Pentagon seeks expansion of the Allied Defense Production Act to prop up critical supply chains

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The Pentagon is working with Congress to change the definition of “domestic sources” as part of a Cold War-era industrial investment program to target companies in the UK and Australia.

The proposal is part of an effort by the Department of Defense to address the Department of Defense’s reliance on China and other sources that it deems risky to provide for critical defense equipment and materials.

Jesse Salazar, deputy assistant secretary of defense for industrial policy, said his team is “evaluating all possible options to improve the effectiveness, flexibility and speed of the Defense Production Act (DPA), particularly Title III”.

“One way is to expand procurement capabilities,” Salazar said during an event hosted last week by the Center for Government Contracting at George Mason University.

He said the DoD plans to expand the definition of “domestic sources” under the Defense Production Act to the UK and Australia. Currently, the definition only includes companies that operate in the United States and Canada.

“Expanding the definition of domestic sources under the DPA will ensure the timely availability of essential industrial resources to support national defense requirements,” said Salazar. “And we’re working with Congress to make sure we have the authority to invest in Australia and the UK.”

Title III of the Defense Production Act gives US presidents far-reaching powers to strengthen and expand domestic industrial resources for supplies deemed critical to national security.

The Pentagon administers the Title III program and has entered into funding agreements with companies in recent years to increase production and reduce the cost of items ranging from medical supplies to microelectronics.

Salazar said Australia’s “sophisticated approach” to rare earth processing could help the United States build its own processing capabilities, while the UK’s advances in battery technologies and forging and casting capabilities could also help the United States develop its own capabilities in these areas build areas.

The Pentagon can currently make industrial investments in other countries through its Industrial Base Analysis and Sustainment program, but Salazar said the Defense Production Act offers more flexibility.

“The hope is that the Defense Production Act will give us the flexibility to react quickly in an emergency,” said Salazar. “I think that’s the real benefit of this flexibility.”

Salazar said the DoD wants to integrate the industrial capabilities of the US defense industry more closely with the allied economies under the National Technology Industrial Base, or NTIB. With the National Defense Authorization Act for fiscal 2017, the NTIB was expanded to include Australia and the United Kingdom, as well as the United States and Canada.

In its July report, the House Armed Services Committee’s Defense Critical Supply Chain Task Force described the NTIB as “an underutilized forum” that “should be used to shape policies and partnerships with allies.”

“The NTIB countries and other close allies and partners are undoubtedly facing similar challenges as they overly rely on Chinese and Russian suppliers,” the report said. “An effective policy to reduce the associated weaknesses in the supply chain requires meaningful, sustainable dialogue and cooperation.”

The Pentagon accounts for allied industrial capacities in the equation as it is spending $ 1 billion over five years moving its supply chains away from China, Russia, and other risky sources.

The NTIB, in particular, plays a crucial role given its form in US law, said Christine Michienzi, Chief Technology Officer of the Deputy Secretary of Defense for Industrial Policy.

“We are definitely working with our partners within the NTIB to make sure we are communicating where our areas of greatest risk are and trying to understand what their capabilities are or where we can work with them to develop capabilities within the US to develop or in the countries that we can use to fill our supply chain gaps and address our risks. It is a very important part of what we are driving forward in this effort, ”Michienzi said at the Intelligence and National Security Summit last week.


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