The global COVID-19 pandemic has illuminated a number of systemic issues in the U.S. Last week, the Biden administration took aim at what it considers a critical infrastructure in the U.S.: the American supply chain. To ensure access to critical items during future events such as “pandemics and other biological threats, cyber-attacks, climate shocks and severe weather events, terrorist attacks, geopolitical and economic competition, and other conditions that can reduce manufacturing capacity” President Biden issued an Executive Order (EO) designed to review the supply chain in two phases.
Phase I Review: Within 100 days, the Secretaries of Commerce, Energy, Defense (as the National Stockpile Manager), and Health & Human Services (HHS) are required to each submit a report identifying supply chain risks and their policy recommendations to address those risks. The EO outlined specific areas of concern: for Commerce: semiconductor manufacturing and advanced packaging supply; for Energy: high capacity batteries and electric vehicle batteries; for Defense: critical minerals and rare earth elements; and for HHS: pharmaceuticals and active ingredients for pharmaceuticals.
Phase II Review: By next February, those same Secretaries along with the Secretaries of Homeland Security, Transportation, and Agriculture, are required to complete a comprehensive sectoral supply chain assessment. This more in-depth assessment requires agencies to dig deeper into potential systemic shortcomings and address root causes while preparing for larger and broader capacity. For example, the Secretary of Defense is required to identify areas in the civilian supply chain where the U.S. is overly reliant on competitor nations. Similarly, for HHS, the Phase II report will be broader, encompassing supply chain analysis for public health and the biological preparedness industrial base. The Secretaries have the discretion to define these areas of analysis.
For critical supplies used across industrial base supply chains (i.e., those not administered by a single federal executive department), like digital networks, President Biden’s advisors Jake Sullivan, Assistant to the President for National Security Affairs (APNSA), and Brian Deese, Assistant to the President for Economic Policy (APEP), are tasked with reviewing and recommending adjustments to ensure critical goods and materials are available domestically or through the supply chains of the U.S.’s allies and partners.
The end goal is to make the U.S. supply chain more resilient – meaning more domestic production, a broader range of available supplies, built-in redundancies throughout the supply chain, adequate stockpiles, safe and secure digital networks, and a world-class American manufacturing base and workforce. The reports required by the EO are expected in part to identify gaps in domestic manufacturing, the availability of substitutes or alternative sources for critical goods and materials, the role of transportation systems in supporting existing supply chains and the risks associated with those systems, and the risks posed by climate change on the availability, production or transportation of critical or essential goods and materials. Recommendations from the Secretaries and Advisors are expected to include actionable steps to strengthen the U.S. supply chain and reforms needed to make supply chain analyses and actions more effective.