Securing America's Defense Supply Chains and Ensuring Domestic Acquisition of Critical Materials

Despite the longstanding prohibition on the use of sensitive materials sourced from geopolitical adversaries, defense contractors have historically under-prioritized domestic production and resilience. My Administration will act to ensure that the statutory requirements of 10 U.S.C. 4872 are strictly observed and result in resilient domestic and allied supply chains.

(b) The Secretary may continue to issue waivers under 10 U.S.C. 4872(c)(1) or (e) that would otherwise be prohibited under subsection (a) of this section for the acquisition of covered materials under 10 U.S.C. 4872, provided that the prime contractor or subcontractor submits to the Secretary or his designee a formal mitigation plan, accepted by the Secretary or his designee, that clearly:

(i) identifies the source of the covered material that would not be compliant with 10 U.S.C. 4872 absent a waiver;

(ii) documents evidence of exhaustive efforts made to acquire compliant covered material or demonstrates that compliant covered material was not available at the time of the acquisition of the non-compliant covered material;

(iii) describes the steps to be taken by the prime contractor or subcontractor to remove the non-compliant covered material from its supply chains; and

(iv) establishes a strict projected timeline for complete implementation of the mitigation plan.

(c) A prime contractor's or subcontractor's failure to qualify a domestic source of covered material shall not constitute non-availability for purposes of a waiver under 10 U.S.C. 4872(c)(1), except in such cases in which a prime contractor or subcontractor demonstrates active, adequately funded, and ongoing efforts to qualify a domestic source of the covered material at issue.

(d) If the Secretary determines a prime contractor or subcontractor has engaged in fraud or deliberately misled the Federal Government in any part of its mitigation plan, or otherwise knowingly or willfully failed to implement its mitigation plan on the terms set forth and approved by the Secretary or his designee in the mitigation plan, the Secretary shall take all actions and exercise all contractual remedies the Secretary deems appropriate, consistent with applicable law. The Secretary may additionally refer the matter to the Attorney General for investigation and possible prosecution as appropriate.

(e) Within 180 days of the date of this order, the Secretary shall provide the Assistant to the President for National Security Affairs a list of generally available actions and contractual remedies that have been taken or may be taken or exercised to address knowing or willful noncompliance by prime contractors and subcontractors.

(f) The Secretary shall review the Department of War's present application of the exemption for electronic devices under 10 U.S.C. 4872(c)(3)(B) and ensure the continued application of that exemption meets current national security needs.

(b) The proposed regulations promulgated pursuant to subsection (a) of this section shall include requirements that:

(i) contractors must submit to the Department of War a complete indentured Bill of Materials that traces all components, parts, equipment, software, and materials back to the origin of raw materials in their supply chains;

(ii) contractors must establish and implement written procedures, in accordance with existing Department of War procedures for conducting supply chain risk assessments, to proactively vet all suppliers and subcontractors that support the critical supply chain; such vetting for critical supply chains shall, at a minimum, include screening of subcontractors and suppliers for the following categories of supply chain risks and challenges:

(A) financial, as defined in section 7(c) of this order,

(B) foreign ownership, control, or influence, as defined in section 7(d) of this order, and

(C) manufacturing and supply, as defined in section 7(e) of this order; and

(iii) subject to the exception contemplated by section 6(a) of this order, prohibit contractors from utilizing in their supply chains covered material supplied by an unreliable foreign supplier, as defined in section 7(f) of this order.

(c) The proposed regulations promulgated pursuant to subsection (a) of this section shall require contractors, upon completion of the vetting activities described in subsection (b)(ii) of this section, to:

(i) implement timely mitigation actions, including those identified in the required Supply Chain Risk Management Plan pursuant to Contract Requirement Data List DI-MGMT-82256A, to reduce the likelihood or impact of each identified risk;

(ii) track active mitigation actions until closure;

(iii) within 15 days of completing the vetting activities, notify the Department of War of any significant supply chain risks identified by the vetting activities;

(iv) within 45 days of completing the vetting activities, submit a written, confidential corrective action plan detailing implemented mitigations and a strict projected timeline for complete implementation of the corrective action plan; and

(v) submit a closeout report upon completing the corrective action plan.

(d) The Department of War shall, in response to the vulnerabilities, bottlenecks, and single points of failure identified by contractor acquisition information, map national security vulnerabilities as they relate to the sourcing of key raw materials or other links in the supply chain, using any tools and technologies to include artificial intelligence to assist in doing so. The Secretary shall account for identified vulnerabilities, bottlenecks, and single points of failure before issuing any waivers under 10 U.S.C. 4872(c)(1) or (e), consistent with the requirements of section 2 of this order.

(i) identify, in his sole discretion, all existing acquisitions by the Department of War that support, implicate, or relate to United States national security; and

(ii) require contractors who, in delivering the identified acquisitions, rely on supply chains that include material or components supplied by an unreliable foreign supplier, to, as soon as possible, consistent with law, safety, mission requirements, and existing contract requirements, qualify and utilize an alternative source for the material or components supplied by the unreliable foreign supplier, except in cases where no such alternative source is available.

(b) A contractor's failure to qualify an alternative source under subsection (a) of this section shall constitute grounds, consistent with law and existing contract terms, for the Secretary to consider suspending or terminating task orders, declining to exercise contract options, and terminating the existing contract.

(c) Within 90 days of the date of this order, the Secretary shall develop a strategy to accelerate testing and qualification of new sources and materials by prime contractors and subcontractors at any tier. This strategy shall include developing new software, technical testing procedures, qualification methodologies, and resources. As part of this strategy, the Secretary shall identify and begin steps to rescind any regulations that prevent rapid testing and qualification of sources and materials necessary for defense production.

(i) any continued use of waivers by prime contractors or subcontractors under 10 U.S.C. 4872;

(ii) the number of mitigation plans accepted under section 2(b) of this order and the progress made by relevant contractors to complete the commitments outlined in their relevant mitigation plans; and

(iii) progress made on implementing the regulations required by sections 3 and 4 of this order, as well as the acquisitions to be covered by those regulations.

(b) The report may include a classified annex if the Secretary determines that national security considerations so require.

(b) The sale of critical materials or components by Project Vault to a contractor or subcontractor shall not be construed as a credit sale of a defense article or service for purposes of 12 U.S.C. 635(b)(6)(A).

(c) Nothing in this order shall be construed to impair or otherwise affect the acquisition by a contractor or subcontractor of critical minerals or components produced by a company or project receiving grants, financing, loans, equity investment, or other such support from the Department of State, the Department of War, the Department of Commerce, or the Department of Energy.

(a) The term “critical supply chain” means all tiers of suppliers and subcontractors providing goods, materials, systems, software, or services that are essential to contract deliverables, mission assurance, security, or resilience, as defined by the Secretary.

(b) The term “indentured Bill of Materials” shall mean all the components, parts, equipment, software, and materials back to the origin of raw materials collected during the design, development, and initial fielding process of a system or end item. This term includes data for maintenance planning, logistics design requirements, reliability and maintainability, system safety, maintenance engineering, cost, cataloging, item management, and in-service feedback. The indentured Bill of Materials will require a standard format, content, and data pursuant to contract data requirement list data item descriptions (DIDs) and will have intended use as outlined in the DID. An indentured Bill of Materials may be disclosed to contractor personnel performing under a Department of War contract, notwithstanding any other provision of law, if the disclosure is necessary for the covered Federal Government support contractor to furnish independent or impartial advice or technical assistance directly to the Federal Government in support of the Federal Government's statutory authorities to include the promulgation of policy, management, and oversight of the program or effort to which the sensitive information relates; is within the scope of the covered contracts with such contractors; and the contractor and contractor personnel to which the information is disclosed will appropriately protect proprietary information from unauthorized disclosure or use.

(c) A “financial” supply chain risk or challenge means a situation in which a supplier cannot generate revenue or income resulting in the inability to meet financial obligations. Financial distress can lead to the inability to meet contractual obligations, hostile takeovers, or bankruptcy.

(d) The term “foreign ownership, control, or influence” means a foreign interest has the power—whether through direct or indirect control, whether or not exercised—to direct or decide matters affecting the management or operations of a company in a manner that may result in unauthorized access to information or may adversely affect the performance of contracts or programs which support national security.

(e) A “manufacturing and supply” supply chain risk or challenge means either a single supplier, economic sector, or market cannot meet market demand. This can be due to reduced throughput or production delays caused by capacity constraints, obsolescence, industrial limitations, market conditions and the supplier's practices across those markets, disrupted material delivery, and other conditions. Additional concerns include availability of supply, capacity to surge, sole-source, and concentration within or over-reliance on a single source.

(f) The term “unreliable foreign supplier” means any person subject to the foreign ownership, control, or influence of a covered nation as defined by 10 U.S.C. 4872(f)(2), or a nation otherwise designated by the Secretary.

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

(d) The costs for publication of this order shall be borne by the Department of War.