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Law360 (July 8, 2020, 8:19 PM EDT) -- The U.S. Department of Defense's acquisition chief said Wednesday that she would like to "reshore" as much of the DOD's overseas supply chain as possible, saying the COVID-19 pandemic had highlighted vulnerabilities in the defense industrial base.
The coronavirus crisis has created some supply chain problems for the DOD, but has also had the "silver lining" of bringing awareness to parts of the defense supply chain located in "potentially adversarial countries" like China, said Ellen Lord, the undersecretary of defense for acquisition and sustainment, in comments at a virtual forum hosted by think tank the Brookings Institution.
"So now, we have interest in actually making sure that we understand the fragilities in our supply chain and that we make sure we 'reshore' as much as possible and also have partners and allies supporting us wherever possible," she said.
The industries that the DOD has grown particularly concerned about amid COVID-19 are rare earth mineral processing and microelectronics fabrication and processing, according to Lord.
"We just found, particularly with microelectronics, we have gotten ourselves into a potentially compromised position where we have U.S. intellectual property, in terms of design, then going offshore for fabrication and packaging, leaving us with some vulnerability there that is unacceptable moving forward," she said.
While the U.S. has a good relationship with the European Union and other allies, and will continue to work with suppliers from those countries, Lord said that "reshoring" efforts would be aimed specifically at bringing critical supply chain capabilities to the U.S.
Although the DOD had been able to work with countries like Mexico and India to quickly address interruptions of supplies from important industrial partners in those countries, "frankly we saw the problems with being able to take deliveries from offshore sources" during COVID-19, Lord said.
What the DOD would like to see, which also fits with its aim to have competition for all acquisitions, is that every procurement would have at least two potential sources, at least one of which is domestic, according to Lord.
But as well as highlighting supply chain gaps, the coronavirus has also led to at least one other silver lining, which came as a result of efforts to keep the defense industrial base working during the pandemic, according to Lord. Frequent meetings between DOD officials and industry associations have "really [opened] up communications both ways," she said.
At a press conference on June 22, Lord said that the DOD's aviation and shipbuilding supply chains had been the hardest hit by COVID-19, but that nearly all defense companies that were forced to close due to the virus had reopened by that point.
Of the 10,509 companies tracked by the Defense Contract Management Agency, only two were still closed at that time because of the pandemic, with 267 previously closed companies having reopened, according to Lord. Of 11,413 companies tracked by the Defense Logistics Agency, 661 had closed and reopened, while 31 were still closed, she said.
--Editing by Jack Karp.
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