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Colonel Gregory M. Tomlin, USA, is the Capability Manager for Division Artillery at Army Futures Command
In her address to the Eisenhower School student body at National Defense University in February 2024, Jennifer Santos, a former Deputy Assistant Secretary of Defense for Industrial Policy, stated that acquisition leaders can no longer afford to ignore the supply chain vulnerabilities of the industries contracted to provide materiel to the Department of Defense (DOD). By following Joint Capabilities Integration and Development System and Defense Acquisition System protocols, acquisition officials are accustomed to writing capability requirements, signing a contract with a firm to procure specific quantities of an item by a certain date, and then passing off to the firm the accountability for any increased costs or fielding delays caused by supply chain disruptions. Santos insisted that DOD must share responsibility for these troubles with defense industries by implementing a more rigorous program for supply chain risk management. She urged acquisition leaders to ask the prime contractors tough questions not only about which supply chain risks might impede their ability to fulfill orders on time but also about what they know about the supply chains of their third- and fourth-tier subcontractors.1 Only through this direct line of questioning will DOD gain an appreciation for the composite risks associated with procuring materiel from a defense industrial base that is very dependent on global supply chains.
The former defense leader is not alone in calling for improved supply chain risk management. Edward Barriball, a partner with the McKinsey and Company global management consulting firm, has warned that the supply chain disruptions that emerged during the COVID-19 pandemic are here to stay.2 Perhaps those vulnerabilities were destined to be inevitable byproducts of globalization, but it took the lockdown of entire countries and empty shelves in local stores to illuminate how one missing link in an industry’s supply chain could abruptly stall production and international trade. In fact, the business model for globalization deliberately built highly interconnected supply chains to keep costs down through the wide dispersal of the fabrication of parts and final assembly of products across those countries paying workers the lowest competitive wages. As Marc Levinson explains in The Box, “Integrated production yielded to disintegrated production,” thanks to the emergence of containerized shipping and just-in-time logistics, which keep on-hand inventories low in the warehouses of every firm contributing to final delivery of a good.3
To frame a deeper evaluation of prime contractors4—“primes”—and subcontractors by acquisition and sustainment leaders, DOD terms of reference would benefit from introducing a new concept: strategic supply chain. While the DOD Dictionary of Military and Associated Terms already includes definitions for supply chain and supply chain risk management, these terms are inadequate for thinking about the complexity of supply chain vulnerabilities to the defense systems most critical to the National Defense Strategy. This article thus proposes a definition for strategic supply chain and argues why it would be more beneficial to add the strategic modifier to a distinct new term than to revise the existing DOD definition of a supply chain. It continues by suggesting how DOD could apply this new concept to update defense policies, joint doctrine, and military education for all personnel involved in defense acquisitions and sustainment. Defining strategic supply chain within official DOD language would improve how program offices and decisionmakers scrutinize the firms chosen to fulfill orders on time and in the quantities necessary to meet the requirements of combatant commanders.
The Value of Terms of Reference
The DOD Dictionary provides the Office of the Secretary of Defense (OSD), Joint Staff, military Services, combatant commands, and DOD agencies with common terms of reference to guide the development of policy, strategy, doctrine, and planning documents.5 When terms and acronyms do not appear within this 300-page digital publication, OSD and Service representatives often find themselves talking past each other during Pentagon meetings. However, when each participant can refer to common terminology, the outcome of an inter-Service working group tends to be more fruitful. The Joint Staff and Services also rely on this dictionary to update the language within joint publications (JPs), Chairman of the Joint Chiefs of Staff Instructions (CJCSIs), Service regulations, and technical manuals used to educate the joint force.
The DOD Dictionary defines a supply chain as the “linked activities associated with providing materiel from a raw materiel stage to an end user as a finished product.” It also includes a definition for supply chain risk management: “A cross-functional approach to procuring, producing, and delivering products and services to customers.”6 While both terms are useful, these definitions suggest that the chain leading from raw materiel to a fielded product is linear, clear cut, and invariable. For a variety of reasons, this false assumption may be detrimental to the outcome of an acquisition or sustainment program critical to national strategy.
When it comes to planning communications for an operation, each Service identifies a primary, an alternate, a contingency, and an emergency (PACE) method to maintain command and control when networks deteriorate or when an adversary jams a signal. Similarly, acquisition and sustainment leaders should consider a PACE plan for maintaining an uninterrupted supply chain to source materiel for the joint force. Assistant Secretary of Defense for Sustainment Christopher Lowman included this requirement in the new Joint Concept for Contested Logistics because he recognizes that DOD will not be able to rely solely on a U.S.-centric solution for sustainment during a future conflict in Europe or in the Indo-Pacific region.7 By identifying where procurement, production, or delivery may be most susceptible to breaking down, logisticians will be able to consider alternatives and offer senior leaders options to mitigate risks before they authorize a contract with either a domestic or foreign-based defense industry. This requires strategic-level thinking.
It is not unprecedented to add the strategic modifier to define terms al- ready found in the DOD Dictionary by themselves. Strategic estimate, strategic intelligence, and strategic mobility appear separately from definitions of estimate, intelligence, and mobility.8 With the first group of terms, each definition specifies the need to consider the operational environment, formation of national and international policies, and capacity to sustain military forces worldwide. Left without the strategic adjective, strategic- and operational-level planners may narrowly apply tactical estimates, intelligence, and mobility considerations to missions vastly more complex than those conducted within the limited geographic boundaries of a tactical unit’s area of operations.
Strategic planners have a responsibility to consider second- and third-order effects of their immediate decisions and to understand how one deliberate action may influence others over a long-term planning horizon. Military historian Lawrence Freedman emphasizes the importance of fluidity and flexibility in developing a strategy, one that must constantly evolve by factoring in the impact of unanticipated friction to the initial plan of action: “This balance requires not only finding out how to achieve desired ends but also adjusting ends so that realistic ways can be found to meet them by avail- able means.”9 Freedman observes that while strategy is partially an art form, it also possesses a scientific dimension “in the sense of being systematic, empirically based, and logically developed, covering all those things that could be planned in advance and were subject to calculation.”10 This especially holds true when thinking about logistics at the strategic level of war.
DOD must look at acquisition programs through a strategic lens and proactively reassess ongoing procurement efforts by considering emerging threats to international manufacturing and shipping for the duration of a program’s life cycle. Decisionmakers must also consider the sustainment of these programs since delays in delivering repair parts or surging production for expendable items—including ammunition—could prevent a military Service from employing systems already available but unserviceable to achieve operational requirements. To elevate the importance of calculating risks to supply chains, it is time to add a DOD doctrinal definition for the term strategic supply chain:
The linked activities associated with procuring, producing, delivering, and sustaining materiel essential to achieving national security objectives. Strategic supply chains require constant reassessment to consider the prioritization of national resources on the basis of emerging vulnerabilities and sourcing opportunities.
This definition begins by specifying the twofold application of a strategic supply chain. First, it applies to the over- lapping Joint Capabilities Integration and Development System and Defense Acquisition System processes responsible for specifying capability requirements, selecting firms to develop and manufacture items, and ensuring they arrive wherever the joint force requires the items globally. Second, it applies to the materiel sustainment managers responsible for ensuring that defense industries maintain sufficient stocks of repair parts or have the surge capacity to keep systems operational in the harsh, austere environments where Servicemembers train and deploy. The second sentence in the definition emphasizes the fluidity of global markets, which must be reevaluated periodically because the factors that make a supply chain’s risk level acceptable at the time of signing a contract may not hold true 6 months or a year later. Harry Yarger from the Army War College explains that “the strategist must reject the expedient, near-term solution for the long-term benefit,” and this certainly applies to the life cycle of platforms such as the B-52 bomber and Arleigh Burke–class destroyer, which have remained in active service for decades.11
Vulnerabilities
Since the offshoring of manufacturing began in the 1980s, the Government Accountability Office has voiced concern about the resilience of the defense industrial base’s supply chains: “Without key monitoring and reporting information, DOD and Congress do not have sufficient information to help determine whether industrial base risks have been mitigated and what additional resources or actions may be needed.”12 Acquisition and sustainment leaders should strive to anticipate product-line closures, transportation disruptions, and spiraling input costs—like the ripple effect caused by the international spike in energy prices following Russia’s invasion of Ukraine. The unavailability of strategic supply chain inputs may be more detrimental to a firm’s long-term solvency than rising inflation, possibly forcing the total shutdown of lines of production.13 This especially holds true when considering the international subtier suppliers of the U.S. defense industrial base, since there are few, if any, alternative sources for technically sophisticated systems like the Javelin antitank missile or Q-53 counterfire radar.
Part of this deficiency lies with the lack of rigor applied uniformly by the military Services to supply chain risk management. The “Made in the USA” label often masks the “planetary collusion” required for final assembly of a military good by one of the “Big Five” defense industries in the United States.14 An astonishing 90 percent of all manufactured items involve sea transport for at least one component, and documentarian Dennis Delestrac describes popular ignorance about the millions of containers transiting the oceans as “sea blindness.” Most consumers remain oblivious to the origins of the components within the goods they purchase, let alone the identities of the shipping companies involved, and 90 percent of these firms are based out of European and Asian countries.15
Sea blindness extends to commercial industries as well, as evidenced by a 2022 McKinsey and Company study revealing that only 17 percent of companies have a “good picture of their supply chains down to the third tier or beyond.” This percentage was an increase from the mere 2 percent that reported affirmatively in a survey the year prior.16 More disconcertingly, many defense acquisition and sustainment managers overlook whether subcontractors will supply primes with materiel from trusted sources to complete orders on schedule.
A high-profile example of a rupture in a defense supply chain occurred in August 2022 when Lockheed Martin suspended production of the F-35, making headlines. The Defense Contract Management Agency discovered that one of Lockheed’s third-tier suppliers provided Chinese-made magnets to Honeywell Aerospace Industries, responsible for assembling and supplying turbomachine pumps to Lockheed for the plane’s engine. While a defense official confirmed that the magnet “does not transmit information or harm the integrity of the aircraft,” the realization emerged from neither the F-35 program office nor Lockheed Martin, the firm providing Joint Strike Fighters to the military Services since 2006.17 Given the plane’s employment by the Air Force, Marine Corps, and Navy to achieve national security objectives, the supply chain associated with its production and sustainment aligns with the proposed definition of a strategic supply chain for DOD. Had analysts determined that an adversary could exploit the magnets to interfere with the fighter’s electronics, then the entire F-35 inventory would have been grounded until replacement of the relatively obscure subcomponent inside each of the $80 million aircraft.
When it comes to procuring computer hardware and software, detection of supply chain vulnerabilities becomes significantly more difficult without detailed risk management training or procedures for acquisition officers. Indeed, a critical component to any DOD strategic supply chain will be assessing the integrity of information technology components. As risk management experts Warren Axelrod and Sukumar Haldar point out, this sort of compromise “can occur anywhere within the system development life cycle of the product or service.”18 Compounding this threat is the fact that it may take months to recognize malicious logic already programmed into the software of a Patriot missile or counterfeit hardware inside a reconnaissance satellite. Once again, visibility into the behavior of subcontractors becomes imperative because having adequate levels of security over third-, fourth-, and even fifth-tier suppliers presents a serious challenge.
While the primes recognize their protective role within the defense industrial base, the rising costs of cybersecurity prerequisites for defense systems may deter software companies from bidding on government contracts, particularly if sales to a defense industry generate only a minority share of their profits. Lockheed Martin cannot afford to lose the U.S. Government as a client, but a third-tier software developer may have little concern over passing on a contract to write code for the next scheduled F-35 modernization. Small niche firms struggling to make payroll for their employees may grow wary of supplying defense industries when they consider how an investment to meet additive defense cybersecurity measures could be applied to more lucrative commercial innovations instead. Consequently, DOD may not receive critical systems on schedule, as evidenced by Lockheed Martin’s announcement in January 2024 that the “Block 4” upgrade to the F-35 had to be postponed by 3 months due to unforeseen delays in soft- ware production and integration.19
To help DOD think through myriad supply chain vulnerabilities, the Office of the Assistant Secretary of Defense for Sustainment drafted a supply chain risk management framework in February 2023. The initiative provides a taxonomy of 12 risk categories and 126 subrisk categories for coordination between DOD and industry, in addition to interagency partners and academia. The authors explain the direct threat posed to national security: “Our adversaries are using supply chains as a nonstandard tool to engage in competition below the level of armed conflict.”20 This includes foreign influence through shadowy equity investments, hard-to-trace associations from mergers or acquisitions, infiltration deep within supply chain subtiers, and control of rare earth minerals. The taxonomy proposes definitions for 12 risk categories:
- foreign ownership control or influence
- political and regulatory
- economic
- environment
- product quality and design
- manufacturing and supply
- transportation and distribution
- financial compliance
- technology
- cyber security
- human capital
- infrastructure.21
If these criteria are codified by DOD, decisionmakers could weigh them before developing future capability requirements or selecting defense industries to provide systems critical to attaining national security objectives. Codification would also require updates to the policies and doctrine used to educate the acquisition, sustainment, and intelligence personnel who would become responsible for understanding and explaining strategic supply chains.
Codifying Into Doctrine and Practice
When choosing how to mitigate risk based on unforeseen changes to the operational environment, a military leader must be familiar enough with policy and doctrine to confidently know where to abbreviate the planning process or modify execution orders to achieve a desired endstate. Applying this principle to long-term supply chain resilience, McKinsey and Company urges firms to implement three measures: “creating a nerve center for the supply chain, simulating and planning for extreme disruptions, and reevaluating just-in-time strategies.”22 DOD would do well to apply these to manage the risk to supply chains associated with the procurement and sustainment of the materiel that the military Services depend on to fulfill responsibilities vis-à-vis the National Defense Strategy. This would also align with the third recommendation proposed in OSD’s supply chain risk management framework: “Expand on the work completed to date by developing additional proposed lines of effort and identified gaps within each.”23 By accepting shared terms of reference, OSD, the Joint Staff, the military Services, combatant commands, and DOD agencies could determine where it would be most effective to establish “nerve centers” to monitor and evaluate supply chains. This should not require establishing new agencies, but rather specifying additional requirements for existing program offices and intelligence centers to consider supply chain vulnerabilities as part of their staff recommendations and official decisions.
Whether drafting a capabilities development document, signing a procurement contract, or developing a life cycle maintenance plan, DOD must recognize that the cost, schedule, and performance of every program will be affected by supply chains. Which supply chains should be classified as strategic based on current national security objectives? Should structural changes be made to a chain to include dual or multisourcing options, or perhaps a shift from global to regional suppliers? Who determines the periodicity for reassessing the risks inherent to a strategic supply chain? How many subtiers require security checks to protect the integrity of a particular program? To answer these questions, DOD directives and instructions, JPs, and CJCSIs governing acquisition and sustainment programs must first include these considerations before they can be addressed through professional military education programs or adopted by joint and Service program offices.
It may seem premature to address strategic supply chains in the JCIDS process that generates joint capabilities requirements. However, specifying whether an American or partner-nation’s defense firm should produce materiel or manage sustainment for the entirety of its life cycle is just as vital as considering budgetary constraints when formulating and authorizing requirements. This would be valuable guidance for the defense acquisition community to receive before scoping prospective industries for procurement contracts. CJCSI 5123.01I, Charter of the Joint Requirements Oversight Council [JROC] and Implementation of the Joint Capabilities Integration and Development System, should be one of the first doctrinal publications to address strategic supply chains. The JROC’s mission includes “identifying alternatives to any acquisition program that meets approved joint military capability requirements.”24 Fast-paced proposals, such as the recently announced DOD Replicator initiative, may fall into this category of alternative acquisition programs to rapidly field unique capabilities.25 However, a desire to fulfill operational needs expediently should not negate taking precautions to protect the components of a new system from adversarial malice or to guarantee an uninterrupted supply chain to provide quantities on schedule to meet demand.
The JROC passes joint capability requirements to the Defense Acquisition System, a process designed “to acquire products and services that satisfy user needs with measurable and timely improvements to mission capability, materiel readiness, and operational support, at a fair and reasonable price.”26 To empower program offices to actively manage risk through data-driven analysis, the concept of a strategic supply chain should become an integral component of every step in the acquisition process. It is the only way to mitigate an embarrassing or potentially dangerous oversight like the aforementioned discovery in 2022 of Chinese-made magnets inside F-35s. Acquisition efforts to consider alternative industrial competitors, data rights, and open designs to enable upgrades should be authorized only once acquisition leaders examine proposals against OSD’s 12 criteria for supply chain risk management.
DOD Directive 5000.01, The Defense Acquisition System, governs the Defense Acquisition System, but the policy does not mention supply chains once within the document. Neither does CJCSI 2120.01D, Acquisition and Cross-Servicing Agreements, which provides guidance on how combatant and subunified commands can expedite the acquisition of logistic support, supplies, and services (LSSS) from other countries and international organizations to support U.S. forces deployed outside the United States.27 Crises will require joint commanders to find time-sensitive LSSS solutions to sustain newly arriving forces in a geographic area of operations, and U.S. staffs should pose direct questions during coordination with host-country governments or firms about their subtier suppliers. Adding a section about strategic supply chains to this CJCSI would encourage logistics planners to factor its risk management into their staff estimates and recommendations to the commanders awarding contract funding.
To sustain U.S. forces overseas, distribution plays an integral role in the time-phased calculus for force deployment or, once in theater, employment. JP 4-09, Distribution Operations, includes two paragraphs explaining the importance of supply chains and reminds commanders that they must quantitatively “assess the risk to and plan for the protection . . . of materiel.”28 This publication would benefit from an expanded discussion about the role of commercial shipping, international rail, and host-nation trucking within strategic supply chains. Without the mobilization of mothballed Merchant Marine fleets and ground logistics units within the Army Reserve, combatant commands will continue to depend on commercial transportation firms to meet sustainment requirements. Therefore, logistics planners need to consider whether they could count on the availability of Asian-owned cargo vessels if war were to erupt in the Indo-Pacific region or enough Deutsche Bahn flatcars in Europe to transport Abrams tanks to battle positions according to war plan timelines.
To change the joint culture to make strategic supply chains a principal planning consideration rather than a crisis to react to when a link breaks in execution, foundational joint doctrine should introduce this topic to officers who think it remains someone else’s staff problem. For example, JP 4-10, Operational Contract Support, does not mention supply chains at all, yet it outlines the process of “planning for and obtaining supplies, services, and construction from commercial sources” in support of joint and military Service operations.29 JP 4-0, Joint Logistics, states that the “Services and DLA are primarily responsible for DOD supply chain operations and manage the supply processes to provide common com- modities and services to joint forces.”30 However, this overlooks the role of the Defense Contract Management Agency and, as proposed in this article, the JROC. JP 2-0, Joint Intelligence, briefly describes U.S. exploitation of the supply chain of an adversary’s capability, but it would be helpful also to define roles for the Defense Intelligence Agency and National Security Agency to assist program offices in verifying the security of subtier suppliers to strategic supply chains.31 JP 5-0, Joint Planning, does not mention supply chains, but this publication should at least briefly encourage operational planners to consider the vulnerability of global manufacturing and distribution when developing feasible contingency plans.32
Finally, strategic supply chains would be a valuable concept to factor into the defense budget process because the costs for raw materiels, manufacturing, and transportation fluctuate as economic, environmental, and political pressures affect businesses. Critics of defense spending often cite program budgets ballooning from the initial acquisition proposal and supply chains for repair parts as being “rife with price gouging.”33 Sometimes, inflationary spikes, energy prices, or regional conflicts cause goods to cost more than the original contract anticipated. Other times, the rising costs could have been avoided through a more exhaustive supply chain risk management analysis early in the acquisition process or by periodically reevaluating vulnerabilities over a program’s life cycle.
When the costs for repair parts for a decades-old aircraft or vehicle increase two- or threefold, military Services may not be able to afford purchasing new platforms because the sustainment costs engulf the program’s budget. The planning, programming, budgeting, and execution commission proposed that OSD and the military provide a semiannual review of the DOD budget “covering budget execution and identifying new developments that impact the budget proposal currently before Congress.”34 This may help Congress to understand why program costs change over time, and the process would benefit from a shared understanding of the links within strategic supply chains.
Linking Supply to National Security
As the United States emerged from the COVID-19 pandemic, National Security Advisor Jake Sullivan assessed that “more secure and resilient supply chains are essential to our national security, our economic security, and our technological leadership. The work of strengthening America’s critical supply chains will require sustained focus and investment.”35 Yet data collected by McKinsey and Company from 113 international supply chain leaders revealed that many firms “still lack a comprehensive picture of the risks lurking deep inside complex multitier supply networks.”36 The same prevailing concern applies to the strategic supply chains underpinning the most critical defense systems required for the National Defense Strategy. Aid to the Armed Forces of Ukraine and Israel Defense Forces currently fighting regional conflicts places further strain on the same defense industrial suppliers that the U.S. military Services depend on to keep depots, motor pools, airfields, and Navy yards stocked. Since global challenges are not likely to diminish in the years ahead, DOD supply chain risk management would benefit from adopting a flexible and adaptive strategic-level approach suit- able for long-term analysis.
Strategic supply chains are more than a logistician’s responsibility, and defense leaders can no longer afford to place the blame for supply chain disruptions squarely on the shoulders of the defense industrial base. For acquisition and sustainment leaders to be empowered to make informed decisions, they must be presented with supply chain vulnerabilities during staff analysis and receive periodic updates to reevaluate risk. Adoption of a new strategic supply chain concept and its integration into joint doctrine will lead to updates in the military Service and DOD agency doctrine needed to improve the uniformity and quality of analysis across the defense enterprise. Joint culture may not change immediately, but shared terms of reference will be an important step in generating a cross-cutting conversation among all people who—whether they realize it or not—play a vital role in protecting DOD strategic supply chains. JFQ