Congress Finally Tackles Strategic Materials Reform

Article excerpt

With the 2013 National Defense Authorization Act, Congress has enacted significant reforms to the Defense Department's acquisition and industrial base policy.

Shortly before World War II, Congress initiated a "strategic materials" program, the National Defense Stockpile, eventually placing it under the General Services Administration. The stockpile's purpose is to ensure that the U.S. military and the civilian industrial base have a secure supply chain for metals and exotic materials that are necessary to manufacture defense systems.

Congress later created a separate office of manufacturing and industrial base policy within the office of the secretary of defense, which has responsibility for overseeing those companies that manufactured these systems.

But neither Congress nor the Defense Department established a clear chain of command or mechanism for policy coordination between offices. This problem finally has been addressed.

The National Defense Stockpile, now known as the Defense Logistics Agency-Strategic Materials, has found itself torn between its dual statutory mandate to secure both national defense and essential civilian materials. It often battled through multiple layers of Pentagon bureaucracy to warn about supply-chain security concerns.

Office of manufacturing and industrial base policy officials have charged that, from the point of view of program managers and prime contractors, the Defense Department was no longer in a position to drive commercial markets and that the government must accept the reality of a globalized defense supply chain. The paramount goal of this office became to deliver products and services to war fighters at the lowest cost, with lesser regard to supply-chain security or industrial base concerns at the lowest tiers.

With nearer proximity to top Pentagon leadership, the views of this latter office often prevailed.

In passing the new defense authorization bill, Congress has directed that the office of manufacturing and industrial base policy give equal weight to both defense contractors and strategic materials suppliers. This establishes a new paradigm in industrial base strategy. The law strikes a balance between the emerging view that the health of the defense industry must be assessed from the "bottom up"--starting with raw materials suppliers--and the department's more traditional "top down" approach to assessing the health of the defense industry, which focused almost exclusively on the well-being of prime contractors.

To reinforce this balance, the head of the office of manufacturing and industrial base policy and the Defense Logistics Agency-Strategic Materials will now serve as the chair and vice-chair of the Strategic Materials Protection Board, codified at 10 U.S.C. 187. Congress created this inter-service body in 2006 to assess the long-term strategic materials needs of the Defense Department and to assist in planning for continued stable supply.

Reviewing the board's prior performance, the House of Representatives noted: "The committee expresses concern about the board's failure to fulfill its statutory obligations." By restructuring the board, Congress has made clear its expectation that the Defense Department seriously assess its strategic material vulnerabilities.

The defense bill provides a window of transparency into industrial base policy for all participants--small business and multinationals, raw material producers and original equipment manufacturers, prime contractors and major subcontractors. Congress has required the board to meet at least once every two years. …