Pentagon Predicts Three-Month Major Program Delay

Credit: U.S. Defense Department

The Pentagon predicts there will be a three-month slowdown for major defense acquisition programs because of the novel coronavirus pandemic.

Aerospace, shipbuilding and small launch are the most vulnerable sectors in the wake of COVID-19, Pentagon acquisition executive Ellen Lord told reporters April 20. Out of the 10,509 major prime contractors, 106 have shuttered their doors, and 68 have closed and reopened. Of 11,413 vendor-based companies, 427 are shut down, with 147 having closed and reopened, she said.

Lord’s team has not identified specific programs but anticipates there will be schedule delays, she said. One of the measures the military is taking to support the defense industrial base is boosting progress payment rates to contractors, raising them for large businesses from 80% to 90% and for small businesses from 90% to 95%.

“Based on submitted invoices, we expect payments at the higher progress payments to start this week, helping provide $3 billion in increased cash flow to industry,” Lord said. “I commend Lockheed Martin and Boeing for both publicly committing to ensure this cash flow goes quickly down the supply chain to small businesses who need it most.”

The DOD is hoping other large defense contractors will make similar public announcements. The Pentagon’s small business program office hosted a webinar with more than 1,000 companies to address their unique concerns, she said.

Over the last few weeks, Lord’s team has focused on supply chain “illumination” tools and found “international dependencies.” Specifically, the defense industrial base is being hit hard by supplier closures in Mexico and India. Lord spoke with the U.S. ambassador to Mexico on April 17 and on April 20 was sending a letter to the Mexican foreign minister asking for help in reopening international suppliers.

The Pentagon also is hoping for additional aid from the American people via the second Coronavirus Aid, Relief and Economic Security (CARES) Act. Lord would not pinpoint a particular amount, but the money sought is incremental funding for inefficiencies related to contracting, Defense Production Act (DPA) Title III, the defense industrial base and medical resources.

In the inaugural CARES Act, DOD received $1 billion for DPA Title III, $750 million for medical resources and $250 million for the defense industrial base.

The DPA Title III medical resources priorities are N95 masks, ventilators, active pharmaceutical ingredients, testing kits, suppliers and reagents, vaccines and delivery systems. The defense sector focus areas for DPA Title III include machine tools and industrial controls, aircraft supply chain illumination, chem bio, directed energy, radar, munitions, missiles, space, shipbuilding, soldier systems and ground systems.

To date, the Defense Logistics Agency has provided more than 1.8 million N95 respirator masks, 3.2 million nonmedical and surgical masks, 54.8 million exam gloves, 8,000 ventilators and 275,000 isolation and surgical gowns to the military services, combatant commands, and several federal agencies, Lord said.

“We have ordered face coverings for the workforce, 3 million active duty, guard, reserve and government civilians with deliveries starting this week,” she said. “We expect 135,000 by the end of April and 580,000 by the end of May.”

For the first time ever, U.S. Transportation Command (Transcom) was able to use the Defense Threat Reduction Agency-developed transport isolation system to move three COVID-19 positive patients from Afghanistan to Germany. The system was developed in 2014 during the Ebola crisis.

“The joint staff, Transcom, and the Air Force continue to work to ensure that we can safely transport COVID-19 patients from overseas locations to the United States,” Lord said. “We just issued a memo that directs contracting officers to support a U.S. Forces Afghanistan memo to redeploy at-risk contractor employees due to insufficient medical capability in-country.”

The Pentagon anticipates this will affect fewer than 1,000 personnel.