Defense industry leaders in Huntsville are urging a swift overhaul of procurement and budgeting policies to enhance competitiveness against China. Concerns focus on the uncertain status of small suppliers which have decreased significantly in number. Emphasis is placed on the need for stable contracts to ensure readiness and mitigate risks associated with reliance on foreign supply chains.

Officials from major defense companies in Huntsville have expressed urgent concerns to members of a U.S. House committee regarding the need for an overhaul of policies related to procurement, budgeting, and supply chains, particularly in light of increasing competition from China. Representatives from RTX Corp., Boeing Co., Lockheed Martin Corp., and Northrop Grumman Co. participated in a roundtable discussion, emphasizing Huntsville’s significant role in national and missile defense alongside Alabama Representatives Dale Strong and Robert Aderholt.

During the discussions, industry leaders articulated a pressing demand for certainty in funding, priorities, and programs. Raymond Sharp, Northrop Grumman’s vice president for missile defense solutions, highlighted that smaller suppliers face challenges in committing resources due to uncertainty in budgets and program funding. He asserted, “Asking them to invest with uncertainty is tough.”

Parker Chapman, a senior director at the Aerospace Industries Association, noted that small businesses in the defense industrial sector have diminished by 40% over the past decade. He explained to Chairman John Moolenaar that while appropriations may signal demand, the timing and distribution of contracts by the Department of Defense also critically influence smaller suppliers, who often lack the financial stability to endure long waits for new contracts.

The implications of small suppliers exiting the market are severe, particularly when their products are integral to the final outputs of larger contractors. Brian O’Connor of Lockheed Martin illustrated this vulnerability, citing rayon production, which is essential for rocket motors yet is not manufactured in the United States.

Committee member Carlos Gimenez warned of geopolitical risks, stating, “If the Chinese are the only ones creating rayon, then … we need to face the fact that China will cut us off when it meets their interests.” Similarly, Perce Leher from Boeing echoed concerns regarding chemical precursors for energetic materials, stressing the difficulties in scaling production quickly during crises.

Mr. Strong concluded that the defense industrial base must enhance its preparedness and called for a more stable and continuous ordering process within defense procurement, stating, “When an order is placed, it can’t be … 50 this year, none the next, 100 the next year, that is an impossible situation, and it doesn’t work in any business model.”

The discussion among defense industry leaders highlights the urgent need for policy reforms concerning procurement and budgeting within the U.S. defense sector. The shrinking base of small suppliers poses significant risks, particularly as geopolitical tensions with nations like China rise. Industry leaders advocate for more stable funding and continuous orders to ensure the resilience and effectiveness of the national defense supply chain.

Original Source: www.al.com

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