DelBene Urges Congress to Close Loopholes Allowing Defense Department to Outsource Key Naval Ship Parts
Today, Congresswoman Suzan DelBene (WA-01) called on Congress to close loopholes that allow the Defense Department to procure naval ship components from foreign sources, circumventing existing law and President Biden’s Buy American directive. In a bipartisan letter to defense appropriators, DelBene and 12 other members of Congress highlight how the Navy approved a design change to a new class of ships to cut costs by outsourcing a key component of the vessels rather than purchasing them from an American supplier.
The Navy is currently building a new class of fleet oilers, the John Lewis (TAO-205) Class. Under current law, the Defense Department must purchase American-made anchor chain if that chain is 4 inches in diameter or under. Initially, the anchor chains for the first ships in this class were built with American-made steel chain. However, the Navy recently took advantage of loopholes in current law by accepting a design change that increased the size of the chains to just over the 4-inch threshold to cut costs by procuring the chain from an overseas supplier.
The total savings from this modification equate to approximately one-tenth of one percent of the cost of the remaining ships in the class, but the implications of this decision have a significant negative impact on smaller U.S. manufacturers. There is only one remaining producer of anchor chain in the U.S., Lister Chain & Forge, a small business of 36 employees, located in Blaine, WA. These loopholes have implications for other domestic defense suppliers around the country.
“This design shift equates to the outsourcing of more than 3,000 tons of steel that would otherwise be made in the U.S. with American labor. In addition, the shifting of this contract overseas puts the U.S. at serious risk of losing its ability to domestically manufacture anchor chain for its U.S. shipbuilding industrial base,” the lawmakers wrote. “This fix will protect the sole remaining U.S. supplier of anchor and mooring chain, bolster American domestic steel production, and ensure that we are able to manufacture this mobilization-critical item right here in America.”
In another instance, the Army Corps of Engineers continues to avoid purchasing American-made chain, instead buying from foreign sources, primarily in China.
For more than two decades, Congress has included domestic content preferences for anchor chain in its annual defense authorization bill. Shortly after taking office, President Biden took executive action to bolster these efforts by calling on all federal agencies to buy goods, products, and materials from American companies whenever possible. Yet, these loopholes remain and allow the Defense Department to purchase foreign-made products to cut costs.
“Congress needs to strengthen our domestic defense production capabilities by ensuring the Department of Defense abides by domestic content requirements for anchor chain and other unique shipbuilding components that are critical to U.S. national security. With only one remaining domestic producer of these chains, this is testimony to what can happen to others in the industry if Congress does not act soon to prevent foreign outsourcing,” said George Williams, CEO of the American Shipbuilding Suppliers Association. “While we understand the need to manage overall shipbuilding costs, we strongly support closing these loopholes to require that critical components be designed, engineered, manufactured, and assembled in the U.S. to support and protect our fragile defense capabilities and the American workforce.”
“In the wake of the COVID-19 pandemic and the resulting volatility in global supply chains, our nation needs to support domestic businesses that create and preserve jobs while strengthening our national security. Attempts to circumvent the law, specific to domestic content and procurement requirements, sets a dangerous precedent for American manufacturers and our economy,” said Philip Bell, President of the Steel Manufacturers Association. “Embracing President Biden’s Buy America directives while protecting the sole U.S. supplier of anchor and mooring chain will bolster domestic steel production and ensure that we are able to source critical items on our shores and not from abroad.”
The letter is also signed by Representatives Mike Bost (IL-12), Julia Brownley (CA-26), Rick Crawford (AR-01), John Garamendi (CA-03), Pramila Jayapal (WA-07), Fred Keller (PA-12), Mike Kelly (PA-16), Rick Larsen (WA-02), Cathy McMorris Rodgers (WA-05), Frank Mrvan (IN-01), Kim Schrier (WA-08), and Marilyn Strickland (WA-10). It is available here.