WASHINGTON — Supply chain challenges that have disrupted military satellite programs, while initially seen as temporary, have emerged as systemic and exposed gaps in the U.S. defense industrial base, said Lt. Gen. Philip Garrant, head of Space Systems Command.
“Coming out of COVID, we thought a lot of these supply chain issues were COVID issues,” he said last week during a meeting with reporters. “What we’re realizing is this is more than COVID; there are true industrial base concerns.”
Garrant said the Space Development Agency’s (SDA) low Earth orbit constellation project has become a revealing case study of the difficulties vendors face when demand ramps up. As DoD transitions from traditional bespoke satellite programs to proliferated commercial-like constellations like the one SDA is building, that means “we need a lot more of those parts,” Garrant said. “That’s a rather simplistic view, but it’s very, very factual.”
SDA Director Derek Tournear said the agency has taken unprecedented steps to address the problem by directly engaging with lower-tier suppliers and offering contracts to incentivize production capabilities.
Similar problems have been identified across other sectors of the defense industry, from munitions to microelectronics.
A major hurdle lies in the Pentagon’s limited oversight of its vast and fragmented supply chain. Prime contractors may be aware of their major suppliers but often lose sight of lower-tier subcontractors, which are crucial to production. This blind spot has left the military exposed to delays.
The Defense Department also has become increasingly concerned about foreign dependency in critical supply chains, particularly those tied to adversaries like China.
China has systematically built dominance in the production and processing of rare earth elements, lithium, and graphite — materials vital to defense systems and green technologies, said Frank Finelli, a senior advisor at the Carlyle Group. Speaking at last week’s Baird Defense & Government Conference, he said China’s global agreements have locked up supplies of these materials, putting the U.S. at a strategic disadvantage.
“We have a lot of single-source Chinese suppliers in our supply chains, and in a lot of cases, we’re not aggressively doing anything about it,” Finelli said.
Pentagon’s response still in its infancy
Efforts to shore up the defense industrial base are gaining momentum but remain nascent.
“We’re in the infancy of this,” said David Rader, a senior advisor to the Defense Innovation Unit,
The recently launched Office of Strategic Capital, which offers loans to companies producing critical components, is one initiative aimed at filling gaps in the lower tiers of the supply base.
“There’s a growing recognition of the link between capital and national security,” Rader said, citing emerging public-private partnerships and interdepartmental coordination.
However, progress has been hindered by political disagreements over the government’s role in industrial policy, Rader noted. While Republicans in Congress often criticize such measures as government overreach, Democrats have labeled them as corporate welfare.
The Pentagon is pushing for a more self-reliant domestic supply chain, as outlined in its newly released industrial base strategy. But achieving that vision will require sustained funding, bipartisan support, and collaboration with allies and private industry, Rader warned. “We see what China is doing, and we do not want to be on the wrong side of this.”
