How the shutdown endangers America’s ‘Arsenal of Freedom’ behind the scenes

In recent weeks, defense leaders have emphasized acquisition reform, additive manufacturing and rebuilding America’s “Arsenal of Freedom.” Secretary of Defense Pete Hegseth has called for restoring speed, accountability and private-sector discipline to the defense enterprise.

Those priorities are necessary.

But as the partial government shutdown stretches on, beneath the modernization debate lies a quieter readiness risk — one that does not involve new platforms or emerging technologies.

It involves continuity.

For more than 25 years, our Texas-based company has supported the Department of Defense as a domestic original equipment manufacturer supplying National Stock Numbers under long-term contracts. We operate in the second and third tiers of the defense industrial base, producing sustainment components that keep larger systems operational.

Since the end-of-2025 government shutdown, we have experienced a 76 percent decline in orders. We have reduced our workforce by 44 percent. 

At the same time, we currently have over 115 funded but unprocessed delivery orders totaling several million dollars awaiting administrative execution. Based on historical reorder cycles, an additional roughly double that amount in expected restock orders should also be entering the pipeline, yet no timeline visibility currently exists. 

That combination is not a demand signal. It is execution volatility.

Even when the Pentagon continues operating during a shutdown, the acquisition system often slows dramatically. Civilian contracting personnel may be furloughed or working with reduced staffing, delivery orders stall in administrative processing, and reorder approvals tied to inventory thresholds are delayed. Demand does not disappear, but the mechanisms that convert demand into executable orders temporarily stop moving. 

The disruption is not limited to shutdowns. Chronic continuing resolution cycles produce similar volatility. When agencies operate under temporary funding, reorder decisions are often deferred and contracting offices become risk-adverse in executing delivery orders. For small sustainment suppliers, that uncertainty compounds the financial shock created when funded orders stall. Over time, that instability quietly erodes the lower tiers of the industrial base, the very layers that sustain the Arsenal of Freedom. 

An Arsenal of Freedom is not composed solely of primes and integrators. It is a layered ecosystem. Weakness at the second and third tiers eventually manifests at the top. That vulnerability is not inevitable. Targeted policy adjustments could significantly reduce the volatility small sustainment suppliers experience during shutdowns and continuing resolution cycles. 

Under a long-term contract structure, small manufacturers must stage raw materials, retain skilled labor, maintain tooling and manage supplier commitments in anticipation of reorder triggers tied to inventory thresholds. When obligation authority pauses during shutdowns or continuing resolutions, or when processing delays stall funded orders, working capital becomes immobilized.

Funded orders sitting idle do not sustain payroll. They do not preserve supplier networks. They do not maintain production continuity.

For large primes with diversified portfolios, such volatility can often be absorbed. For small OEMs concentrated in sustainment supply chains, it produces liquidity shock. When those shocks accumulate, capacity erodes quietly.

Skilled machinists disperse. Compliance specialists leave the sector. Suppliers tighten credit. Workforce reductions become structural contraction.

This is not a story about a single company. It is a structural feature of how acquisition volatility disproportionately impacts the lower tiers of the industrial base.

If the Arsenal of Freedom is to be more than a slogan, acquisition reform must address continuity alongside speed. Two targeted adjustments would materially strengthen resilience without requiring new appropriations.

First, Congress and the Department of Defense should establish a limited Industrial Base Continuity Authority for sustainment-related items during shutdown transitions and extended continuing resolutions. This could allow conditional bridge execution within existing long-term contract ceilings for high-readiness National Stock Numbers. The goal is not to expand spending, but to reduce demand whiplash that destabilizes small domestic suppliers during political budget disruptions.

Second, the Defense Logistics Agency should modernize reorder transparency under long-term contracts. Small manufacturers often receive little visibility into projected reorder windows or consumption trends, despite being required to stage capital-intensive production in anticipation of inventory triggers. Providing forecast confidence bands or projected reorder ranges — without disclosing operationally sensitive data — would materially reduce overstock and understock risk and improve capital efficiency across the supply chain.

Neither proposal is dramatic. Both address structural weaknesses in acquisition continuity.

Acquisition reform discussions frequently emphasize innovation velocity — shortening timelines and accelerating pathways to fielding. But velocity without stability risks hollowing out the industrial layers that sustain readiness over time.

This erosion rarely appears in topline budget debates. It appears instead in shrinking credit lines, suppressed production runs and incremental workforce reductions at firms few outside the acquisition community ever see.

Once small domestic manufacturers exit the defense market, barriers to reentry are significant. Regulatory compliance, tooling investment and workforce reconstitution are expensive and slow. Capacity lost during peacetime instability is difficult to regenerate during crisis.

Innovation accelerates capability. Continuity preserves it. If acquisition reform is to strengthen America’s Arsenal of Freedom, it must ensure that the industrial base does not quietly thin beneath it.

Capacity, once lost, is far more expensive to restore than it is to sustain.

Rachel Gorken is president of GMS Industrial Supply / American Patriot, a Texas-based Woman-Owned Small Business and domestic original equipment manufacturer. The company manufactures critical components for the defense supply chain and employs skilled workers.