More than a month and a half into the coronavirus crisis, the federal government has only invested in one project to produce medical supplies, despite a pair of laws aimed at making it easier to do so.
But the pace is about to increase, Department of Defense Undersecretary for Acquisition and Sustainment Ellen Lord said Monday.
“We are just beginning to really pick up momentum within the interagency,” Lord told journalists at a Pentagon briefing.
The first coronavirus relief package allocated $1 billion to the Department of Defense to increase industrial capacity for medical supplies.
The single investment came on April 11 under the Defense Production Act’s Title III, which allows the government to inject capital into industries, so they could ramp up or shift production to meet the nation’s needs in fighting the COVID-19 virus pandemic. That investment will allocate $133 million to 3M, O&M Halyard, and Honeywell, so those companies can increase N95 mask production by 39 million over the next 90 days.
The Defense Logistics Agency also manages the acquisition of medical supplies using existing contracts. On Monday, Lord said the Defense Department has acquired 1.8 million N95 masks, 3.2 million surgical masks, 54.8 million exam gloves, 8,000 ventilators, and 275,000 surgical gowns for use by the Department of Defense and other federal agencies.
On April 14, the Defense Department announced the $415 million purchase of 60 decontamination systems. The units can sterilize 5 million N95 masks per day, allowing the masks to be used up to 20 times before disposal.
Only slowly has the DLA team completed negotiations for Title III production capacity investments, with so many medical and health priorities.
Lord said the DLA was prioritizing domestic production capacity for N95 masks, ventilators, pharmaceutical ingredients, testing kits, suppliers and reagents, vaccines and delivery systems, and personal protective equipment.
A so-called Joint Acquisition Task Force to manage the process was set up March 20, when Lord said the team was already pulling the levers of the DPA Title III, which it has much practice using for specific sectors important to national defense.
In the coming days, Lord said the Department of Defense would sign a contract to increase the production of the type of test swabs needed for coronavirus testing and touted by President Trump over the weekend.
“The objective is to eliminate reliance on the foreign supply chain,” she explained.
The Department of Defense was given $1 billion by the CARES Act March 27 to shore up the nation’s coronavirus supply needs. Lord said the money would be divvied up $750 million to procuring medical supplies and $250 million to shoring up the defense industrial base.
The DLA also plans to dole out $3.2 billion to assure cash flow to smaller defense companies, but Lord said Monday there would be no assurances the money would not be used for corporate stock buybacks.
“We did not, as we don’t typically do, put a specific auditing function in review,” she said, noting that conversations are “moving fairly quickly.”
Nonetheless, she said industry associations have been asked to track the flow of the money and that the defense contracting process already includes a high level of oversight.
Similarly, when asked if the Defense Department was being gouged on the prices of N95 masks, Lord said she could not be sure.
“I do not follow the actual prices,” she said. “What I will say is, I am particularly focused on creating capacity and throughput so that we do not have that situation.”
Test kit inaccuracies and defense project delays
Of particular concern to the military is the capacity to adequately test service members for the coronavirus.
Recently, the Navy admitted that it was receiving “false negatives” for asymptomatic individuals, who actually are positive for the virus and able to spread it.
“The protocol, if you will, for testing continues to evolve,” Lord admitted, acknowledging there are different levels of accuracy in available tests.
Chairman of the Joint Chiefs of Staff Gen. Mark Milley said last week that the Pentagon aims to ramp up its testing capability to 60,000 per day by the end of May from a current level of about 9,000 per day.
For that to happen, Lord said a lot of pieces would have to fall into place still.
“He needs the entire testing chain in the right place at the right time,” she said. That will include swabs, reagents, and analyzers.
In addition to describing how the DLA is working to sign contracts quickly for medical supplies, Lord acknowledged that the coronavirus is expected to cause approximately three months’ delay in defense production projects underway.
“We see aviation, we see shipbuilding, and we see small space launch as the three areas of greatest concern,” she said.
The DLA expects more funds to be allocated in the second coronavirus relief act that would benefit DPA Title III efforts underway to acquire medical resources, shore up the defense industrial base, and “make up for inefficiencies” in some programs, Lord said.
She added that $17 billion set aside by the Treasury Department as part of the Paycheck Protection Program would go to national security priorities. Lord said first in line would be acquisitions related to the nuclear modernization process of the nuclear triad and the Missile Defense Agency.
