So far amid the ongoing pandemic the “vast majority” of the defense industrial base is still on the job, Pentagon Acquisition Chief Ellen Lord said on Wednesday.
Lord couldn’t quantify the number of workers that might be out of work due to COVID-19 concerns and consequent orders from state governors and local leaders for their citizens to shelter in place but said “the vast majority is working. We want industry to know that our demand signal is still there.”
Defense industry CEOs are telling the Pentagon that they can keep operating, Lord said at a Pentagon briefing to discuss impacts from the COVID-19 pandemic on the industrial base.
Senior Navy leaders this week said there haven’t been any impacts so far in shipbuilding programs but that they do expect issues eventually. Navy shipbuilders Bath Iron Works, which is owned by General Dynamics [GD], and Huntington Ingalls Industries [HII] also said their operations have been unaffected, although their shipyards combined have had several employees infected with the virus.
Bruce Jette, the Army’s acquisition executive, on Tuesday sent a letter to the defense industry asking companies to stay in touch with program and contracting officials on the challenges they are facing, noting that “We understand COVID-19 will impact your operations, as it will impact ours.”
Lord did note that Boeing [BA] has said that a portion of its operations will be impacted from the coronavirus but said the Defense Department is working with state leaders so that defense workers that have to be on site can continue going to work. Boeing this week began a two-week shutdown of its operations near Seattle, Wash., impacting production on commercial wide-body aircraft but also the Air Force’s KC-46A tanker and the Navy’s P-8 anti-submarine warfare aircraft.
State leaders are helping out, Lord said.
Last Friday, Lord said she spoke with Pennsylvania Gov. Tom Wolf (D) to ensure that facilities of Boeing and BAE Systems in his state could continue operating. The same day, she also spoke to California Gov. Gavin Newsome’s (D) chief of staff to make sure defense company operations continue in Sunnyvale and Carlsbad.
“So, we continue to work there, where there is sometimes a lack of clarity reading a governor’s orders and what is essential, what is not, what support there is,” she said. “So, we are using our Office of Economic Adjustment who has a very strong communication path with on the Governors Association to make sure they understand where we are.”
Lord last Friday issued a memorandum highlighting that the Department of Homeland Security has classified the defense industrial base as critical infrastructure and that the workforce must continue working. The memo was a result of daily phone calls with defense industry trade associations about the concerns their members were having related to workforce, cash flow and standardization of guidance.
“This was very important, because industrial leaders told us that state and local governments had different shelter-in-place rules and guidelines, with some even issuing misdemeanor citations to workers trying to get to work,” Lord said at the media briefing.
To help industry with concerns about their cash flows, DoD also last Friday issued guidance to its contracting officers to increase progress payment rates to large business to 90 percent from 80 percent and for small businesses from 90 percent to 95 percent. Progress payments are for work already done on a program.
“I am firmly committed to ensuring this is done in a fully transparent and accountable manner,” Lord said.