Pentagon must target weak points, improve resiliency in the defense supply chain [Commentary]


Pentagon must target weak points, improve resiliency in the defense supply chain [Commentary]

By: Jeff Green

Since Operation Desert Storm, a hallmark of U.S. air power has been the precision-guided munition. Images of bombs striking so accurately that they appear to target individual windows are a frequent reminder of American military might. But what if those bombs were no longer available?

It’s not a hypothetical. In this time of conflict, the Air Force cannot replace smart bombs as fast as they are expended.

According to Air Force Secretary Heather Wilson, “when it comes to munitions, we are stretched.” In fact, the Pentagon is now seeking to triple production in order to keep up with current operational needs. This statement conflicts with a 2011 Department of Defense statement assuring lawmakers that it possessed a 30-year supply of precision-guided munitions.

The DoD must improve its process for assessing and proactively addressing weak points in its supply chains. President Donald Trump’s Executive Order 13806, “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States,” directs the DoD to make these improvements in order to ensure a robust domestic supply chain for America’s military needs.

Since 2000, the domestic supply chain has lost “more than 60,000 American factories, key companies, and almost 5 million manufacturing jobs.” The DoD estimated that approximately $19.7 billion — nearly 6.4 percent of all U.S. military spending — went to foreign contractors overseas in 2013 alone. These losses have cost the United States millions of jobs and led to a precarious supply situation for many important defense systems.

In order to revive the nation’s industrial base and improve America’s national security, the DoD must take an expanded view of the entire industrial base, including an understanding of the sourcing of all components used by prime contractors; this includes not only end items, but also the raw materials that enable military overmatch. Prime contractors may be easy to identify, but lower-tier suppliers are equally critical to battlefield success.

It is concerning that the Defense Department’s implementation of the executive order appears on track to narrowly review the industrial base, effectively evaluating only companies whose primary business is defense. Last week, the Pentagon asked only 300 companies to complete its official industrial base survey. It is highly unlikely that only 300 companies, much less a targeted list of prime contractors and first-tier subcontractors, can give the Department of Defense a complete picture of the industrial base.

Companies not included in this survey likely include metal makers, electronics manufacturers, tool makers, miners, refiners and many more. These companies may not be visible on the battlefield, but their products are vital to the overmatch that military leadership demands from its weapon systems.

Upstream suppliers face the most foreign competition for business and are the first to be impacted when the military reduces its procurement. They are more likely to be pushed out of business when the government forces industry to provide systems that are the lowest-priced and technically acceptable variants, rather than the best value for the taxpayer; the DoD’s future acquisition strategies must include consideration of their impact on the domestic industrial base to prevent further capability degradation, and the results of the ongoing industrial base study are critical to informing those decisions. Because of heightened economic pressure on lower-tier suppliers, many defense programs are seeing significant consolidation in their supply chains, resulting in a smaller and more brittle industrial base, not to mention a reduction in competition for needed supplies and components.

The appointment of Eric Chewning to oversee DoD manufacturing and industrial base policy is an important opportunity for the Pentagon to revisit its traditional views, with a key first step being a survey of the entire supply chain. Addressing industrial base problems that have been developing for decades will be difficult and will require a sample size far larger than 300 companies. To avoid costly repeats of the situation facing today’s smart bombs, the Pentagon must assess suppliers at all tiers for single points of failure or limited resiliency, as required by this summer’s executive order, and the agency must abandon any preconceived notions about the resiliency of the supply chain.

As long as our military’s success or failure depends upon our nation’s ability to scale production to be ready for any threat, it is essential our supply chain assessments and policies are based on a realistic understanding of all of our suppliers, not only the most visible.

Jeff Green is the president of J.A. Green & Company, a government relations firm based in Washington, D.C. He previously served with the House Armed Services Committee and the Defense Department.

The article can be found here.