April 7OSD Conference Call & News from the Administration

Overview:

• As a reminder, they will not comment on material shared in these calls. They’ve received several inquiries about this.
• The new Small Business Director within Industrial Policy joined the call to update us on their agenda. He started in February as the Director of Small Business Programs, originally an attorney from Florida but moved to DC in 2011 to work for the Obama Administration. He’s interested in pursuing accelerated payments. He wants this office to regain an influential position in the pentagon and to communicate better with industry. He hopes to bring more long-term ability to the program in addressing capability gaps, vulnerabilities, and hopes to bring in more small businesses to the supply chain.

DLA:

• PPE Buys: 3 contracts have been awarded. Closing out on reusable gowns shortly (96% delivered) and disposable gowns (94% delivered).
• They received 2800 responses from across the supply chain on their DLA business survey. What they’ve learned is that DLA has seen improvement in communication and a decline in growth and profit potential. They attribute the challenging fundraising environment to the pandemic. On May 5 they will be hosting a call to discuss the results of this survey in full; DAEC will attend and report back.

DCMA:

• There are currently 11 facilities impacted by COVID-19, 1 facility is closed. This is the first closure in several weeks. Most impacts are due to high quarantine rates and COVID-19 outbreaks.

DPC:

• CARES ACT 3610 Authority and Class Deviation: American Rescue Plan Act: reimbursements will continue through September 2021. These continue to be processed on a limited basis, using that authority.
• Last week they hosted a tri-industry association discussion on vaccine policy, specifically allocations to our contractors in the DIB. They have no new policy updates to report on. They’ve used this discussion to continue to work with the Office of Personnel Readiness at the Pentagon as they publish their Return to Work policy, which is relevant to vaccine distribution.
• They brought up DAEC’s inquiry earlier in the week regarding a variant of that policy. DAEC asked about allocations for U.S. expatriates employees of multinational corporations. They addressed this lightly: American citizens abroad who are not employed on DoD contracts are not eligible or authorized to receive the COVID vaccine from the DoD allocation. They did look to various US embassies to understand the extent to which vaccines may be allocated to these employees and found that the U.S. has no plan to provide to private citizens over-seas. They have agreed to host a follow-up discussion on this with DAEC on this matter.

Small Business:

• Army: Small business obligated $11.4 B to small business, which is 28.6% of their total spend. $3.8b of that $11.4 was awarded to combat COVID-19. A live forecast for the fiscal year is available on their website: this captures installation support, weapons platforms, etc.
• Navy: Had no updates.
• Airforce: $6B obligated to small business, which is 17% obligated of their total spend.

Associations and Chamber:

• Q: Is there anything OSD is looking at with respect to supply chain that associations can do to support DOD and the Task Force?
• Q: Is there any more information you can share regarding DPA Title 3?
• Q: What is the availability of COVID vaccines for dependent families in the U.S. of those deployed for combat: “combat readiness is family readiness”.

Latest news from the Administration:

DIU’s Mike Brown as USD A&S nominee: Inside sources tell us that Dr. Ash Carter pushed hard for Mike and that SecDef Austin made it clear that this was a personal choice nomination to his team and also pushed hard. The good news is that Mike comes into the position with strong personal support of his boss as well as a party insider (Dr. Carter). We are seeing a pattern with respect to A&S nominations whereby individuals have a clear innovation background and will be given an innovation mandate. We are not sure how this will fit with R&E—another critical nomination we are told DepSecDef Hicks is working.

https://www.defense.gov/Our-Story/Biographies/Biography/Article/1807001/michael-brown/

Christine Wormuth: It has been reported in the press recently, in numerous articles, that Christine will be nominated as Secretary of the Air Force. Our sources have made it clear since earlier this year that her nomination will be as Secretary of the Army. As to who will be nominated to the other Service Secretariat positions--your guess is as good as ours. Members of Congress are beginning to openly express frustration with the lack of nomination transparency as they stand ready to help President Biden succeed in clearing various nominations.

DAEC transition paper: State Department has formally acknowledged receipt of our paper. The Office of the Secretary of Defense reached out to discuss at length our recommendations. DepSecDef Kath Hicks has assigned our paper to DASD Industrial Base Policy Jesse Salazar who reached out to us last month. He is tasked with ensuring the various actions are directed to OUSDP, OUSD R&E and he will work the recommendations that fall within the OUSD A&S. We are committed to continue the discussion as our paper is worked in the coming months.

NSC CAT Policy Review: The NSC has started their work to rewrite NSPM-10 signed April 2018 and reached out to DAEC for input. Our formal response to the NSC staff was dated and transmitted 28 March 2021. We received acknowledgement and a promise to continue working with us over the next few months as they work their version of the CAT Policy. Fundamentally, we have strongly suggested they retain the section specific to the economic impact of sales to our industries and not revert back to prior CAT policies that suppressed this consideration in favor of such issues as human rights and regional balance of power. Both of which of course matter, but we ask for continued equal consideration of the economic impact matters especially in anticipation of reduced domestic defense spending.

The Role of DoD in national security: Our inside source who is advising the President has shared the following. This President and his administration have stated that since 1989, DoD was the prominent agency supported by all others and that the United States has been the most warfighting nation in recent history. Thus, the State Department will be the prominent Agency under this President supported by all others including DoD. Hence, it was no surprise that when President Elect Biden publicly revealed his national security team, the SecDef was absent (yes, there was debate as to whom that nominee would be, but this was a move to message this philosophical shift). Why is this important? The ability of the Defense Department to influence strongly international sales decision is now diminished. The NSC, and State Department will be the prominent deciders and will be cautious with respect to any DoD endorsements.

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.

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