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May 25, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

The US needs to rethink its overseas supply chain

By: Thomas Ayres

As Americans respond to the COVID-19 pandemic, we have become acutely aware of the outsized impact of our dependence on China in the supply chain.

Pharmaceutical companies learned key chemicals and minerals are exclusively made or mined in China. For instance, reports show China produces 97 percent of the antibiotics, 95 percent of ibuprofen and 91 percent of hydrocortisone consumed in the U.S. market. Hospitals also learned that while China produces 50 percent of the world's face masks, they are of dubious reliability. There is cause for concern with the quantity or quality of ventilators.

In sum, we learned as citizens what we in the Department of Defense have known for some time: Our national security supply chain must be free from dependence on China.

The DoD's concern for its supply chain is not new. Congress spurred activity over a decade ago by questioning the DoD's supply chain risk management, or SCRM, policies. The National Defense Strategy‘s recognition of a new era of strategic, great power competition further sharpened the DoD's focus, propelling recent efforts to enhance regulations and procedures in addressing supply chain threats.

We are transitioning from analog to digital, with the goal of planes, ships, tanks and satellites all seamlessly sharing data — a lethal version of the ride-sharing app on your smartphone. Yet, even as the DoD builds this future, the threat of supply chain disruption and concerns about component quality within the electronic backbone are real. Counterfeit or planted microelectronic parts can be vectors for cybersecurity intrusions.

Recently, for instance, the DoD voiced concerns that Chinese telecommunications giant Huawei's 5G solution provided back doors, purposefully or negligently, for data corruption, data extraction, system failure or worse. Similarly, SCRM policies have increasingly addressed the concern of intellectual property theft enabled by subcomponents designed to allow information to flow back to larger architectures. The COVID-19 pandemic is giving new meaning to that threat, and the risk of disruption to both raw and manufactured materials from abroad has become apparent.

Our SCRM focus must broaden in response to COVID-19 to better address national production capacity and sustainability. Being able to assure access to the minerals, chemicals, subcomponents and components required to build weapon systems is essential. China supplies 80 percent of the rare earth minerals imported to the U.S., many of which are essential to electronic parts. Since 1933, the Buy American Act has required federal agencies, including the DoD, to purchase items manufactured in the U.S. Additionally, these items must be made from supplies mined or made in the U.S.

The act is implemented by regulations requiring analysis of the components — where they are mined or made, and where they are assembled. Companies that falsify “Made in America” designations can be debarred from the federal marketplace. In July 2019, months before the pandemic emerged, President Donald Trump issued an executive order seeking to increase the minimum domestic manufacture thresholds above the current 50 percent floors. The pandemic now shows even more needs to be done. We must increase to President Trump's mandated percentages, and we must also analyze where each of the subcomponents are manufactured.

This doesn't mean we need to back away from allied contributions or alliance-based weapon systems like the F-35 fighter jet, which benefits from the industrial cooperation of nine partner nations. But in light of COVID-19, it does mean that when we make risk-based and measured decisions to produce an alliance system, we program in several months' worth of component backlogs to allow continued production during future quarantines.

The majority of our weapon systems are made in the U.S. by American companies with greater than 50 percent of component production and assembly done domestically. Yet, what is less clear are the composition of the subcomponents in the components themselves. Not recognizing the risks of the subcomponents equally jeopardizes the new reality of disruptions to our supply chain and risks of data extraction, degradation and spying, about which we have increasingly been concerned.

Recently, I sought to buy a grapefruit spoon on the internet and found it exceedingly difficult to learn where the offered spoons were made. The harder it was to find, the more I suspected it was made in China. Perhaps Congress should pass a law making it easier to learn the source of manufacturing. Ensuring my access to an American-made grapefruit spoon is not nearly as vital as assuring our access to critical weapon systems, rare earth materials, and pharmaceuticals and medical supplies. A vital step is knowing the source countries of components and subcomponents. We must have deeper knowledge of the full supply chains of subcomponents, and how and where they are produced.

Trust can only come once we know all that is required to understand our supply chains and we seek even greater focus in our new normal. Our security depends on it.

Thomas Ayres is general counsel for the U.S. Air Force.

https://www.defensenews.com/opinion/commentary/2020/05/22/the-us-needs-to-rethink-its-overseas-supply-chain/

On the same subject

  • France to double military vehicle order, asking for multiple variants

    June 11, 2018 | International, Land

    France to double military vehicle order, asking for multiple variants

    By: Pierre Tran VERSAILLES, France ― France is to double its order for the Light VBMR reconnaissance vehicle, a key element in the French Army's €10 billion (U.S. $12 billion) Scorpion modernization program. An additional 420 Light VBMR units are to be ordered, taking the total to 978, according to Erwan, the director of the Scorpion modernization program at Direction Générale de l'Armement procurement office. Erwan, whose last name is not used for security reasons, spoke to the press May 16. A first delivery of the Light VBMR is due in 2022, with 489 shipped by 2025. In addition to the highly equipped 489, there will be a further 200 units ordered, with the latter more lightly equipped units, according to the annex of the draft multiyear military budget law for 2019-2025. That raises the total of Light VBMRs to 689 delivered by 2025. After 2025 and out to 2032, there will be a further 978 ordered for Scorpion, and 1,060 ordered outside of the program, with a total of 2,038 for that period. A first delivery of an armored personnel carrier version of Light VBMR is due in 2021, a reconnaissance model in 2022 and a communications variant in 2023. A wide spectrum of missions will be covered, as there will be 16 versions of the vehicle, with 10 of the APC, two for recon and four for comms. Nexter will design, build and service the vehicles, while Texelis will supply the chassis and driveline. Nexter's factory at Roanne, central France, will build the Light VBMR, adding to the workload generated by orders for the Griffon troop carrier and the Jaguar combat and reconnaissance vehicle. The Light VBMR weighs 15-17 tons, can reach a speed of 100 kph and has a range of 600 kilometers. That weight compares to the French Army's initial requirement for a 10-ton vehicle, before industry called that unrealistic. One of the vehicles can be airlifted on a C-130, while two can fit on the A400M transport aircraft. Regarding the latter, the vehicles can be fully equipped for combat and still be successfully loaded. The vehicle is armed with a remote controlled 7.62mm machine gun, a minigun at the rear and self-protection with a Galix smoke dispenser. The vehicle can carry 10 people ― eight troops, a driver and a gunner. France is also to order an upgrade for 200 Leclerc main battle tanks, with a first delivery of a modernized tank in 2021, Erwan said. Sensors and the Bull SICS battle management system, or Scorpion Information Communication System, will bring the tank into the Scorpion's so-called collaborative combat concept, which seeks to heighten teamwork on the ground and with commanders at the regimental level. An order for the Griffon multipurpose troop carrier is to be raised to ”a target“ of 1,872, up 150 units from a previous total, Erwan said. A first delivery is due by the end of the year, with certification in the second quarter of 2019. Some 936 units are due by 2025. Contracts for those increased orders are expected to be signed later this year after the French Parliament formally adopts the draft military budget law, expected in July. That boost in orders follows the Army's call for a speedy introduction of the new armored vehicles, to replace an aging fleet of VAB troop carriers. There is a 2,700-strong fleet of VABs, which are some 40 years old. The briefing by Erwan was on a press trip organized by Gicat, the French trade association for makers of land weapons, ahead of the Eurosatory trade show, which runs June 11-15. https://www.defensenews.com/digital-show-dailies/eurosatory/2018/06/08/france-to-double-military-vehicle-order-asking-for-multiple-variants/

  • What To Expect From Biden’s Pentagon

    November 24, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

    What To Expect From Biden’s Pentagon

    Jen DiMascio Michael Bruno Lee Hudson Tony Osborne November 20, 2020 One of Joe Biden's last speeches as U.S. vice president focused on nuclear security, touting passage of the New Start Treaty with Russia in 2010 and subsequent reductions in the U.S. stockpile of warheads. Four years later, nuclear modernization and arms control will be among the first major tests he faces when he assumes the presidency in January. Under President Donald Trump, the Pentagon made notable strides in speeding up its cumbersome acquisition system, enabling the military to take better advantage of commercial technologies. The Defense Department also established what it calls “irreversible momentum” toward new space capabilities. But it will fall to the Biden administration to shepherd many experiments in new technologies into actual programs. It will be Biden's task to sell Congress on the idea of Joint All-Domain Command and Control. The new Democratic president could be dealing with a Senate controlled by Republicans, and he faces allies that see the U.S. as a less reliable partner than it was four years ago. He also will have to balance the modernization and readiness of the force within a budget that probably peaked in 2020. Shortly after he is inaugurated, Biden will face the Feb. 5 expiration of the New Start arms control treaty with Russia. His options are to extend the treaty for up to five years, for a shorter time frame or not at all. The Trump administration has been reluctant to agree to a full extension, given Russia's aggressive modernization of nuclear systems not covered by the treaty. Biden's advisors are likely to opt for extending the treaty to allow for more time for negotiations, predicts Matthew Kroenig, deputy director of the Scowcroft Center for Strategy and Security at the Atlantic Council. Republicans, meanwhile, are likely to be more focused on the threat of advanced weaponry in Russia and China, in particular the growth of strategic nuclear arsenals. Retiring Rep. Mac Thornberry (R-Texas), ranking member on the House Armed Services Committee, says he is “particularly concerned about where the Chinese are headed with the size and capability of their nuclear program.” He adds: “Like a lot of things related to the Chinese, we have probably been too complacent.” Such tensions, and a Congress split along partisan lines, could help maintain support for nuclear modernization programs such as development of the next-generation ICBM, the Northrop Grumman Ground-Based Strategic Deterrent (GBSD), a program some analysts have thought a Biden administration might consider slowing or canceling. “Any serious push to retire the ICBM force and do away with the Ground-Based Strategic Deterrent program would not be supported by the Senate,” Cowen analysts say. A Biden administration likely means more of the same for the U.S. industrial base, for better or worse. The U.S. defense budget is expected to remain flat, putting pressure on the Pentagon to find ways to get more bang for its buck and better technologies against peer rivals—at the expense of traditional force structure. “Technology investment is likely to be most important, including network integration, hypersonics, artificial intelligence, long-range strike and missile defense,” Bernstein analyst Doug Harned and his team say. “We expect a lot of activity around integration, but exactly what this means is still ill-defined. Force structure may well come under more pressure. This means lower numbers of troops, aircraft, vehicles, ships, etc.” Downward pressure on force structure would be bad for Lockheed Martin, given its high exposure with the F-35, as well as for General Dynamics' warships and ground vehicles, says the Bernstein team. Northrop Grumman appears well-positioned long-term, based on its lean toward new technologies, but there are some risks around the GBSD. Raytheon Technologies and Lockheed have the highest Middle East exposure among the primes, and military sales there may have some added risk. “Democrats in both the House and Senate want restrictions on [Foreign Military Sales] in the wake of reports that the United Arab Emirates will be allowed to purchase 50 Lockheed Martin F-35s,” the Cowen Washington Research Group observed Nov. 4. “We do not believe a [Republican] Senate will support restrictions. If the sale is going to happen, it will need to be jammed through . . . before Biden takes office.” Like the Obama administration, the Trump team provided growing support for new space technologies. “I believe space will continue to be very, very important,” says Ellen Lord, the undersecretary of defense for acquisition and sustainment. “I just had a briefing on a lot of [National Reconnaissance Office] projects we work on. And I'll tell you, it is absolutely eye-watering the capability that is being launched here in the next couple of months. . . . I think we have irreversible momentum.” During the Trump administration's final weeks in office, Lord is working to create a trusted capital marketplace, strengthen the defense industrial base and work with Capitol Hill on new ways of purchasing software. The Defense Department is working closely with the interagency Committee on Foreign Investment to block adversaries such as China or Russia from purchasing companies that are critical to U.S. national technology initiatives, she told the American Institute of Aeronautics and Astronautics' Ascend conference on Nov. 18. Another focus for Lord's team is rare earth minerals and microelectronics. The bulk of rare earth mineral processing occurs in China, and most microelectronics are manufactured outside the U.S. Chris Brose, who served as policy director for the late Sen. John McCain (R-Ariz.), is advocating more radical change to scale up defense innovation, a priority of U.S. Air Force Chief of Staff Gen. Charles Q. Brown, Jr. “The question for the new administration is going to be: ‘How do you support that vision, and how do you kind of reshape the Air Force, reshape the Space Force and really realign the [national] defense program?'” asks Brose, who is now chief strategy officer for the defense industry startup Anduril. Brose believes that to compete more effectively against advanced military challenges, the Pentagon must rethink how it harnesses new technologies, from the requirements process all the way through the acquisition process. Today's military, he notes, is organized to purchase a platform it has seen in a presentation or read in a white paper. The goal should not be to spend a long time defining requirements and then pay a single vendor to build things such as small satellites, software-defined programs or unmanned systems. One of the Air Force's top modernization priorities is the Advanced Battle Management System (ABMS). The challenge with an effort such as the ABMS is that the requirements and concepts of operation are unclear, Brose says, and ABMS demonstrations study different problems each year, making progress tough to discern. Though the Trump administration has experienced extensive turnover among its civilian leadership, it made considerable progress in restoring aircraft fleet readiness. In 2018, then-Defense Secretary Jim Mattis—the first of five men in the military's top civilian job in four years—mandated that all tactical aircraft fleets needed to be 80% ready for missions. The Navy drew on techniques from the commercial airline industry to meet that goal within about one year for its Boeing F/A-18E/F Super Hornet fleet. The service has since applied the same techniques to improve the readiness of Boeing EA-18G Growlers, and it is beginning to expand the process to its Northrop Grumman E-2D Hawkeyes, with an eye toward the rest of its tactical aircraft, Rear Adm. Shane Gahagan, the Navy's program executive officer for tactical aviation, said at Aviation Week's Military Aviation Logistics and Maintenance Symposium on Nov. 17. While Biden's team will seek to build on that progress, his administration likely will take a markedly less confrontational approach with U.S. allies than Trump, who believes the U.S. has borne too much of the burden to defend Europe. As the Pentagon announced the withdrawal of 12,000 U.S. troops from Germany earlier this year, repositioning them around Europe, Trump placed the blame squarely on Germany, describing the nation as “delinquent” in failing to pay its fair share. NATO members breathed a collective sigh of relief after Biden's election, believing it will pave the way for a relaunch of transatlantic defense relations. But Biden is likely to maintain pressure on European countries to keep defense spending up in light of Russian and Chinese threats and to align with NATO's call for members to spend 2% of their GDP on defense. “Trump seized on the 2% and banged the table. . . . It is broadly true he got the Europeans to take seriously the demand that more should be spent on defense,” says Jonathan Eyal, an associate director at the London-based Royal United Services Institute. The cost of Trump's approach, however, has been “very heavy,” he says, leading to a virtual collapse in the relationship between the U.S. and Germany. Less certain is how a Biden administration will deal with countries that appear to be undermining NATO values. Turkey's oil and gas exploration in waters disputed by neighbor and fellow NATO member Greece have prompted regional tension, not to mention Ankara's actions in Libya, Syria and, more recently, its support of Azerbaijan in the Nagorno-Karabakh conflict (AW&ST Oct. 12-25, p. 62). Turkey's decision to recently test its S-400 ground-based air defense system purchased from Russia also remains a source of irritation for Washington. The purchase of the S-400 prompted Washington to kick Turkey out of the F-35 program, but Trump opted not to invoke the Countering America's Adversaries Through Sanctions Act against the government of President Recep Tayyip Erdogan despite pressure in the Senate. “One can assume that the Biden administration would take the tougher line on Turkey,” Eyal says. “Erdogan is now part of the problem rather than part of the solution.” https://aviationweek.com/defense-space/budget-policy-operations/what-expect-bidens-pentagon

  • UK defense plans could take major hit from coronavirus fallout

    April 24, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

    UK defense plans could take major hit from coronavirus fallout

    By: Andrew Chuter LONDON — Britain is facing some “distasteful medicine “ in an upcoming defense review, with question marks around money, allies, the industrial base, Defence Secretary Ben Wallace has warned. Giving evidence in a virtual session of the Parliamentary Defence Committee April 22, Wallace said there were some difficult issues to be addressed by a post COVID-19 Britain. “We will have to take some pretty distasteful medicine," he told committee members spread across the country in the first ever virtual session of the committee. "It's not just about sums of money. It is about cultural change — our relationship with our allies, what Britain's ambitions are going to be. Do we want to do everything? Do we want to do less? Do we want to let go of something? Do we want to bank on international consortia every time, or do we want to invest in our industrial base? All those are difficult questions. The defense secretary, who only recently recovered from COVID-19, said changing the culture is going to be as important as the sums of money made available to the Ministry of Defence in the integrated review. The government refers to it as an ‘integrated review' as it involves, defense, security, foreign policy and international development departments. Wallace said that whether the review is uncomfortable or not, his hope is the defense ministry will have a realistic amount of money available to undertake what it recommends. That's rarely been the case in previous reviews over the last 30 years or so, and few people here are expecting much different this time round. The issue is already complicated by the never-ending budget pressure at the MoD. According to the National Audit Office, the government's financial watchdog, the MoD already has a financial black hole for its equipment program of between £3 and £13 billion, or as much as $16 billion. John Louth, an independent defense analyst in the U.K., said one of the big challenges facing the MoD will be putting the procurement roadmap back together post COVID-19. “One of the real challenges will be re-profiling a schedule for procurement," Louth said. Everything is slipping to the right, and re-profiling is going to be difficult, particuarly as many of the programs are interdependent on other programs. That poses a large and difficult challenge within a restricted budget." The economic impact of the COVID-19 pandemic is likely to make more difficult allocation of cash to its various departments and ministeries in the next comprehensive spending review. That's not withstanding the fact that MoD personnel — nearly 3,000 at the last count — have been lauded for their excellent performance assisting the National Health Service and others, carrying out tasks ranging from delivering oxygen to hospitals to setting up and running command and control centers. In particular the MoD has been widely praised for rapidly constructing several field hospitals for COVID-19 sufferers, including a 4,000 bed facility at the Excel Centre in London. The site is well known to defense contractors, as it's the venue for the DSEI exhibition. The government announced last week it was pausing the integrated review to focus resources on the COVID-19 fight, without saying when the work would recommence. Wallace answered that question — twice. First he said the review would recommence next year; later he said the correct date was the end of this year, but he was seeking clarity on the exact timing. That decision will be taken by the Cabinet Office who are leading the review. They had previously ordered the review, which was initiated after Prime Minister Boris Johnson won the general election last December, be completed by July. That was a date many analysts and politicians, including the defense committee, thought was risky. “This [the delay] is welcome news. I want a longer period for the integrated review. I want us to examine our place in the world, especially post COVID. It's going to be a different world,” he said. Wallace, an ex-British Army officer, said the number one threat is lack of resilience. "I suspect it will be higher up the agenda as a result of the virus,” he said. The defense secretary said that unlike countries such as France, Britain wasn't bringing forward a number of programs to protect the industrial base. “We are though speaking to industry to ensure their cash flow is continuing. There is a lot of work on the books that we would like to keep going,” he told the committee. One industry executive who asked not to be named said, “cash is not an issue yet, but I'm prepared for that to happen. I'm bracing for extended credit being taken by our customers, but I haven't seen it yet.” The virus has had an impact on a number of major defense programs in the U.K., as people have been ordered to work at home or, if that's not possible, adopt social distancing requirements in the workplace. The impact that might have on defense suppliers ability to meet their contractual obligations, and subsequently their financial viability and and that of the supply chain, has been recognized by the government . A series of actions relating to paying suppliers has been in place since late March, with MoD procurement authorities advised to support suppliers in a range of ways to maintain cash flow. This includes forward ordering, payment in advance, interim payments and payment on order rather than receipt. The scheme has been well received by industry here. The executive said he applauded the government for its swift action, but acknowledged the challenge remains for protecting employment and cash flow. The executive did say though that more clarity was needed from the government over the availability of initiatives like the Corona Business Interruption Loan scheme for defense exporters. Wallace named BAE's F-35 and nuclear submarine activities as programs where the balance between COVID restrictions to keep workers safe and keeping production and cash flow moving were vital. “It's really important that we continue some work that's absolutely key. We also need to help these firms to get through the process, because cash flow is really important to their survival,” said Wallace. But it's not easy keeping your distance from colleagues if you are trying to build something like a nuclear submarine. As such, Wallace said submarine building activities in the U.K. had some of the highest absentee rates in the sector. BAE employs around 9,000 people at its nuclear submarine yard at Barrow in northwest England where it is building Astute-class attack submarines and working on the Dreadnought class of Trident nuclear missile boats. About 4,000 of the staff are working from home with over 1,100 employees now working on site – up from 800-900 last week. A BAE spokesperson said the employees were supporting critical work at the yard. Last week the company reported that HMS Audacious, its latest attack submarine to be built for the Royal Navy, had left the yard and was heading to the submarine base on the Clyde in Scotland. https://www.defensenews.com/global/europe/2020/04/23/uk-defense-plans-could-take-major-hit-from-coronavirus-fallout/

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