Lord: Industrial base report addresses supply chain 'fragility,' looks at dependence on single sources

By Marjorie Censer  / July 27, 2018

The defense industrial base report, which is at the White House, focuses on the defense supply chain down to "the granular level," according to the Pentagon acquisition chief.

At a roundtable with reporters at the Pentagon today, Ellen Lord said the industrial base report mandated by an executive order last summer is "in the final stages of interagency coordination and adjudication" at the White House.

"When the White House releases it, we'll provide a lot more details on findings and recommendations, but I will say that that work . . . was a pretty robust, interagency process really aimed at looking at fragility in the supply chain," Lord said.

"It's provided a framework for discussion with our industrial base, where I am very concerned that we have second sourcing in all of our critical components, where we understand where we are constrained in terms of volume," she added. "A lot of analysis going on and a lot of in-depth discussions with our industry base about what they need to do to make sure they understand the industrial supply chain -- not only at the first and second level, but four or five levels down, where we might have common suppliers and might be constrained."

Lord said the timing of the report's release is up to the White House, but she's hoping it will be issued within the next month. She called the document "really useful" and said she expects the Pentagon to undertake "a number of initiatives to address some of the challenges."

She said the report is focused "at the granular level" and includes discussions of metals, explosives and electronics.

"Probably the most challenging part of the report was segmenting the industry into meaningful segments," Lord added. "So you will see different materials segmented and then some more functionality in terms of different types of processes as well."

She told reporters it would also address suppliers based abroad.

"There is a large focus on dependency on foreign countries for supply, and China figures very prominently there," Lord said when asked specifically about whether China is addressed in the report. "However, it looks at areas where we are single-sourced -- regardless of whether it's domestically or internationally."

During the same roundtable, Lord touted her continued efforts to connect with industry. She said she is meeting quarterly with contractors through industry groups like the Aerospace Industries Association, the National Defense Industrial Association and the Professional Services Council. Lord noted she normally brings to these meetings about 10 representatives from the Pentagon; last time, she added, Deputy Defense Secretary Pat Shanahan attended.

"We have about two hours, and we go over topics of interest to industry and then we try to give them a flavor on what our objectives are, what constraints, what issues we see," Lord said.

Additionally, Lord said she continues to meet regularly with the six largest defense contractors.

"That's been very, very productive in terms of saying, what can we do more of, less of here in the department," Lord told reporters. "What should we stop doing, start doing, to make sure that we meet our common objectives? And that's really, again, to get capability downrange to the warfighter as soon as possible at the best value."