When I was in middle school, I ate lunch every day with the same group of boys. Most of us brought the same brown-bagged peanut butter and jelly sandwiches, faithfully made by our parents. One boy, however, regularly brought fluffernutter and banana sandwiches. Before long, curiosity turned into demand, and classmates began paying him fifty cents for the alternative. Our parents still packed peanut butter and jelly — but most went uneaten, discarded unopened into cafeteria trash cans.

America’s depots are increasingly becoming the uneaten peanut butter and jelly.

The organic industrial base consists of 23 depots and arsenals that provide the U.S. military with strategic depth and surge capacity in war. Collectively, these government-owned, government-operated facilities form the backbone of a circular sustainment economy that preserves readiness by repairing, reusing, and extending the life of military equipment. Today, the organic industrial base increasingly competes with private industry for sustainment work amid declining legacy demand, finite modernization funding, and growing scarcity of critical materials.

This competition is not the product of malice or market failure. It is the predictable result of the incentive structures embedded in law, budgeting, acquisition, and program management. Private firms and government offices are responding rationally to those incentives. The problem is not adversarial — it is structural — and the consequences are strategic.

The Circular Economy

Title 10 U.S. Code §2466 — the 50/50 rule — requires the military services to retain at least half of depot-level maintenance funding within the organic industrial base. The rationale is straightforward: Cost savings and strategic resilience accrue when the government retains the ability to repair its own equipment rather than relying exclusively on external providers.

This framework reflects a broader distinction between two economic models. In a “cowboy economy,” worn-out systems are simply replaced with new ones, continually exhausting finite resources and moving on. In a circular or “spaceship economy,” value is created not through constant replacement, but by extending the useful life of existing assets. Expensive platforms are sustained across decades through lifecycle overhaul, reuse, and remanufacture.

A multi-million-dollar helicopter, for example, can gain another 25 years of service after a depot-level overhaul — at a fraction of the cost of procuring a new aircraft. Depots make this model viable at scale, converting sunk costs into enduring combat capability.

This is a strategic design choice: one that preserves optionality under disruption, scarcity, and conflict. It allows the force to absorb shock, adapt, and regenerate combat power when supply chains fracture or access to industry is constrained.

Friction: How Incentives Distort Outcomes

Depots are the engines of this circular economy and represent a cornerstone for wartime surge capability. A key factor in determining whether to repair or replace a major end item is the Department of Defense’s maintenance expenditure limit. Generally, if a one-time repair cost exceeds 75 percent of the value of a new asset, an item is deemed non-economically repairable. When a depot can restore a platform for $15 million instead of replacing it at $30 million, the savings are substantial — and the force regains a like-new asset at a fraction of the cost.

This framework should bias decision-making toward extending existing capacity rather than defaulting to new production. In practice, however, sustainment decisions are shaped less by lifecycle economics than by institutional incentives.

Program managers are typically evaluated on their ability to speed procurement, meet near term readiness metrics, and minimize schedule risk. Contracting with private firms often appears more flexible under these constraints, particularly when funding is tied to short obligation windows. Depot-level planning, by contrast, is constrained by annual appropriations, fixed production schedules, and carry over workloads from prior fiscal years. These constraints reduce the depots’ ability to absorb unplanned, high-cost requirements — such as a short notice field team to repair multiple damaged aircraft — when those missions were not programmed in advance. As a result, private firms can appear more responsive — not because they are inherently more capable, but because their financial models are more suited for sudden demand.

The result is not bias — it is predictable behavior. When decision makers are rewarded for speed, certainty, and near-term outputs, they will favor options that deliver those outcomes despite impacts to long-term capacity. Over time, this logic shifts work away from organic facilities, not because they lack capability, but because the system is not designed to value it.

Outsourcing, therefore, is not inherently irrational. In some cases, private industry outperforms government facilities in speed, specialized capability, or surge responsiveness. Workforce constraints or emergent operational demands can make contracting the correct near-term choice. But these advantages are situational, not structural.

Case Study: Corpus Christi Army Depot

The consequences of these dynamics are visible at Corpus Christi Army Depot, the Army’s Center of Industrial and Technical Excellence for rotary-wing aviation sustainment. In fiscal years 2025 and 2026, the depot experienced workload reductionsnearing 20 percent with additional reductions forecasted for fiscal year 2027. These conditions are prompting many skilled artisans — nearly a quarter of the workforce — to retire or seek employment elsewhere. At the same time, the Army is exploring expanded private-sector partnerships for long-term sustainment of the UH-60 Black Hawk.

This reflects a cost feedback loop, not a performance failure. As workload declines, fixed overhead is distributed across fewer labor hours, driving up depots’ fully burdened rates. Those higher rates then make private-sector alternatives more competitive, accelerating further shifts of work away from the organic industrial base.

What follows is a compounding process. Each reduction in volume raises unit costs, which in turn justifies additional outsourcing, which further erodes the depot’s workload. Over time, this process strips away not only capacity but expertise. Skills that take decades to build can disappear in a few budget cycles, and once lost, they are neither cheap nor quick to reconstitute.

Transformation, Contraction, and Converging Demand

The Army Transformation Initiative has shifted resources away from aviation toward emerging technologies expected to be more survivable in future conflict, including attritable drones and loitering munitions with far smaller sustainment tails. As a result, the Army is reducing its helicopter inventory and cutting 6,500 aviation-specific positions.

Historically, a clear division of labor existed: depots repaired and rebuilt aging systems, while industry focused on producing new ones. That equilibrium depended on a steady flow of new production and predictable volume. Today, that pipeline is narrowing. New, manned aviation programs are fewer, inventories are shrinking, and the number of platforms requiring depot-level sustainment is declining.

This contraction collapses a complementary system into a competitive one. Sustainment of the “enduring fleet” is now the primary source of work, and both the government and private industries are competing for the same dollars. What was previously additive has become zero-sum.

Intellectual Property and the Right to Repair

Defense aviation contractors argue — effectively — that intellectual property protections are essential to sustaining innovation. Exclusive control over technical data allows firms to recover research and development costs, preserve competitive advantage, and reinvest in future capabilities. In commercial markets, these incentives are fundamental. In military sustainment, however, they create strategic vulnerabilities.

Consider the Rolls-Royce AE 1107 engine, the powerplant for the V22 Osprey flown by the Navy, Marine Corps, and Air Force, and the intended engine for the Army’s Future Long Range Assault Aircraft. Despite being in service for nearly two decades, there is no government-owned organic repair capability for this engine. Sustainment authority remains in private hands.

When technical data is restricted, organic facilities are structurally excluded from competing for work, regardless of capacity or expertise. Over time, this creates a form of vendor lock that is not simply expensive — it is operationally dangerous. When only one actor can repair or modify a system, that actor becomes a single point of failure.

This is not an argument against private industry, but for reframing sustainment rights as a strategic input, not a commercial afterthought. Lifecycle sustainment accounts for roughly 70 percent of total system cost. Embedding data rights into acquisition strategies — rather than treating them as negotiable add-ons — would preserve competition, reduce long-term costs, and ensure the government retains the ability to adapt and repair systems under contested conditions.

The Corpus Christi Army Depot offers a glimpse of what such a model could look like. It maintains direct support partnership agreements with nearly every major original equipment manufacturer. Under these arrangements, the depot functions as a subcontractor for the private sector with access to the technical data necessary for specific maintenance tasks. In principle, these relationships could form the backbone of a far more resilient industrial base.

In practice, however, they reproduce the same structural trap described earlier. At the Corpus Christi Army Depot which I lead, for example, many of these agreements currently have little or no workload behind them. As organic workload declines and fixed costs are spread across fewer activities, labor rates rise. Private firms — operating under different cost structures and incentive regimes — can perform the same work independently at a lower price point. The result is a system in which depots become casualties of both government budgeting logic and private-sector competition: starved of volume, priced out of relevance, and gradually stripped of the capacity they were meant to preserve.

Scarcity and the Limits of Market Logic

The sustainment enterprise is increasingly constrained by material scarcity, particularly for high-demand inputs such as titanium, nickel, and electroslag-remelted steel. These materials underpin both organic and private sustainment activities. Both draw from the same globally concentrated supply chains and rare earth sources, which are vulnerable to geopolitical disruption.

Scarcity becomes dangerous not merely because materials are limited but because sustainment authority is dispersed. When multiple providers compete for the same constrained inputs, no actor can prioritize readiness across the system. Fragmentation converts supply disruption into fleet-wide risk.

In this environment, scarcity does not function like a normal market signal. When multiple sustainment providers draw from the same finite pool of critical inputs, scarcity becomes a shared bottleneck rather than a market-clearing mechanism. Delays in one sector propagate across, converting industrial friction to operational risk. Readiness becomes hostage to material access.

Fragmentation of sustainment demand across competing providers compounds this vulnerability. It undermines economies of scale, reduces bargaining power, and increases per-unit costs. A consolidated organic workload, by contrast, allows depots to plan inventory, workforce, and production flow in ways that mitigate volatility. Dispersed demand does the opposite.

Scarcity converts what appear to be commercial constraints into strategic vulnerabilities. If the United States cannot ensure predictable access to materials for its own sustainment base, it cannot guarantee readiness under sustained operational stress.

A Way Ahead

Shifting sustainment work to private industry marginalizes organic capacity and places depots like Corpus Christi in a precarious financial position, and erodes the military’s ability to repair its own equipment. As legacy platforms are retired and inventories shrink, preserving a circular sustainment economy becomes essential to controlling costs and sustaining readiness. If the Department of Defense is serious about preserving organic sustainment capability, it should focus on two policy levers that would matter most over the next five years: technical data access and predictable organic workload.

First, technical data rights should be treated as a core element of combat power. Rather than negotiating access on a case-by-case basis, the department should embed sustainment data rights into acquisition requirements from program inception. This would not eliminate the role of private industry; it would preserve competition while preventing single-point failures. The objective is not to nationalize innovation, but to ensure that when platforms break, the military retains both the legal authority and practical ability — the right to repair — to restore them without seeking permission.

This challenge is already visible. Most Army helicopter rotor blades have transitioned from metal to composite materials. For nearly a decade, the Corpus Christi Army Depot attempted to negotiate a partnership agreement with original equipment manufacturers to overhaul these blades organically. Intellectual property restrictions and limited access to technical data have so far prevented this. As a result, the Army today cannot overhaul its own composite rotor blades, despite having the facilities, workforce, and operational demand to do so.

Second, the services should stabilize the organic workload for enduring systems. The problem is not merely that depots lose work — it is that they lose predictable work. For example, the Corpus Christi Army Depot was originally programmed to remanufacture more than 700 UH-60V Black Hawks over the life of the program. The program was terminated after just over 100 aircraft, costing the depot millions of dollars per aircraft. The fixed costs associated with establishing production capacity were predicated on volumes the depot will now never realize, undermining the economic logic of an activity that operates as an industrial non-profit.

Without stable demand, workforce planning collapses, fixed costs spike, and specialized skills erode. The services should establish workload floors for critical platforms, ensuring that depots remain viable centers of expertise rather than residual claimants on leftover sustainment dollars.

Public-private partnerships, direct support partnership agreements, and co-production models can support these goals — but they should be tools, not substitutes, for organic capability. The objective is not balance for its own sake. It is continuity of capacity under wartime conditions where continuity cannot be assumed.

Modernization should not come at the expense of sustainment capacity. The United States cannot assume that the conditions of peacetime contracting — global access, financial stability, and permissive logistics — will hold in future wars. Organic capability is not an insurance policy one hopes never to use. It is a warfighting capability the nation will need.

Conclusion

The erosion of the organic industrial base is not the product of market forces alone — it is the cumulative result of policy choices about incentives, structures, and risk tolerance. Decisions about technical data rights, workload allocation, and sustainment strategy shape not only how the military maintains its equipment, but whether it retains the ability to do so under contested, prolonged, or resource-constrained conditions. In that sense, sustainment is not a back-office function of national defense — it is a frontline determinant of readiness.

Private industry will remain an indispensable partner in modernization and production. But partnership is not the same as substitution. When the government relinquishes repair authority, disperses organic workload, or treats sustainment as a transactional afterthought, it trades short-term efficiency for long-term fragility. Those tradeoffs are rarely consequential in peacetime. They become decisive in war.

The challenge is not to choose between government and industry, but to structure their relationship around continuity of capability rather than episodic efficiency. That means embedding data rights into acquisition strategies, stabilizing organic workload for enduring systems, and treating depots as strategic assets rather than residual providers.

The United States built its sustainment enterprise to fight through disruption, scarcity, and uncertainty – not to compete for marginal workshare in a shrinking market. If that system is allowed to wither through neglect or misaligned incentives, it will not be easily reconstituted when it is needed most. In the rush toward modernization, policymakers should be careful not to discard the industrial equivalent of the dependable peanut butter and jelly sandwich: not flashy, not novel, but essential when conditions are hardest, and failure is not an option.

Kevin J. Consedine is an Army Aviation officer and the commander of the Corpus Christi Army Depot. A former aviation battalion commander in the 82ndAirborne 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 rotary wing tactics and the role of depots in modern conflict in Army aviation publications.

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.