The Biden administration is seeking changes to Section 803 in the Senate’s draft version of the body’s fiscal 2023 defense authorization bill.
Section 803 of the Senate Armed Services Committee’s bill, S. 4543, “would prohibit the procurement of items used in major defense acquisition programs [MDAPs] made in, or by companies controlled by, China.”
“The committee is concerned about the susceptibility of Department of Defense acquisition program supply chains to a range of malign activities that have been and continue to be perpetrated by foreign actors,” SASC said. “The committee believes that one key vulnerability is the sourcing of certain materials and components from China. The department’s continued reliance on such items poses unacceptable risks to U.S. national security.”
“In addition, the committee recognizes that, for any significant supply chain adjustment, a transition period is necessary to minimize disruption,” per Section 803. “Accordingly, this provision would require the secretary of defense to transition the sourcing of items used in the Department’s major defense acquisition programs to sources other than those controlled by China with a one-time waiver to minimize disruption during such transition.”
Yet, an Oct. 18 White House Office of Management and Budget Statement of Administration Policy on S. 4543 said that the Biden administration “opposes section 803 as written.”
“The department is working aggressively to strengthen domestic supply chains, including increasing reliance on domestic critical items and components in MDAP products, and appreciates Congress’s ongoing support in these efforts,” per the statement. “However, the provision as written, would create significant operational challenges. Neither the Department nor its defense industry partners can determine the original source of many items within the supply chain that are commercial or of small dollar value—for example, raw materials and many electronic sub-components. Enactment of this provision, as written, may unintentionally disrupt contract deliveries, increase the cost of MDAPs, and reduce warfighters’ mission effectiveness.”
This month, Pentagon acquisition chief William LaPlante approved a national security waiver to allow Lockheed Martin [LMT] to resume deliveries of its F-35 fighter (Defense Daily, Oct. 8). The Pentagon said it halted such deliveries last month after the Defense Contract Management Agency told the F-35 Joint Program Office on Aug. 19 of a Chinese-made cobalt and samarium alloy in the aircraft’s Honeywell [HON] turbomachine pumps.
LaPlante said that the national security waiver allows DoD to accept Lot 13 and Lot 14 F-35 aircraft with the Chinese-made alloy.
Lockheed Martin has said that Honeywell has stopped work with the supplier of the Chinese alloy for the F-35 turbomachine pumps and that Honeywell has identified an alternative U.S. source for production beginning next month.
“For several decades, the DoD has entrusted supply chain visibility and risk management to companies in the private sector that provide it with defense capabilities,” per a February DoD report on securing defense supply chains in response to President Biden’s Executive Order 14017. “Consequently, the DoD has limited visibility into some sub-tiers of defense supply chains and does not track these vulnerabilities as they impact weapons programs. As supply chains have become more global in scale, prime contractors have lost some visibility into the sub-tiers of their supply chains, especially below third-tier levels.”
That report said that “the average American aerospace company relies on roughly 200 first tier suppliers” and that “the second and third tiers have more than 12,000 companies.” The F-35 has more than 1,700 suppliers globally, Lockheed Martin said.
Since at least 2018, DoD’s industrial policy office has worked on a DIBNow system to identify suppliers.