3 weeks ago
11
Every day the U.S. sends an inadvertent message of “non-deterrence” to China.
Our adversaries and our partners both know the Department of Defense cannot prosecute a war beyond the weapons and munitions in its inventory. That’s because the Pentagon needs imports from its key adversary, China, and its at-risk-of-blockade partner, Taiwan, to manufacture virtually every platform, weapon and drone.
With President Biden now a lame duck and unburdened by political concerns, now is a good time to start mitigating this dangerous dependence. With two wars ongoing and with China rapidly building its military, our country can no longer afford to wait.
Despite multiple attempts by Congress and the administration to address this over the years in annual defense policy legislation, the U.S. remains as vulnerable as ever. Past attempts failed because they focused on specific inputs, such as rare earth materials, and on placing future limitations on purchases from China. Instead, the Pentagon must examine its full supply chain to urgently implement solutions mitigating dependencies on China and Taiwan, through a combination of stockpiling, second sourcing, new capacity or redesign.
The Chinese Communist Party recently fired shots across the bow of our rare earth supply chain, and by implication thousands of defense inputs, demonstrating its ability to ban exports such as germanium, gallium and antimony. Additionally, as Michael Rubin from the American Enterprise Institute recently published, China is aggressively locking up cobalt in Africa, further boxing in the U.S.
The Pentagon has spent over $650 million directed toward rare earths, but even with that, it cannot supply what our fighting force needs. Its lack of urgency and piecemealing approach to address its dependencies is a serious failing. Therefore, the president should take the following four actions.
First and maybe most importantly, President Biden should send a legislative amendment to this year’s National Defense Authorization Act to mandate supply chain resilience. Failing that, he can begin the process by enacting the recommendations below in an executive order.
Next, Biden needs to put a single organization within the executive branch in charge to oversee and direct the Pentagon to mitigate its supply chain dependency and coordinate across the multiple federal departments executing industrial policy.
In 2022 and 2023, the Congress gave some Defense oversight to the Federal Acquisition Security Council. This organization could be reorganized to provide leadership and coordination for supply chain risk activities critical to improving the security, reliability and resiliency beyond its original mandate of overseeing risks in federal information and communications technology.
Currently, it lacks authority and teeth even for its current mandate and offers no mitigation strategy for any limitations it identifies. Upgrading the Federal Acquisition Security Council, either through the Defense Act or through an executive order, could do both. The bottom line is that there needs to be a single organization that is accountable to the American people to coordinate this effort.
Third, the Pentagon should focus on resilience, which is different from the “Buy America” policies that pervade the Inflation and Infrastructure acts. Resiliency could be developed by building bigger inventories, cultivating more or new second and nearshore sources, and redesigning munitions and platforms to eliminate inputs from vulnerable supply chains. Partners and allies both must be part of our supply chain and can bring capabilities, cost and availability we cannot.
In addition, because many Defense Department requirements are dual use (especially related to drones, batteries and rare earths), Inflation and Infrastructure monies could be used. For instance, cheap, scalable drones are required for both Defense and almost every industry targeted in the acts.
Resiliency requires inverting the United States’s approach to defining, analyzing and addressing Department of Defense supply-chain vulnerabilities. To date, the government’s efforts have focused on well-known inputs such as rare earths and certain semiconductors. Instead, the Pentagon should focus on outputs, its critical munitions and platforms, to remediate the threat to the supply chain. Starting from outputs drives a review of all dependencies through a bottom-up supply-chain analysis. The department is not currently addressing the knowns and unknowns in its supply chain with the urgency or completeness required to mitigate supply or risk.
Finally, an oversight group outside the Department of Defense allows for authorities beyond the department's limited set, which include grants, loans and purchases. Additional authorities, such as those contained in the Infrastructure and Inflation acts, can support companies to become world-class competitive while serving the Defense Department.
Yet, more is needed. While building world-competitive companies generally requires less government interference than more, under the pressure of an adversary determined to exploit our markets with the full force of their government powers does require the federal government to step in with efforts such as regulatory reform and, perhaps, as we do with agricultural commodities, floor prices on rare earths to protect our companies against Chinese attacks.
The president is in a unique position, no longer beholden to the politics of elections, and he has a rare opportunity. Starting now, Biden can work with Congress on a bipartisan basis to set the Department of Defense on a path to resiliency. This move would cement a lasting legacy, while ensuring his successor to be better postured to resist China.
Retired U.S. Army Maj. Gen. John G. Ferrari is a senior nonresident fellow at the American Enterprise Institute. Ferrari previously served as a director of program analysis and evaluation for the service. Mark Rosenblatt runs Rationalwave Capital Partners, which invests in public and private technology companies.
English (US) ·