Shipbuilding and aviation supply chains have been worst affected.
“I continue to use the words ‘slowdown’ and ‘impact,’ and did not say the word ‘delay,’ which carries a very different connotation,” Undersecretary of Defense for Acquisition and Sustainment Ellen Lord told reporters on June 22.
While Lord declined to discuss specific programs, she confirmed that there had been “inefficiencies across most programs,” with the pandemic shutting down manufacturing facilities and production lines, disrupting supply chains, and distressing the financial stability of the companies.
“We’re getting back up to speed,” she said. “We don’t know what that new normal will be on speed, but we see an enormous amount of recovery, and we think there’s roughly a three-month impact, but we will continue to monitor.”
Lord indicated that the three-month period she was talking about was April, May, and June, adding, “We see an enormous amount of recovery in the defense industrial base.”
Her remarks echo projections made in April, when the Trump administration had already taken various steps to shore up the industrial base.
Before widespread lockdowns were introduced, the Pentagon earmarked workers in the defense industry as critical infrastructure workers.
The department has also increased ongoing payments given to contractors for work already completed. The rate of what are known as progress payments for large contractors rose to 90 percent from 80 percent, and to 95 percent for small contractors from 90 percent.
“As of this week, we have processed over $2 billion in invoices at the higher progress payment rate,” Lord said. “We have spoken with each of our major prime companies, and they have confirmed their detailed plans to work with their supply chains to accelerate payments to identify distressed companies and small businesses.”
Of the 11,000-plus companies that the Department of Defense tracks in the defense industrial base (including logistics) just 33 are still closed, with over 800 having closed and reopened.
“Domestically, we have seen some minor improvements,” said Lord. “We continue to see the greatest impacts both domestically and internationally in the aviation and shipbuilding supply chains. Our acquisition and sustainment team remains focused on partnering with industry to maintain readiness and drive modernization.”
The effects of the “dynamic situation” will not be completely known for a while, Lord says.
“I stress that we expect our defense industrial base to follow CDC guidelines,” she said.
Like other sectors of society, the Pentagon has had to make other adjustments to cope with the pandemic, including canceling some joint exercises, limiting overseas troop movements, and adjusting some training requirements.
However, military leaders insist that their combat readiness is little affected and have warned adversaries not to see the pandemic as an opportunity to test U.S. military strength or resolve.
Some analysts have suggested that a flurry of recent U.S. long-range bomber expeditions, along with Naval exercises in the Pacific and Arctic were, in part, about demonstrating that the U.S. military is strong and healthy, despite the pandemic.