Pandemic's 'Silver Lining': Suppliers Are Returning to the US, Acquisition Chief Says

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Under Secretary of Defense for Acquisition and Sustainment Ellen M. Lord
Under Secretary of Defense for Acquisition and Sustainment Ellen M. Lord discusses "Defense spending and capabilities after COVID-19" at the Brookings Institution's virtual EU Defense Washington Forum, at the Pentagon, Washington, D.C., July 8, 2020. (DoD photo by Lisa Ferdinando)

The COVID-19 crisis has accelerated Defense Department efforts to secure supply chains against China and bring overseas manufacturing capacity back to the U.S., according to the Pentagon's acquisitions chief.

"This has, in a way, been the silver lining for us" in the pandemic, Ellen Lord, the undersecretary for acquisition and sustainment, said at a Ronald Reagan Institute forum aired Thursday.

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"We in government cannot let a good crisis go unused here," Lord said, adding that the pandemic is "a wake-up call to do things a little bit differently."

The crisis has pushed the DoD to accelerate efforts under President Donald Trump's July 2017 executive order to secure supply chains and strengthen the Defense Industrial Base, or DIB, she explained.

"We identified a lot of single-source, offshore supply chain critical items" that could be produced in the U.S., including microelectronics, Lord said.

The DoD "also advanced pharmaceutical ingredients that go into our drugs," she said, adding that much of generic drug production now comes from China.

Most chief executives are well aware of the challenges of doing business in China, Lord said, but there "wasn't really a compelling reason to reshore" and bring the work back to the U.S. until COVID-19 hit.

She stressed her continuing concern about "adversarial capital" taking over U.S. firms through shadow third parties controlled by China.

"We have made amazing inroads in coming back up to prior productivity levels" throughout the Defense Industrial Base despite the pandemic, although shipbuilding and aircraft production have lagged behind, Lord said.

The major concern is for aircraft manufacturers who supply the DoD, as well as the commercial aircraft industry, she explained.

"Those dual-use providers have been particularly hard hit," as air travel has cratered during the pandemic, Lord said.

In addition to defending against inroads by China, Lord said she intends to go on offense by boosting weapons exports.

"In the next six months, I very much hope to open the envelope, particularly on some of the weapons technology that we can export," she said.

Lord said she wants to "beef up what we're doing with" Britain, Canada and Australia.

"There are many others out there that we can work more closely with," she added.

-- Richard Sisk can be reached at Richard.Sisk@Military.com.

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