DEFENSE CONTRACTING

COVID-19 NEWS: Pentagon Expecting Three-Month Delays in Acquisition Programs

4/20/2020
By Mandy Mayfield

iStock photo

The Defense Department is anticipating three-month delays in major defense acquisition programs as companies grapple with the effects of the coronavirus pandemic, the Pentagon’s top weapons buyer said April 20.

“We do anticipate about a three-month slowdown … in terms of execution than we saw before,” Undersecretary of Defense for Acquisition and Sustainment Ellen Lord told reporters during a press briefing at the Pentagon. “We are just now looking at key milestones that might be impacted.”

The Pentagon is looking at schedule delays, inefficiencies and other problems for all major defense acquisition programs, she said. She did not identify specific programs that are expected to be delayed, but noted that aviation, shipbuilding and small space launch sectors have been hardest hit by the pandemic.

The Defense Contract Management Agency and the Defense Logistics Agency are tracking the industrial base’s top defense contractors and sub-tier vendors.

“Out of 10,509 major prime companies, 106 are closed with 68 companies having closed and reopened,” Lord said. “Out of 11,413 vendor-based companies, 427 are closed with 147 having closed and reopened.”

The Pentagon is also seeing supply chain challenges internationally.

“Particularly of note is Mexico, where we have a group of companies that are impacting many of our major primes,” she said.  "Today I am writing the Mexican foreign minister to ask for help to reopen international suppliers there.”

The companies currently closed in Mexico are of particular importance to the U.S. for airframe production, she noted.

Meanwhile, the Defense Department is hoping to receive additional funding through another coronavirus relief stimulus package, Lord said.

The Coronavirus Aid, Relief and Economic Security, or CARES, Act provided $2.2 trillion to stimulate the economy and help businesses affected by the pandemic. The package included billions of dollars to help bolster national security-related supply chains.

Defense officials are in talks with lawmakers and the Office of Management and Budget to receive additional funding to offset inefficiencies relative to contracting due to disruptions caused by COVID-19, she said.

“We are looking for something in the next CARES Act package, which is headed towards OMB shortly, ... and we are in active conversation with members [of Congress] and staffers," she said.

Lord did not disclose exactly how much money the Pentagon is seeking, but said it was "billions and billions" of dollars.

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,” Lord said.

Topics: Defense Department, Defense Contracting

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