The Defense Department has created a new tool to keep tabs on the health of the defense industry supply chain during the COVID-19 pandemic and has established a portal to share information with industry and get updates on operating status of companies, Pentagon officials said on Wednesday.
The industry outreach efforts include holding conference calls with the defense trade associations every other day and led to two key policy memos last week from the department, one confirming that defense industry employees must continue working and the other aimed at easing cash flow concerns of large and small contractors, Ellen Lord, under secretary of defense for Acquisition and Sustainment, said at a DoD media briefing.
The Supply Chain Heat Map combines data from the Centers for Disease Control and Prevention on positive coronavirus tests by geographic location, shelter in place rules issued by states and localities, and location information of defense companies, Lord said.
Jennifer Santos, deputy assistant secretary of Defense for Industrial Policy, said at the briefing the heat map helps DoD with “understanding the supply chain vulnerabilities associated with the virus.”
Lord said, “All of this information can help us with predictive solutions and planning when overlaid with the location of our industry partners.”
In addition to the Supply Chain Heat Map, Lord said that the department has created portals as a means for the industry to share its ideas such as “technical assistance and manufacturing capability.” The portals and data repositories, which includes the heat map, have been set up under the auspices of the Defense Contract Management Agency, Santos’ Office of Industrial Policy, and a new Joint Acquisition Task Force (JATF) that is directing DoD’s efforts under the Defense Production Act to leverage its authorities to respond to the pandemic, she said.
“Demand signals” for medial resources are coming from the Department of Homeland Security’s Federal Emergency Management Agency, the Department of Health and Human Services, and other federal agencies, Lord said, highlighting that the JATF is leading the DoD response to these needs.
Santos said her office is “the help desk to industry,” directing inquiries to the appropriate DoD organization, and also said that the portal her office has created will allow industry to update their operating status for the department. The Industrial Policy office is also updating its website with frequently asked questions to aid industry and has established a “common mailbox” for COVID-19 questions that “feeds into” other DoD offices, she said.
Lord said the scope of the new JATF includes “building capacity in identified areas of fragility in the defense industrial base,” including capabilities and the workforce, “with a focus on reducing reliance on foreign supply sources.”
She said one area of interest is alternative materials for the N95 respirator masks, which provide healthcare workers and first responders protection from COVID-19.
The moves DoD made last week ensuring that defense contractor employees can go to work and that defense companies have improved cash flow in these uncertain times in part are aimed at staving off industry vulnerabilities to adversarial capital, the department said on Sunday. Adversarial capital refers to investment by foreign entities, such as Chinese companies, in U.S. technology firms.
Lord again highlighted this concern on Wednesday, saying that the crisis from the pandemic potentially puts companies at risk, and “presents a greater attack surface” if small companies don’t know if their contracts will continue.
“So, we want to basically mitigate that uncertainty,” she said. “That’s why we are being forward leaning and over-communicating, probably, to say we are open, we want them to be open.”
To combat potential adversarial capital, Santos said that her office in the past few weeks has hosted “trusted capital events,” which are used to bring together trusted providers of capital with companies seeking potential business partners to help bring products to market. These meetings are currently being done virtually, she said.
The Committee on Foreign Investment in the United States (CFIUS) is another tool to fend off adversarial capital investments, Santos said. CFIUS is an interagency committee led by the Treasury Department to help regulate potential investment in U.S. companies by foreign investors.
Santos said that the trusted capital events are aimed at getting to the “left of CFIUS by ensuring that critical companies are able to access clean capital that assists their commercialization.”