April 21 OSD call with the US Chamber and Associations Notes

OSD update: continue to protect the discussion and those speaking; expecting a robust discussion today; a federal register notice is out regarding a 100-day report on supply chain so ensure if you industry have input you respond.

DLA: NSC directed cloth distribution update: over 13-15 April DLA delivered 24M cloth masks to various states (2M shy of the 26M goal); 97.7% of re-useable gowns delivered and 99% of disposable gowns delivered; 57% of small business awards made to date; webinar for small businesses mid-month next month and info can be found at DLA.mil; 5 May industry association engagement during which DLA will share results from their supplier survey and will reveal forecasted requirements for remainder of this year.

Vaccines: DoD is not acquiring vaccines but is issuing vaccines to some. Soon P&R will issue a policy that will allow DoD installations to issue vaccines overseas to contractors and dependents. Cannot release details yet but the memo is in work. Question raised about covering host country nationals as well. Action taken to determine an answer on this and will report back. (In an exclusive OSD and DAEC call last Friday, OSD confirmed that the provision of vaccines is for all contract personnel and dependents deployed globally performing work under a DoD awarded contract which includes contractors and their dependents on contract with DoD to fulfill an FMS agreement with a partner or allied nation.)

DCMA: Limited COVID impacts—11 partial closures; no full closures at this time; small business—currently at $1.6M in contract actions with small businesses which is 89% of goal; FY2020 subcontract compliance review completed confirming $11.7B awarded to small businesses in FY20. DoD mentor protegee program that helps foster the development of new small businesses in the DoD supply chain—DCMA manages all protegee agreements and currently have 75 agreements in place with DIB primes. DCMA also reviews and approves all mentorship program credits with industry and overall manage this program. DCMA can provide more information on this program which is currently authorized to 2024.

DPC: 39% of COVID awards valued at over $9B to date; working with P&R on the vaccine memo for DoD contracted support globally and dependents as mentioned earlier. Discussion on FAR changes under EO 14005 made in America—OSD DPC currently in the policy change process thru July and rulemaking will follow after this July and will be posted for comment late summer.

Small Business: Army at $12B in awards which is 28.7% of annual goal; Army solicitation on the street for mentor protegee program as detailed by DCMA; no update from Navy; USAF at $37B set aside for small businesses and ~$6B awarded to date; USAF small business webpage was down for updates and is now back up on line.

Associations:

There was a question on minimum wage increase to $15. OSD is working with the NSC on data collected regarding impact. OSD is seeing the likelihood of an EO to mandate a change but to what level they are not sure. OSD will keep us informed.

Working capital fund question: Specific to DLA and the desire to accelerate DLA payments. DLA responded that the situation has not changed and not seeing the adjustment needed to the appropriations for their working capital fund and cannot speak to the pending DoD budget request and whether that request for FY22 will address this issue or not. So DLA remains unable to accelerate payments.

Question on DPA funding: Money will go to HHS vice directly to DoD; DoD will continue working with HHS to develop a spend plan—items anticipated are those around vaccine materials and supplies. Waiting for trigger from HHS to lock requirements and transfer funds to either OSD DPA office or other DoD buying components. Although OSD reported earlier that the bulk of the funds would move to DoD to execute, now sense most likely less than $10B will move to DoD to execute.

Note about EU restrictions on US goods moving to US installations for US personnel use via US carriers. Issue raised to USTR, EUCOM and P&R to engage the EU to ensure movement of material. OSD noted that there have been recent interagency discussions on a host of US EU trade concerns and asked the association who raised this issue to send them a paper which they will pass within the interagency.

A question was raised about increasing award of LPTA contracts and impact on the DIB. Section 813 of FY 2017 NDAA (I believe that was the reference). OSD just received some GAO input and OSD DPC is working to soon issue some additional guidance on LPTAs to address some growing industry concerns.

OSD was asked for an update on CMMC program. Window for CMMC review is soon to close and the team will prepare recommendations up the chain for consideration.

Chamber: I raised appreciation for vaccine support to expats in support of DoD contracts and asked if we will get copy of the P&R memo on this matter once signed? OSD confirmed that we will.

Latest News from the Hill and the Administration:

COVID Vaccines for Expats: In addition to the positive OSD P&R direction noted above and soon to be released direction, DAEC has been working within the Chamber to issue a letter to the Secretary of State seeking similar support for the broader expat contract community globally and dependents. Current State Department guidance informs our citizens to seek vaccination in the country of residence which is not acceptable. Once OSD P&R issues their final memo, we will sign out our letter to Secretary Blinken and will reference the OSD P&R direction to bolster our request.

Senate Foreign Relations Committee: Focus of the moment is the Menendez China Bill which is being marked up now and is a watch item for DAEC. SFRC staff are also watching for members to slip in numerous human rights mandates in this Bill and others specific to sales of US military equipment globally. Some members are trying to limit such provisions going forward. Senator Bill Hagerty, former US Ambassador to Japan, has directed his staff to look at FMS reform. He had his own opinions on needed FMS reform formed while in Japan and is pressing to legislate change. I have offered DAEC assistance to his staff to advise and support their efforts.

Senate Armed Services Committee: As the Administration has yet to deliver its full budget proposal, and with growing anger at the delay by members of Congress, we were told that a CR will happen and that staff have been told to cancel July 4^th vacation plans. The DoD skinny top line of $715B for DoD was expected. The matter of managing investments with a flat budget by in part canceling legacy programs is already creating Congressional and constituent “circling of the wagons” to protect various programs. SASC is growing more concerned with the marginalization or appearance of DoD being marginalized with respect to various program proposals and national security decisions. They too are seeing the rise of Sate Department and AID. SASC is considering legislating DoD collaboration on key programs if their concerns are not addressed.

Russia build-up: What initially looked like a typical Putin move to pressure Ukraine is now growing into a major concern given the latest imagery and reporting. Washington Think Tank crowd is conflicted on what Putin intends to do. NSC is growing more concerned with the President’s statements internally that Russia is a diminished and diminishing power which implies some in the Administration may be underestimating Putin and that although they are, they can inflict great harm regionally if not globally.

About the authors

Keith Webster

Keith Webster, president of the U.S. Chamber of Commerce’s Defense and Aerospace Council, guides the focus of the council to strengthen the U.S. defense and aerospace industries by influencing domestic and international policy on behalf of its members.

Read more