Three-Month Delay in US Defense Acquisition due to COVID-19

Major Pentagon defense acquisition programs as a whole will face about a three-month slowdown due to COVID-19 pandemic.

“Of 10,509 major prime contractors, 106 are currently closed and 68 have closed and already reopened. On the vendor side, out of 11,413 companies, 427 are closed, with another 147 having closed and reopened,” Ellen Lord, the Under Secretary of Defense for Acquisition and Sustainment, said during a press conference yesterday in Washington.

She identified Mexico and India as problematic international supply chain points, “One of the key things we have found are some international dependencies. Mexico right now is somewhat problematical for us, but we’re working through our embassy. And then there are pockets in India as well.”

Lord said that shutting down assembly lines to allow for social distancing, coping with a smaller workforce and breaks in the supply chain as manufacturers of components struggle to keep on schedule, is disrupting production.

Lord noted that aviation, shipbuilding and small space launch sectors are the three hardest-hit by the COVID-19 pandemic within the defense industrial base.

She said companies in the coronavirus hotspots will be identified, so together they work out a way to “keep going to the greatest degree possible.”

The Pentagon is hoping to receive "billions and billions" of dollars of additional funding through Coronavirus Aid, Relief and Economic Security (CARES) Act. The package includes funds to help bolster national security-related supply chains.

Meanwhile, Kim Herrington, acting principal director for defense pricing and contracting, has issued 20 memos responding to industry needs.

“Those memos include guidance for increased telecommuting, increased progress payment rates, acquisition timeline impacts, relief for those who cannot work, and more,” she added.