The House Armed Services Committee’s Supply Chain Task Force recently issued a report on supply chain risks facing the Pentagon and the defense-industrial base. Its notable recommendations include treating supply chain security as a defense strategic priority, increasing visibility of the defense supply chain, reducing reliance on adversaries for resources and manufacturing, and securing the supply chain for rare earth elements. However, one recommendation should be analyzed carefully by the national security community and policymakers: Specifically, the report encourages the U.S. to leverage allies and partner nations to address supply chain gaps, in particular with members of the national technology and industrial base, or NTIB.
By doing this, the task force argues for the creation of global policy to reduce our reliance on Chinese and Russian suppliers. What the report does not recommend is relying on NTIB members, or other allies, over domestic suppliers to close supply chain gaps. Lawmakers and the Pentagon should carefully note this nuance, especially given the impending markup of the fiscal 2022 National Defense Authorization Act.
To address the challenge of implementing this recommendation, Congress should be mindful of long-standing calls from free-trade advocates to maximize trade with allied nations, which risks trading one foreign reliance for another. Instead, lawmakers should introduce a tiered preference system that maximizes supply chain security through the benefits of international partnerships and competition. This would require a balance between domestic sourcing and the need to collaborate with allies as a supplement to our domestic production capabilities. It also recognizes that many of our allies have specialized capabilities that should be embraced in some cases, but that creating foreign competition for its own sake is not strategically sound.
The concept is simple: buy American when you can, buy from trusted allies when you must.
Critics may argue this tiered approach is unimplementable, too costly or complex; however, such practices are already successfully in use through International Traffic in Arms Regulations and export regimes, where allies are allowed under certain conditions, but adversaries are off limits.
These regulations strictly control many aspects of the defense supply chain to ensure our most sensitive systems are largely sourced or produced in America, and numerous statutory provisions restrict purchases of essential materials from nations such as Russia and China (see 10 U.S. Code 2533a, b and c). Moreover, the Federal Acquisition Regulatory Council recently issued a proposed rule that modifies Buy American provisions to increase the threshold for domestically made content in federal purchases from 55 percent to 75 percent over five years, in addition to higher price preferences for items deemed critical for national defense.
These developments underscore the feasibility of a tiered approach, which would also ensure the defense industry can meet mission requirements without interruption. Most importantly, it would bolster the U.S. economy and support the revitalization of the middle class through domestic manufacturing that is long overdue.
The case of Turkey provides strong evidence of the need for this tiered approach. The nation is a member of NATO and was heavily involved in a major U.S. Air Force aircraft modernization effort. Thousands of specialized parts for a next-generation fighter were outsourced to Turkey to bolster defense trade with “allies” and create reciprocal foreign sales opportunities. However, when in 2017 Turkish officials decided to procure S-400 anti-aircraft weapons systems from Russia, the U.S. was faced with a difficult choice: allow an “ally” to purchase a weapon system capable of challenging a next-generation fighter from a near-peer competitor, or cut ties with Turkey in a way that could disrupt the production of the aircraft.
U.S. officials chose the latter, which forced contractors to find new suppliers outside of Turkey — a task that is now mostly complete but not yet finished. The hard lesson learned from relying on an “ally” for critical production, then needing to reshore that capability as politics change, ultimately will cost taxpayers between $500 million and $600 million in nonrecurring engineering costs, according to Ellen Lord, the previous undersecretary of defense for acquisition.
The case of Turkey should be a cautionary tale for those charged with implementing the HASC Supply Chain Task Force recommendations. While working with trusted allies and partners to create global coalitions to secure our respective industrial bases makes good sense, policymakers should take care not to misinterpret it as a call to shift one foreign reliance for another. Most importantly, current and forthcoming policy suggests that prioritizing domestic producers is an entirely reasonable strategy to bolster our nation’s defense-industrial base.
Retired U.S. Air Force Col. Jeffery A. Green is the president of J. A. Green & Company. He previously served as counsel for the House Armed Services Committee.