Lawmakers are increasingly concerned about where defense companies source materials such as batteries that are essential to military technology. But the industry is also concerned about pressure to buy domestic materials without additional funding.
“We feel in the industry that risk sharing and burden sharing is becoming a little bit out of balance. And that’s going to cause some problems and ultimately cost taxpayers money,” said the Aerospace Industry Association. Chairman and CEO Eric Fanning told reporters Thursday. “When you sell to the government, when you sell something that has no market value or other customers, everything is costed in the contract. And ultimately, anything that requires labor is built into the contract. It will happen.”
Earlier this week, the House Armed Services Committee released a draft version of the must-pass 2025 Defense Policy Act, which would address the supply chain for critical minerals and rare earth elements essential to military technology but sourced from foreign countries. Concerns are highlighted. A country like China.
Under a section of “special interest,” the lawmakers said the Pentagon is “underutilizing” its authority to buy critical supplies domestically and asked for a three-year plan to change that.
“The Committee is concerned that this authority remains underutilized and that the stockpile will allow traders procuring foreign materials, including those from China, to bid on and win defense stockpile acquisition contracts. gender is recognized,” the commission wrote. “The Committee urges the Defense Stockpile Manager to use its authority to proactively develop reliable sources of critical supplies to ensure that the nation’s industrial base is ready to meet urgent demands.・I hope that it will be preserved.”
For example, concerns about where the United States gets its battery materials have become acute as military training becomes more dispersed and troops are deployed in areas with little access to networks. The U.S. will import just under $12 billion in lithium-ion batteries from China in 2023, up from $2 billion in 2020, according to an analysis by decision science firm Govini.
The bill also raised questions about sourcing materials for lithium-ion battery technology and neodymium magnets from China.
One of the provisions, if adopted in the final bill, would require the Pentagon to develop a plan, from budget to civilian needs, to replenish the defense stockpile in case of a prolonged national emergency. Additionally, the panel expressed disappointment with the Navy’s “slow” adoption of “durable devices and technologies designed to operate in remote locations with limited network connectivity” as part of its digital supply chain efforts. expressed.
Supply chain pressures have been a top concern for defense companies in recent years, ranking third behind the government’s complex procurement and budgeting processes, according to a recent study conducted by the Defense Industries Association.
“There are a lot of good reasons why the government would ask contractors to do other things,” said Fanning, a former Army secretary. “It is unrealistic to think that you can switch on the spot. In some cases, it can take a long time to find an alternative supplier.”
AIA is calling on Congress to enact legislation that facilitates agreements with trading partners that include high standards and rules of origin for critical minerals, as well as increased funding for domestic critical minerals initiatives.
Fanning said the geopolitical climate and increased demand for U.S. defense technology is expected to cause supply chain concerns and materials such as minerals and metals to be sourced from “dangerous locations.” . But defense companies say the changes will be time-consuming and expensive.
“Sometimes what we’re trying to acquire is so small that we can’t really impact the creation of new markets. So in some cases, we’re trying to bring something back to the United States and it’s really If it’s defense-focused, we need to make sure there’s an upfront investment of public-private partnerships, government investment, to seed that effort.”
