Reconnecting Innovation and Production in the Maritime Industrial Base: Aligning Discovery, Supplier Development, and Trusted Capital into a Single Pathway

Maritime Industrial Competition

The United States is entering a period of sustained maritime competition in which industrial capacity will matter as much as operational capability. The resurgence of great-power competition at sea is no longer defined solely by fleet size or forward presence; but instead, increasingly, it is shaped by industrial depth, supply chain resilience, and the ability to translate innovation into sustained production. This dynamic is most evident in the Indo-Pacific, which the Congressional Research Service (CRS) describes as the “focal point of great-power naval competition,” marked by rapid modernization and compressed escalation timelines[1]. The region is characterized not only by naval presence, but also by the speed at which competitors can regenerate forces, scale production, and integrate emerging technologies into operational capability.

In this environment, maritime advantage is increasingly determined by the strength, resilience, and adaptability of the industrial base that sustains it. Yet, the system remains misaligned with this reality. The United States continues to rely on a fragmented ecosystem in which innovation, production, and capital formation often operate in parallel rather than as part of a coordinated strategy. This paper argues that closing that gap is now as decisive to maritime advantage as fleet size or platform performance — and that the United States can close it by connecting the discovery, supplier-development, and capital programs it already operates into one deliberate pathway.

The Structural Disconnect and “Missing Middle”

Over the past decade, the Department of Defense/War (DoD/DoW) has made meaningful progress in expanding access to innovation. A growing ecosystem of accelerators, demonstration programs, and nontraditional acquisition pathways has improved the Department’s ability to identify emerging technologies and engage nontraditional entrants.

However, identifying innovation is not the same as fielding it. A persistent structural gap exists between early-stage technology validation and sustained production. Many firms successfully demonstrate technical capability but fail to transition into the defense industrial base (DIB) at scale. This is not primarily a failure of technology, but a failure of integration.

The Government Accountability Office (GAO) continues to identify systemic delays in shipbuilding programs driven by supplier constraints, workforce shortages, and infrastructure limitations[2]. At the same time, small businesses — which comprise the majority of firms within the defense supplier base — continue to face barriers to entry, including limited access to capital, difficulty navigating compliance requirements, and challenges integrating into prime contractor supply chains[3].

As a result, many promising technologies stall in the space between demonstration and deployment — a gap increasingly described as the “missing middle” of the defense industrial base. In many respects, this challenge mirrors the long-discussed “valley of death” in defense innovation: the stage at which promising technologies fail to secure the resources, partnerships, or production pathways necessary to transition into operational capability. Programs exist to identify innovation, and separate mechanisms exist to scale production, but the connective tissue between the two remains weak.

Strategic System Design

Lower-tier suppliers — often the source of specialized components, advanced manufacturing techniques, and emerging technologies — are also among the most financially vulnerable segments of the industrial base. As the GAO has noted, reliance on foreign sources and exposure to foreign investment present growing risks, particularly in sectors tied to advanced or sensitive technologies[4].

In practice, this creates a structural vulnerability. Firms unable to access trusted domestic capital to scale production may seek external financing sources that introduce strategic risk. The concern extends beyond ownership alone; it includes potential influence over supply chains, intellectual property, production capacity, and long-term industrial dependencies.

The Department’s Trusted Capital initiative was designed to help address this challenge by connecting innovative firms with vetted sources of private investment aligned with national security interests[5]. However, absent integration into a broader industrial strategy, such initiatives remain limited in impact. The underlying issue is not the absence of tools, but rather the absence of an integrated system.

Today, the Department already operates several mechanisms that address different phases of the innovation lifecycle. These include:

• Technology discovery and demonstration platforms that identify emerging capabilities, such as APEX and Rapid Innovation Accelerators (RIA)

• Supplier development programs that help firms meet defense production requirements, including the Mentor–Protégé Program (MPP)

• Capital access initiatives intended to support scaling and growth, including Trusted Capital Marketplace concepts.

A more effective approach would treat these mechanisms not as isolated initiatives, but as components of an integrated industrial strategy operating along a continuous pathway — one that begins with discovery and ends with scaled, secure production. In such a system, firms would not exit one program only to re-enter the ecosystem through another. Instead, successful demonstration would trigger structured progression into supplier development, followed by access to secure private and public capital programs aligned with national security priorities.

This approach would help close the “missing middle” by establishing deliberate pathways that connect innovation to production readiness rather than relying on firms to navigate fragmented systems independently.

From Pipeline to Industrial Architecture

Scaling from prototype to production — particularly in advanced manufacturing and maritime systems — requires significant investment in facilities, workforce development, equipment, cybersecurity, and compliance infrastructure. For many small- and medium-sized businesses (SMBs), these costs are prohibitive without external financing. Absent trusted capital pathways, firms face a constrained set of options, some of which introduce unacceptable strategic risk. From a strategic perspective, capital should be understood as a form of infrastructure — no less critical than shipyards, dry docks, or logistics networks. Capital enables capacity, determines resilience, and shapes who is ultimately able to participate in the industrial base.

This reality points to a broader shift in how the United States approaches defense acquisition and industrial strategy. Historically, the Department has largely operated through a reactive acquisition model: defining requirements, issuing contracts, and relying on industry to respond. While this model has historically produced significant technological advantage, it is increasingly mismatched to the pace and structure of modern strategic competition.

A more proactive approach would focus on shaping the industrial base deliberately through the alignment of incentives, capital, supplier development, and innovation pathways. This is less about centralized industrial control and more about strategic coordination across the public and private sectors.

To build that pathway, the Department should take four specific actions:

• Establish a formal transition trigger so a company that completes an APEX or Rapid Innovation Accelerator (RIA) demonstration moves directly into Mentor–Protégé Program (MPP) supplier development rather than re-entering the ecosystem through a separate front door. DoW program offices and the Office of Small Business Programs (OSBP) own this handoff.

• Authorize the MPP to connect protégé firms with vetted private capital before a production contract is in hand, financing the pre-contract scale-up where firms most often fail. DoW, working through the Office of Strategic Capital (OSC), is positioned to direct this.

• Designate trusted-capital access as a named milestone in the acquisition lifecycle, so capital is treated as industrial infrastructure rather than a firm-by-firm afterthought. DoW acquisition leadership owns this requirement.

• Pair foreign-ownership screening of lower-tier suppliers with a domestic trusted-capital alternative, so risk mitigation closes a vulnerability instead of cutting viable firms off from financing. DoW and the Defense Counterintelligence and Security Agency (DCSA) share this responsibility.

Importantly, this model also creates opportunities for organizations capable of operating and innovating across multiple segments of the ecosystem. An entity, such as MoveAmerica, is well-positioned to build tools, create consortia, and develop innovation pathways that help bridge the gap between innovation, infrastructure financing, industrial partnerships, and production-scale implementation. By aligning private-sector investment capacity with national security priorities, organizations operating in this space can serve as critical connectors between emerging technology firms, industrial partners, and trusted sources of capital.

Ultimately, addressing these challenges requires a shift in posture, from reactive acquisition to proactive industrial orchestration. The objective is not simply to identify promising technologies, but to ensure the United States builds the industrial pathways necessary to scale them securely, rapidly, and sustainably.

Conclusion

The United States does not lack innovation, nor does it lack industrial capacity in absolute terms. What it lacks is a coherent system capable of connecting innovation, supplier development, and capital formation into a unified industrial strategy. The future of maritime competition will be shaped not only by operational concepts or advanced platforms, but also by the supply chains, workforce pipelines, and investment decisions that determine which technologies successfully transition from concept to capability.

Bridging the “missing middle” of the defense industrial base is therefore essential to sustaining maritime advantage in an era increasingly defined by industrial competition. Doing so requires viewing innovation, supplier development, and capital formation not as discrete activities, but as interdependent components of national power.

The Department already possesses many of the foundational tools necessary to support this transition. The challenge and the opportunity is to align them within a coherent industrial framework. Achieving that alignment would not only accelerate capability delivery, but also strengthen the resilience, security, and scalability of the maritime industrial base upon which the United States’ long-term strategic advantage depends.

Sources

1. Congressional Research Service. Renewed Great Power Competition: Implications for Defense—Issues for Congress. 2024.

2. Government Accountability Office. Shipbuilding and Repair: Navy Needs a Strategic Approach for Private-Sector Industrial Base Investments. GAO-25-106286. 2024.

3. Congressional Research Service. The U.S. Defense Industrial Base: Background and Issues. 2024.

4. Government Accountability Office. Defense Industrial Base: Actions Needed to Address Risks from Foreign Sources. GAO-24-107283. 2024.

5. U.S. Department of Defense. Trusted Capital: Strengthening the Defense Industrial Base and Securing Critical Technology Supply Chains. 2021.