How Tax-Based Incentives Could Fix Broken Defense Maintenance Policies When Existing Rules Fall Short

Summary

The United States' organic industrial base — comprising 23 government-owned depots and arsenals responsible for repairing and sustaining military equipment — is steadily losing critical workload to private sector vendors due to distorted incentives, intellectual property constraints, and short-term cost-focused decision-making. This shift is eroding workforce proficiency, surge capacity, and long-term military readiness, as demonstrated by recent precision munitions shortfalls during operations against Iran and persistent Army helicopter fleet readiness failures documented between 2011 and 2021. The author, writing from experience as a depot commander, argues that the fundamental problem is not a lack of oversight but rather misaligned rules that consistently steer sustainment work toward original equipment manufacturers even when government depots are fully capable of performing it. Drawing on successful precedents such as the Research and Development Tax Credit and the Low Income Housing Tax Credit, the article proposes a tiered, targeted tax incentive program to encourage private firms to complete work at or in partnership with government depots. This market-based approach would expand total repair capacity, preserve critical workforce skills, and better align industrial base activity with national security requirements for large-scale conflict preparedness.