September 16 OUSD Conference Call Notes

OSD A&S:

• Last week convened the first defense technology and trade initiative DTTI Industry collaboration forum under the new DTTI engagement program to advance industrial collaboration.
• This virtual event was attended by over 100 industry and government reps from both the U.S. and India; HON Lord also had a bilateral meeting with her India counterpart; discussion on the matter of as late as 2nd quarter 2021 availability of pandemic funds to reimburse the DIB consistent with HON Lord press release last week.
• Lord briefed the HASC last week regarding the DIB and how to build a safe and secure DIB, update on DPA Title 3 activity as well as other matters including the annual Industrial Capabilities report—OSD will provide us a link to the public release version of this report as the actual report is marked FOUO. $773M in funds released to at risk industries so far; DPA Title 3 work continues.
• First and third Wednesday of each month will be the new meeting schedule and off Wednesdays will be used to schedule special topics like an appearance by ASD Acquisition Policy Kevin Fahey -- date will be announced soon.

DLA:

• Most requirements for PPE national stock pile filled with existing contracts, however, for some requirements, like medical gowns, DLA reached out to non-traditional suppliers.
• DLA just awarded 35 contracts for gowns to small businesses who are new suppliers to DLA.
• Contract options are in place to allow DLA to buy more gowns if HHS needs them within one year; awarded to 30 companies across the U.S. for this requirement; this was a “buy to budget” effort and HHS funds to date for this requirement have been fully obligated.
• Those offerors that did not receive an award have been notified and DLA is on stand-by to back brief those companies that desire to have such a discussion.
• Fed Mall PPE update: DLA is now offering over 1000 non-medical PPE products on Fed Mall with over 100 companies and state organizations registered to utilize the Fed Mall PPE program. Much discussion followed about performance of the new vendors to DLA given the lack of performance history—DLA responded that the normal compliance process applies and agreed to take this issue off line for any specific industry concerns.
• Discussion about DLA working capital fund. Specifically, the lack of additional money to allow DLA to push more money out to the DIB, upcoming CR impacts and how will DLA adjust under a CR. A response to this question will be a topic at the next meeting as agreed to by DLA.

DCMA:

• Non COVID DIB impacts—hurricane Sally impacting 11 facilities, with six closed and balance expected to be impacted shortly. Hurricane Laura Aug 26th closed two DIB facilities with one just reopening today—second facility remains closed due to power loss.
• Wild Fires—one facility closed in California; four closed in Oregon initially with two reopening yesterday; two facilities in Washington state closed with one reopening yesterday.
• No COVID impacts to date.

DPC:

• Reminder--Industrial Capabilities Report is FOUO but a public version is on the OSD website and that link is what will be provided to us today.
• Regarding HON Lords press comments last week regarding lack of supplemental funds to fully implement Sec 3610, the five to six month reference by HON Lord re pandemic reimbursements is a span of time and industry should expect that whatever OSD gets as additional funding, OSD wants to get all the pandemic claims at the same time.
• OSD does not want to do first in first out processing. If funds received are insufficient, they will then have to decide what to do.
• Questions asked regarding what OSD criteria will be used to decide who gets what? OSD does not know at the moment. OSD is hearing that the Hill may force decision criteria on DoD if and when additional funds are appropriated—i.e. small businesses first. OSD is trying to work with the Hill to manage any Congressional mandates. OSD does know that the manner in which they developed the original number months ago did not include the full knowledge of what transpired to date and didn’t anticipate all the costs that industry is actually experiencing.
• So OSD stands firm on full $10B requirement as they believe its best to remain consistent with the Congress on what additional funding is needed and then OSD develop a process to deal with any shortfalls in funding for actual claims submitted and validated. But no decision process or criteria at the moment as OSD is waiting to see what Congress might mandate.
• Question raised about a winter resurgence of the pandemic and renewed impact upon the DIB which will then increase the reimbursements needed to the DIB for pandemic impact beyond the FY20 costs? Is there planning for FY21 pandemic impact costs as well? OSD replied that they have the flexibility to manage additional impacts absent an extension of Section 3610 as that authority currently expires 30 Sep.
• So OSD would use normal REA authorities exclusively. OSD may issue a call for DIB best estimates for impacts in FY21. If future pandemic impacts are minimal, OSD could see that included in residual rates from the DIB. If significant cost impacts like this year, then OSD would have to figure out how to manage those costs and whether additional supplemental funding would be needed. OSD still supports the extension of Section 3610 and HON Lord is meeting this afternoon with a member of Congress on this matter as well as need for additional funds.

Small business update:

• Navy—awarded $14.8B to small businesses representing 15% of total Navy awards to date setting a new small business record; $319M awarded specific to COVID 19. Air Force-awarded $11.7B to small businesses to date representing 20.7% of all awards setting a new small business record; $730M awarded specific to COVID 19. Army-awarded $19B to small businesses representing 28% of all Army awards to date which is also a small business record for Army.

Chamber and Associations:

• I asked for an update on Warp Speed—OSD said they would add that to the next agenda. The transportation association said they received an update from the Warp Speed team, and that it was excellent.
• Several associations joined in stating such an update on Operation Warp Speed would be excellent.
• CMM--comment that we need to get an update especially with respect to the status of the certification board for CMMC. OSD agreed to add CMMC update to our next meeting.

About the authors

Keith Webster

Keith Webster, president of the U.S. Chamber of Commerce’s Defense and Aerospace Council, guides the focus of the council to strengthen the U.S. defense and aerospace industries by influencing domestic and international policy on behalf of its members.

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