The Army’s top acquisition official has said the service’s fiscal year 2024 budget will include “multiple requests” for multi-year contracts worth more than $500 million to procure critical munitions, as it looks to further ramp up production capacity.

Doug Bush, the assistant secretary of the Army for acquisition, logistics and technology, noted on Friday that multi-year deals above $500 million require specific approval language from the appropriations committee to enter into such contracts.

The Honorable Douglas R. Bush, assistant secretary of the army for acquisition, logistics and technology, receives a briefing of current V Corps operations at Victory Corps Forward, from U.S. Army Command Sgt. Maj. Raymond Harris assigned to V Corps, during a visit to Camp Kościuszko, Poland, Sep. 8, 2022. Photo by Spc. Dean Johnson, 5th Mobile Public Affairs Detachment

“We are going to request several of those for fiscal year ‘24. And if the appropriations committees support that based on us demonstrating cost savings and industry stability benefits of the multi-year, we’re pursuing those,” Bush said during a Center for Strategic and International Studies discussion.

The final version of the FY ‘23 National Defense Authorization Act included a provision allowing the Pentagon to use multi-year contracts for select critical munitions procurements, which the Army has cited as key tool for boosting production capacity to continue providing critical munitions to Ukraine and replenishing its own inventories.

“The value of using multi-year contracts for munitions I think has long been there but not talked about and not pursued. I believe the Department of Defense across the board is going to push as far as we can on doing that. There are many benefits. You do save money, so you can do buying in bulk over years. That’s one, of course, good thing. But the second thing, and in some ways more important, is the industry stability. They know they have three to five years, for example, of guaranteed production. They’ve got the ability to take that certainty, work with their suppliers who now also have certainty. Having those orders to book far in advance, they can leverage private sector capital resources to make sure their production lines work well, get ahead of some of these supply chain challenges, buy in advance and in bulk, all the goodness that comes with a long-term contract,”

Army Secretary Christine Wormuth told reporters last week multi-year procurement authorities will be “helpful” to boosting production of critical munitions, including meeting a goal to manufacture 70,000 155mm artillery shells per month by 2025 (Defense Daily, Feb. 23). 

Bush on Friday detailed the Army’s outlook on increasing production capacity for munitions, noting efforts the Army started planning last year as the conflict in Ukraine escalated are “now underway.” 

“We had to do a lot of planning working with industry. We then had to work with Congress closely to get the funding in the billions of dollars to support these rampups. And we are now in execution mode,” Bush said. “In creating this production capacity, we’re trying to create options for future decisions, in terms of how much we’ll need. But if we don’t do the production ramp-ups, we won’t have those choices to make in the first place.”

The ongoing conflict in Ukraine is informing the size of weapons stockpiles that DoD should maintain, according to Bush, to include areas such as how the Army is thinking about  prepositioned stocks for raw materials “bought far, far in advance.”

“Now, stockpiles are expensive. They’re expensive to build and [they’re] also sophisticated weapons to maintain. You have to store them in certain conditions. You have to maintain an inspection regime. All of this costs money. But how big are our war reserves is a really good policy question that’s being asked and being worked,” Bush said. 

Bush also cited the Army’s 15-year, $16 billion organic industrial base modernization plan to upgrade its depots, arsenals and ammunition plants as a key effort to realizing increased production capacity (Defense Daily, Feb. 1 2022). 

“Congress has been very supportive. [There’s] more than a billion [dollars] already on contract to modernize all those things,” Bush said. “Because of the good work of having that plan, we’re now executing that much faster than we thought we could to modernize those facilities. It’s a really generational opportunity to modernize these facilities. It will set them for a long term in a much better place in terms of being able to ramp up production and maintain it.”

During the discussion, Bush was asked about a Government Accountability Office report from October that found vendors at four of the Army’s five government-owned, contractor-operated plants “lack incentives to make investments to improve plant infrastructure and operations, citing an inability to make a return on investment during the life of the contract” (Defense Daily, Oct. 13 2022). 

“I don’t know what incentive you need more than winning a war and having billions of dollars available to modernize and produce. So I think we’ve checked that box since maybe that report was drafted over last summer. I don’t see that problem right now. But it’s a fair point,” Bush responded. 

Looking ahead, Bush said the Army will continue discussions with industry on how to best maintain extra capacity to meet production surges for critical munitions. 

“The long-term challenge will be how much of that capacity can we sustain over time post-[Ukraine] conflict. Those are really good questions. I don’t have all the answers. I do know that Foreign Military Sales are up dramatically this year for all these items. I believe our requirements for stockpiles will be higher after these conflicts, once we’ve done the analysis. I think there will be work to do,” Bush said. “There’s a careful balance to strike there. But we of course expect our defense companies to be efficient and provide their goods at good prices. If we want them to have excess capacity, we will have to partner with them and work with them to pay for part of that excess capacity that’s not being used. Again, that’s a policy choice that could be made.”