3 March 2021 OSD Call Notes

Overview: Mr. Salazar was introduced. Joined two weeks ago. “Previously worked in advanced industries focused on robotics, electronics, automotive technologies, semiconductors, etc. Here to strengthen DIB and spent some time over last year with elements of the DIB to look at COVID impacts and resilience. Thanks to all for working in the DIB and sees MIBP as the key liaison with the DIB and will continue these discussions and will have an open line. This forum has proved invaluable engagement and we are reaching the one-year mark for these meetings on 17 March.”

Acting Executive Director International Cooperation: April 2020 review of the national defense strategy was conducted to look at options to expanding industrial cooperation. Several working groups formed and they developed 37 initiatives. SecDef Esper signed out a memo to implement these recommendations last Fall. Four focus areas: designing exportability—rewrite of 5000 series to build in doing so in milestone decisions; new business rules to make ATTRSG better; capturing market share—FMS dashboard to track the most important FMS cases thru execution/delivery; improving predictability of international demand to inform industrial capacity. These 37 initiatives were “concluded” by January of 2021. “Not completed, but well underway”(mixed message here). They have not briefed the new leadership on this effort yet, but believe that much of the progress is embedded. U.S. participation in EU funded programs—DoD has been working closely with EU members and NATO to adopt third state guidelines to allow U.S. industries to participate in PESCO programs. Most recently the U.S. approached the Netherlands to join a PESCO program and waiting to see what the response is—this is serving as a first test case.

DLA: solicitation released for cloth masks for HHS with a requirement to deliver 26.6M masks for a number of fed centers and food banks, closes 21 March, to supply in June 2021; RFI just posted on PPE domestic manufacturing to understand domestic ability to manufacture PPE that can address certain microbe threats, closes March 18^th and this is only to understand U.S. capacity for this specific need. DIB--tracking zero closures and looking for other ways to assess the health of the DIB such as tracking delivery date performance; welcome thoughts from industry on how to creatively measure the health of the DIB beyond closures and missed delivery dates. $13.5B awarded to date to small businesses which is roughly 40% of 2021 DLA small business goal. Working with their industries on the potential impact of an increase to the minimum wage—textile industries seem to be the hardest hit if there is a wage increase mandate.

DCMA: COVID impacts to DCMA DIB—like DLA zero closures, of the 10,509 entity codes DCMA tracks they see about 11 short term impacts mostly representing smaller companies; 2013 corrective action request policy (CARs) and noticed compliance challenge. DCMA decided in 2020 to issue CARs directly to primes with info to subcontractors to try a different approach to correct deficiencies (vice previously issuing CARs directly to subcontractors with info to prime contractors). New paper issued and we have that for background. Further developing a new CARs guidebook and the contents will be discussed with industry but this is not a DFARS matter thus an internal guidebook that will not be released in whole to industry. (much discussion on this policy and associations seeming to have major concerns as expressed to OSD during this call).

DPC: over 23 DFARs cases being worked to implement changes in NDAA 2021; industry inputs being considered and welcome; sessions planned with various associations next week and their advance questions have been provided to DPC.

Small Business: Air Force, of $25.9B set aside they have obligated $4.9B to small businesses to date; with Space Force up and running, the USAF small business office has been directed to support the Space Force small business needs until they get their own small business team. USAF hiring personnel to augment the mission in their small business office. No update from the other Services.

Associations and Chamber:

1. Welcome to Jesse Salazar; Director IC was asked if notes on the 37 initiatives would be provided (action taken); EOs getting some traction and engaging the NSC and wondering how the various departments will work the two EOs—supply chain and buy America. Can these two EOs be added to this group discussion as we would like to be part of that evolution? OSD response--DPC has lead on buy America and MIBP will have lead on Supply Chain EO. There is a concern on component test regarding valuation and working process to ensure limited disruption.
2. I asked about RDP MOUs—OSD agrees they remain in effect and have been working to ensure they remain so. I asked about the added requirement in NDAA 2021 that expands the OSD supply chain reporting requirement to include details of DIB supply chains with Allies and that I view this expanded reporting as a positive do they agree?—OSD agreed this is a positive change to the report. Finally, I noted that on the matter of designing in exportability requirements that lack of money at the Service PM/PEO level was always the hard stop and what has changed with the matter of resourcing this requirement which must be getting harder given the planned cuts to the DoD budget—OSD agreed this remains the number one challenge and will remain so.
3. NDAA 2021 language on contract financing and recent article the DoD has contracted with universities to study and advise on this matter—OSD responded that they contracted with three Universities. OSD will add this topic to the next session which will be conducted on 17 March 2021.

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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