Subcommittee meets today to receive testimony from under secretary of defense for acquisition and sustainment, ellen lord, concerning supply chain integrity for the department of defense in the United States. Since our her initial confirman as the undersecretary of defense, secretary lord has overseen significant acquisition reform at the department of defense, and a chill well talk about some of that today. As the u. S. National armaments director she has traveled to see the u. S. , throughout the u. S. And to see our allies and partners with regard to the development and Manufacturing Activities around the world, and, unfortunately, has seen firsthand just how reliant the u. S. Defense Industrial Base chain has become come to class relates to china. With the rise of china and Great Power Competition of the global covid19 pandemic, the vulnerabilities and gaps in our supply chains particularly as relates to National Security have taken on a new urgency. What you think Ranking Member kaine for his interest in this topic as well. Both of us recognize how important the defense Industrial Base is to our Nation Security and our nations economy, and we are pleased to have this timely hearing. Secretary lord has been upon the voice in sonic alarm on this important issue and i like to personally thank her for being here today. In july of 2017 the president issued an executive order on the u. S. Manufacturing and defense Industrial Base that focuses on resilient supply chains that are essential to the economic strength and National Security of our nation, and also the importance of jobs as it relates to key components in manufacturing, and the defense Industrial Base. And muchneeded change to our broader National Security and strategic interests. That National Security document from the department of defense notes quote, every year competitors such as china steel us intellectual property valued at hundreds of billions of dollars. Members of this committee certainly agree that so much technological change has happened in this digital age, highly technical weapon systems as well as Consumer Electronics like laptops and cell phones increasingly have a role in war fighting and are increasingly reliant on chinese supply chains. And one area of supply chain integrity thats important to me and i think the rest of the country is our supply of Strategic Critical Minerals and metals that go into many of our modern Day Electronics and our modernday weapons and this years senate path and daa id like to highlight sections 809 and 810 which Work Together to ensure the Defense Industrial is states have secure sources of rigidity and Critical Minerals by the year 2020, 2030. I appreciate the bipartisan support for this goal and i appreciate secretary lords work with me and others on the key issue. As a matter of fact just last night the president issued an executive order entitled addressing the threat to the domestic supply chain for reliance on Critical Minerals from foreign adversaries and i like to submit this for the record with my Opening Statement without objection. The key issue on this is that we know where reliance on china. In many cases we, the United States of america have these Critical Minerals for example in the great state of alaska and we actually mind them and process them in ways with much much higher Environmental Standards and the chinese. So if thats the case, and mining and processing create good jobs, why wouldnt we do it here as opposed to over there . And i think people are starting to recognize that and madam secretary, i look forward to discussing this executive order and the broader topic of the strategic criminal Critical Minerals in our hearing today. And like to conclude by commending the secretary with regard to addressing some of the significant defense Industrial Base challenges, particularly as our country and the world goes through this pandemic and i want to thank senator kane for his interest in this topic. I believe this is an area of bipartisan interest and we want to hear from you madam secretary on what you think the congress can be doing and what you should be continuing to do addressing this issue which is, has been highlighted even more with the rise of china, our reliance and the covid19 pandemic so without further comment i like to turn the hearing over to senator kane for his opening comments thank you mister chair and im glad to be able to be here together with my colleagues in person virtually for this important hearing about readiness and supply chain integrity. I welcome our distinguished witness and i want to thank secretary lord for her constructive conversation this week working together to prepare for this hearing but also to just generally discussed the many challenges the dod faces today you are all aware of the roles that are defense Industrial Base plays in supporting National Security and in strengthening , contributing to the economic strength of the nation and many of the hearings of the readiness subcommittee at least in full or in part deal with that topic. The health of our Industrial Base is the ability to support National Security is under many severe challenges under normal times but now the challenges are escalating so i hope today we can discuss those challenges including the Global Economic downturn resulting from the covid19 pandemic. The way that pandemic itself affects the operations of the , of our supply chain. So lots of trusted suppliers and manufacturers in Key Technology areas referenced by the chair including microelectronics, Rare Earth Minerals, advanced materials, Cyber Security threats to our companies result in the loss of valuable intellectual property in National Security secrets and finally adversarial capital sometimes sponsored by foreign nations that find their way into our supply chain ticking to gain control ofemerging and innovative hightech systems. I also want secretary lord to know that were all concerned about an article that the Washington Post ran recently which raised questions about how the department of defense has used funds provided to it under the cares at and i actually think its an issue thats directly related to the topic of todays supply chain integrity and i hope the secretary may address some of the important issues raised in the article so that we can all not only on the committee but the American Public have confidence that the department is being a careful steward of taxpayer dollars including those provided in the cares at. We all want to help address the problems and we will discuss problems today in our manufacturing and Industrial Base but hopefully this is also a hearing more about solutions than it is about problems. We will assess the challenges but also will be interested in hearing what the dod is doing to address them so thanks for calling the hearing and i think our witness for her service and for being here today to testify. Thank you senator kane and madam secretary im going to have you issue yourOpening Statements. Please try to keep it to five minutes. We will submit for the record and longer written statement. Im going to apologize in advance. I have a short hearing i need to be at another committee at 9 30 if you see me stepping out youll be in good hands with senator kane. Ill be back quickly but the floor is yours and thank you for being here. Thank you. Chairman sullivan, Ranking Member kane and distinguished members of the readiness and management support subcommittee, thank you for the opportunity to testify today on the defense Industrial Base. The office of the under secretary for acquisition and sustainment has released the most substantial change to Acquisition Policy in the last several decades. Called the adaptive acquisition framework for aas. It approved the acquiring of war fighting capability and allows dod to better partner with industry. That aaf replaces the onesizefitsall approach used in the past and it includes six practical acquisition pathways, each tailored to the unique characteristics of the capabilities being acquired and in fact we do have a trifold that is a good description of this which weve made available to you for yourreference. Last december we released our Small Business strategy, reducing smallbusiness barriers to become art of the Defense Industrialbase. And to educate Small Business on Cyber Security readiness. Again, we have provided for you what we call our welcome mat as a guide for business, howto work with dod with a number of hyperlinks. So for reference, in terms of Small Business 24. 2 percent or 75. 4 billion in 2019 went to Small Business in terms of dod spent. Further, subcontracting was 38. 6 percent in 2019 or 62. 3 billion. In other words, there is significant slowdown major defense crime to Small Businesses. Additional efforts to strengthen our us Industrial Base include the Cyber Security model certification or cmc program. The interim role published two days ago implements the cmm c framework which establishes Cyber Security as fundamental to dod acquisition and secures the dod supply chain. Dod also released its first policy on intellectual property to support effective approaches and customized strategies for acquiring and licensing it and technical data rights really dod canal better support the entire lifecycle of the program. Upon congresss passing of the cares act, we worked closely with executive and legislative branches stakeholders to balance the needs of both medical and defense Industrial Base affected by covid. Were thankful to congress for providing the authorities and resources that enable the interagency to invest in the us production of critical medical resources and protect key defense capabilities from the consequences of covid. Dod has supported production of essential medical items and investments in capacity expansion for the medical industry following initial investments, the department in coordination with the department of health and Human Services or hhs and the federal Emergency Management agency or fema leveraged defense production act dpa title iii funds to mitigate adverse impact. Dod continued to provide vital contracting support to expand Domestic Production of medical resources leveraging hhs funding that congress had provided for the purpose. Of the nearly 658 million dod has invested in expanding medical resources and capacity, 213 million from dpa title iii funds, 427. 5 million comes from hhs cares act funding and 17. 6 million comes from the healthcare and enhancement act. Dod has obligated 6. 5 7 billion for the federal covid19 effort just over 62 percent of these obligations have gone to Small Businesses , 4. 70 billion. Over 75 percent of the dod Small Business spending has beenobligated in the medical category. Including drugs and biologicals, surgical instruments, equipment and supplies, hospital and surgical clothing, related to specialpurpose items and other Product Service code items. Congress appropriated 1 billion in cares act funding for dod to be executed under the dpatitle iii program. Dod has invested 213 million for health and medical resources such as and 95 masks, respirators and injection technology. 687 million of cares act funding is dedicated to saving part of the defense Industrial Base either by covid19 health or financial impact. Weve targeted regions severely affected to sustain vital domestic Industrial Base capabilities and for local job creation. The expenditures have protected us workers and insured that our Industrial Base provides covid. Dpa title iii cares act efforts mostly target supply chains in aircraft, shipbuilding, soldier systems, microelectronics, rare earth elements and investment projects, and projects and services for these fragile stressors simulate the sub tears and Small Businesses that report programs critical to National Security area economic and National Security are tightly interrelated and our Industrial Base is the nexus of the two. In conclusion i look forward to doing the work of congress to ensure that resiliency and security of the defense Industrial Base. Congressional support we will focus on ride child areas such as microelectronics and rare earth elements. But it will require a multipronged approach utilizing investment, legislation and policy solutions. A Us Rare Earth Minerals strategy should with the necessary congressional authorizations and appropriations consist of National Stockpiles of certain rare earth elements, reestablishing Rare Earth Mineral processing in the us implementing new incentives and removing disincentives and r d around new forms of clean, Rare Earth Mineral processes and substitutes. We will need your help. At the same time we will continue to support the department and the nations response to covid19. I appreciate the opportunity to speak and look forward to answering your questions. We will begin a fiveminute round of questions and alternate between parties and have a number your participating virtually and in person. Secretary lord, a Washington Post article i referred to in my opening comments when it came out suggested that the dod was using funds and the suggestion in the article that was the funds were either being used improperly or in ways that werent really poor to the reason that congress appropriated monies to the dod. You have testified in your opening comments about how those dollars were used and why. Let me ask a set of simple questions about the number one, in using those dollars as the dod carefully examined the purposes and restrictions in those dollars and attempted to use them completely in accord with guidance in the cares act . Yes. Have you over the course of time today as the dod kept both houses of congress informed about how the cares act dollars were being used. Absolutely and in fact what i would like to do is enter into the record timeline of dpa spending. All of the numerous calls and briefings that we have done as well as hearings. Without objection that will be entered into the record and if i can try to summarize quickly your testimony , the idea is these cares act dollars been used to deal in the dod and within our supply chain with the Health Effects of coronavirus so that we can continue to do the work thats needed but also to shore up economic damage that is being visited upon some of the key actors in the supply chain so that we wont see an erosion of the supply chainthat would hurt our National Defense , is that basically your testimony. Yes, very well said. I know the dod issued a statement that mentioned many of these things and i was a little bit surprised that that statement was not really reflected in aWashington Post story. How that material been provided to the Washington Post for the story was written . It had and the Washington Post had two different journalists who had been conversing back and forth with my Public Affairs individuals and whats interesting is there was a very lengthy interview with Stacy Cummings who is here with me today who has directed our joint Acquisition Task force and none of that was included in the article and thats why we very quickly the next day put out a Public Statement reflecting all of the conversations we had had. Thank you for ad