combat deployments, he has served in operational, acquisition, and policy roles, including on the Army Staff and as a senior service college fellow at Duke University. He has previously written on the use of AI in the organic industrial base, the role of depots in modern conflict, and public-private defense industrial cooperation.
The views in this article are those of the author and do not represent those of the Corpus Christi Army Depot, the U.S. Army, the Department of Defense, or any part of the U.S. government.
**Please note, as a matter of house style, War on the Rocks will not use a different name for the U.S. Department of Defense until and unless the name is changed by statute by the U.S. Congress.
Image: Megan Gully via DVIDS.
