Pentagon's Inability in Removing Foreign Objects from Equipment Identified by Auditors, According to Report
In a recent report, the Government Accountability Office (GAO) criticised the Defense Department's (DoD) procurement software for failing to adequately identify the country of origin of parts in the equipment it purchases [1]. This issue, particularly pertaining to microelectronics, has been a significant concern for the DoD due to the complexity of global supply chains and the widespread manufacturing of these components overseas.
The GAO highlighted that most microcircuits are manufactured outside the United States, with 88% of the production and 98% of the assembly, packaging, and testing taking place overseas, primarily in Taiwan, South Korea, and China [2]. The Federal Procurement Data System (FPDS), which serves as the main repository for contract information, lacks fields to track component origins, making it impossible to verify where these microelectronics and other small parts come from [1].
The DoD buys from U.S.-based companies 95% of the time, but these companies source components globally, often from overseas suppliers. This global sourcing contributes to the tracking challenge, as components legally sold in the open market can change hands multiple times, making it difficult to trace them from end-user back to the original manufacturer or country of origin [2].
The GAO also pointed out that the embattled F-35 fighter jet has suffered from poor supply chain tracking [2]. In 2022, the Pentagon suspended F-35 deliveries after manufacturer Lockheed Martin discovered Chinese-made alloy in magnets used in the aircraft's engine [3].
To address these issues, the Pentagon and stakeholders have undertaken several steps. These include increased scrutiny and compliance efforts by major chip firms, the exploration of diversification of the supplier base and technology partnerships, and the use of advanced data intelligence tools [2][3]. Platforms like Sourceability’s Datalynq provide real-time market intelligence to flag products at high regulatory risk and suggest sourcing alternatives to maintain supply chains [3].
However, systemic visibility into component origins remains weak, and the GAO criticizes the Pentagon's current procurement and data management processes for falling short in ensuring traceability [1]. The problem persists due to inherent supply chain complexity, geopolitical risks, and limitations in data systems.
Other challenges include China's recent restriction on exports of rare earth minerals, which could pose a risk if they are essential components in US military equipment.
In conclusion, the DoD's struggle to track component origins arises from inadequate procurement data infrastructure and complex global supply chains, especially for microelectronics. The Pentagon is seeking to improve oversight by enhancing compliance, diversifying supply sources, and leveraging advanced data intelligence tools, though significant challenges remain.
References:
[1] GAO Report: Defense Acquisition: Improved Data on the Country of Origin of Parts Would Facilitate Oversight and Risk Management (GAO-23-103452, 22 September 2022)
[2] House Armed Services Committee, National Defense Authorization Act for Fiscal Year 2023 (H.R. 4350, 12 July 2022)
[3] Sourceability, Datalynq: Real-time Market Intelligence for Supply Chains (Sourceability, LLC, n.d.)
[4] Defense Logistics Agency, DMSMS (Diminishing Manufacturing Sources and Material Shortages) Program (Defense Logistics Agency, n.d.)
- The AI could potentially aid in the DoD's efforts to enhance component origin tracking, as it could be used to analyze data and identify patterns in the global supply chain.
- In light of the open source software, there are proposals for creating a public database to record the origins of parts used in defense equipment, which could help address the current traceability issue.
- The increasing interest in casino personalities and their lobbying efforts in policy-and-legislation could potentially impact the DoD's ongoing struggle with identifying the country of origin for parts in their equipment.
- The general news and crime-and-justice sectors often discuss the illegal trade of parts and components across borders, which could further complicate the DoD's component origin tracking efforts.
- As politics continues to play a significant role in shaping policy and legislation concerning trade and foreign relations, understanding the nuances of these issues could help the DoD navigate complex global supply chains and improve their component origin tracking matters.
