Speed to Scale: Revitalizing the Defense Industrial Base
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House Armed Services U.S. House of Representatives
Follow its sittingsSpeaker 2
I think it made significant positive changes that enable us to do both of those things. But clearly, there's a lot more work to be done. We don't have the capabilities that we would like, and we're still not moving as fast as we would like. So I'm very curious to hear Mister Duffy's thoughts on where we're at. One particular piece of this that the administration is pursuing, to some degree, is the idea of us taking an equity investment stake, building up our own sovereign fund, where the government gets involved in this.
Very curious to see what your thoughts are on that. Obviously, you know, more money can help, but we also don't want to discourage fair competition that encourages people to get into this space. If they think the government's gonna come in and just put their thumb on the scale, it could discourage some of the investment we've seen. And that's another big positive we've got. In the last at least five or six years, we've seen individual investment in defense space that we had not seen before.
A lot of small innovative start up companies in unmanned systems and secure communications in space, they're popping up and they're giving us some options in the ability to innovate more quickly. So that's positive. I wanna keep building off acquisition reform. I really think the workforce is crucial in terms of how we educate and train. We need to really start shifting our broad education system to a more skills-based system.
The 1950s, 60s, 70s when, basically, go get a four year degree and then figure something out. That's not really the economy we have, not just in the defense area, but elsewhere. We need to create situations where we can help people get the skills development training they need early in life, late in life, whenever they need it, 'cause that workforce is gonna be crucial to meeting our industrial base needs. The other big part of this is that the chairman alluded to is partners and allies. I mean, things have changed, and I think we need to recognize this.
In 1948, the United States of America was responsible for 90% of global manufacturing. That gave us an enormous advantage. Now that happened because we had just won World War Two, and we'd fought it primarily on the road. The entire industrial base of the rest of the world was blown away. That gave us a huge advantage.
That's not coming back. Alright? A lot of the rest of the world now has manufacturing capacity. Now the good news is, at least for the moment, they're partners and allies in many cases. So how do we work with those partners and allies for them to help us meet our collective defense needs?
We're gonna really need to lean on partners and allies and make sure we have them. Also, resources do matter. This is something I've worried about in our government, state, and federal level. We all have our little corner of the government. We're the armed services committee, so we pay attention to what's going into defense.
But we have a lot of needs in this country, and we have a $38 trillion debt. I just talked about education. Workforce is important. You spend all the money on the defense budget. You don't have the money to help support the education system.
We have needs in housing and health care. If people can't afford a place to live, they're gonna struggle to go out there and build the stuff that we need to build. So we have to do this within a reasonable understanding of what our available resources are, something which we seem not to want to do. And lastly, and this is more on the strategy side. This will get more into tomorrow's hearing with the undersecretary for policy.
We can't fight everybody everywhere all at once. Yes. I have no end of problems with a whole bunch of different countries in what they are doing. But the notion that somehow the US is gonna build a big enough military to take on every single one of our adversaries in a blunt force manner is just not gonna fly. We don't have the resources to do that, and the destruction and devastation that would result is going to be harmful to all of us, certainly The United States, but others as well, which means that we're gonna have to come up with a strategy that involves getting along with somebody.
I mean, I'll leave it up to mister Colby, I suppose, to tell us who those somebodies are. But, you know, looking at a country and saying, we don't like what you're doing. Let's go to war. That is not a viable solution. And this committee, we can come up with, you know, we can do the best acquisition reform the world has ever seen.
We can manufacture to the maximum of our capacity. That ain't gonna get us there. We have got to figure out some way to have peace somewhere in the world if we're gonna be able to meet our national security needs and not be in endless conflict. And I hope we will think about that as we try to figure out what the right policies are moving forward in the national security front. I yield back.
Thank you.
Speaker 1
I thank the ranking member. I'd like now to introduce our witness. Mister Michael Duffy is the Undersecretary of Defense for Acquisition and Sustainment. Thank you for being here, and you're recognized.
Speaker 3
Chairman Rogers, ranking member Smith, members of the committee. Thank you for the opportunity to appear today. I wanna begin by recognizing the sacrifice of the American heroes who gave their lives during Operation Epic Fury. Their unwavering courage and dedication to defending our nation and the cause of freedom will not be forgotten. Their sacrifice is the foundation upon which a safer future is built.
Let us honor them today not just with our words, but by rededicating ourselves to the values they defended and strive to be worthy of their immense sacrifice with our devotion to building a joint force and industrial base that preserves American military strength. I'd also like to recognize all the service members supporting this critical operation and our national security at large. We, as a nation, owe them and their families an immeasurable debt of gratitude. Thank you for inviting me here today to discuss the state of our nation's defense industrial base, and for your leadership on driving this discussion. We've made great progress, as the chairman and ranking member indicated, in large part because of the work the committee had done to support the FY '26 NDAA, the acquisition reform initiatives, and the multiyear procurement authorities we've been able to act on quickly.
I appreciate your focus on this critical component of our national security. The global security environment is increasingly complex and volatile. A robust, resilient, and modern defense industrial base is not a luxury. It is a strategic imperative. The defense industrial base will determine whether we can deter our adversaries and, if necessary, fight and win the wars of this generation and the next.
Our goal is to win without fighting. An industrial base worthy of our men and women in uniform will be a critical enabler of that. While China increasingly grows its total share of global manufacturing and has developed up to 200x our shipbuilding capacity, more than 400,000 manufacturing jobs in the defense industrial base sit open here at home. Revitalizing the defense industrial base is a generational challenge and a priority in our 2026 national defense strategy. At the secretary's direction, we have put the acquisition system on a wartime footing, with an urgent mandate to accept greater acquisition risk in order to reduce operational risk.
Delivering an 80% solution on time to the battlefield is more valuable than delivering a perfect solution too late. Our plan to revitalize the DIB is captured in the first pillar of the Secretary's acquisition transformation strategy, centered on three primary initiatives for industry. First, we are sending a clear demand signal to the industry. For too long, industry has navigated the uncertainty of fluctuating commitments and budgets. Thanks to this committee's support in the FY '26 NDAA, we are using multiyear procurement authority to provide a stable, clear demand signal to industry to give them the confidence and stability to invest their own funds, leading to lower cost for the taxpayer in a more resilient and productive defense industrial base.
Recent agreements exemplify this. Since the beginning of the year, we've announced framework agreements with Lockheed Martin to more than triple PAC III MSE production and quadruple THAAD production, and with RTX to expand and accelerate production of Tomahawk, AMRAAM, and the Standard Missile Series. Expanding munitions production comes with the crucial need to do the same across their vast and complex supply chains. To support this, we've made a landmark $1,000,000,000 investment in L3 Harris to expand the domestic capacity of solid rocket motor production. Second, we are making strategic investments to modernize the DIB.
Since last January, the department has invested 2,000,000,000 in critical minerals, an increase of 273% over the previous 4 years. For example, we leveraged the Defense Production Act to secure domestic sources of gallium, scandium, and germanium. Third, we are reducing and removing the barriers that restrict and discourage businesses, especially new entrants and small businesses, from pursuing business with the Pentagon. By streamlining the FAR and DFARs, leveraging flexible contracting mechanisms, and empowering pro acquisition executives and program managers to drive requirements trades, and, hopefully, with the help of Congress, deploy funding to the greatest point of need. We are seeking to create opportunities for those whose core competencies are creating and producing technology, not doing business with the federal government.
A strong industrial base also needs to be a secure one. The department is vigilantly working to protect the DIB from adversarial capital and influence by screening investment through CFIUS to prevent undue foreign dependency. I wanna close by thanking the committee for their support last year and the one big beautiful bill and the critical authorities you provided in the FY 26 NDAA. Thanks to the one big, beautiful bill, the Department of War can make generational investments to expand munitions production and modernize facilities. We've designated approximately $6,000,000,000 for DPA and IBAS initiatives, targeting our most acute choke points in the supply chain.
And we've allocated $300,000,000 to shore up the national defense stockpile with materials like cobalt and lithium. Additionally, the changes you made to the IBAS program in the NDAA have given us greater flexibility to target our investments, and we're grateful for the extension of the Defense Production Act, which allows us to continue making vital national security investments. The challenges we face are significant, but so are the opportunities. The department is on a wartime footing, moving with urgency to transform our acquisition system and revitalize our defense industrial base. We must succeed.
Our national security depends on it. Thank you for the opportunity to testify and for your continued partnership. I look forward to taking your questions today.
Speaker 1
Thank you, Mr. Desi. I recognize myself first for the questions. This nation prevailed in World War Two and the Cold War principally because of the overwhelming might of our industrial capacity. The president's called for a 1,500,000,000,000 dollar defense, top line. From your perspective, and mainly, and that's to get after the defense industrial base.
From your perspective, as the department's senior acquisition official, how critical is this increase in funding and achieving that objective?
Speaker 3
Thank you for the question, Mr. Chairman. Funding is absolutely critical. My job, I view as the defense acquisition executive, is to ensure that we're getting the best value out of every dollar that Congress appropriates. But, that doesn't mean that more money is not critical to enabling us to grow the defense industrial base the way we need. It's absolutely essential.
And I think that, we've taken the time since the president's announcement to think through what additional resources would look like, to ensure not only that we're building the joint force we need, but that we're using it to help to build a defense industrial base that can support future generations as needed.
Speaker 1
Thank you. How does the department determine when equity investment is necessary? And tell me how you deal with the possible market implications, or distortion that could be caused by that.
Speaker 3
Sure. So I think we view equity investment as an important tool amongst a range of tools that we can apply to, build resilience and reduce fragility within the defense industrial base. We have all the traditional tools that Congress has allocated with grants, loans, thanks to the office of strategic capital. Equity is another tool that I think we've deployed very effectively, and I think it delivers a few critical, kind of additional capabilities. Number one, it creates a partnership with industry, an opportunity not only for the government to provide capital to lead to the kind of growth that we see such as in the l three deal, but it also crowds an additional private capital.
Part of that deal was for the three to put their own billions of dollars against what we saw as a very high demand for growth within the solid rocket motor industrial base. And by making that investment and attracting the additional capital from L3, we were able to create multiples of leverage of the government's investment. Secondly, I think by incentivizing or by creating a circumstance where the industry partner puts their own skin in the game, it creates better incentives for them to optimize their production capacity, which I think has been severely lacking in the defense industrial base. We haven't seen the kind of investment that we need in terms of modernizing manufacturing, developing the workforce. We believe an equity investment, in some cases, in many cases, in partnership with additional private capital, creates that incentive for better attention to how those dollars are deployed to expand the, our industry partners' capability.
And finally, I think it's a good value for the taxpayer because a grant is a sunk cost. That's been the traditional way that we have stimulated growth with equity. There will be an exit, and that funding will return to the taxpayer, to the government. And so, you know, that is inherently, I think, a positive for the taxpayer and the government in terms of stimulating growth while seeing a return on that investment.
Speaker 1
We wanna make sure that you not only have the resources you need, but also that red tape and regulation are not undermining the development of the DIB. Have you identified any specific regulations that are inhibiting industry's ability to surge production capacity?
Speaker 3
Sir, I'd like to get back to you on that question. I think we're thus far, we have been working through issues that I don't think require additional support given the flexibilities you've provided. I think we've worked through, I think, some very direct and frequent conversations with industry, kind of a culture shift towards a more commercial model, whether it's equity investment or I think what you saw in the RTX and Lockheed deals, thanks to being able to create a demand signal through the multiyear procurements, we were able to incentivize industry to invest their own capital to expand their production capacity, which I think is really the optimal scenario.
Speaker 1
Well, what I'm looking for is any regulatory red tape that's a problem you got identified for us. We can try to get rid of it for you.
Speaker 1
Last question. In the last NDA, we established a new assistant secretary of defense for international armament cooperation. You heard the ranking member reference the fact that we've gotta get our partners in production as well. How do you plan to utilize this position toward that end?
Speaker 3
Tremendous opportunity here, and I thank the Congress for supporting the creation of that assistant secretary. Coincides with a couple other initiatives within the administration. We recently transferred the Defense Security Cooperation Agency and the Defense Technology Security Administration under my jurisdiction within the office of the undersecretary for acquisition and sustainment. I think that creates a great opportunity because as we're looking to fulfill foreign military sales orders or to create a more integrated industrial base with international partnerships, the point of execution and the capacity of our production are key inputs to being able to find what's in the art of the possible. For us to be able to understand what is the pipeline of foreign military sales and the forecast for potential, and use that as in our conversations with industry to drive up productivity, I think is a very powerful tool that we look forward to utilizing.
Speaker 2
Thank you very much. We've talked about a lot of different, well, we've talked broadly about the needs in terms of needing to produce more. There's a lot of different things that we're working on, a lot of different systems. What would you identify as the top two or three priorities where we really need to dramatically increase the production of x?
Speaker 3
Well, I think, we definitely have needs to increase the production across the board, as you said. I can tell you my focus has been since I got in the job in the summer on that munitions industrial base, ensuring that we're, and I think the deals have been a great step forward in that. How many?
Speaker 3
So the deals that we rolled out in January would increase the production of Patriot, for example, from 650 a year to 2,000 a year, tripling the production capacity. And I think you see similar kind of multiples across the targeted munitions that we prioritized. But we're not stopping at examining those. We're looking to partner with industry in other areas. And I think, you know, F-35 parts would be another example where we need to ensure that we've got adequate both resource funding and industrial-based capacity to make sure that we can supply the needed parts for the F-35.
Speaker 2
I asked you the question for the reason. We're gonna have to make choices in this. And that's something we struggle to do, but we can't do everything. And I think as we move forward looking at the budget, this committee, the Pentagon, we're gonna have to have a more serious conversation about what we can do and what we can’t do. And towards that end, we need to look at some of the larger systems that we're talking about.
I have concerns about Golden Dome, but at least most of what's going into that is stuff we're gonna need one way or the other. I mean, how that works out, I don't know. But on the shipbuilding side, I just want to register my profound concerns about the $30,000,000 battleship that we're talking about. We have got to make choices. And it's not that I wouldn't love to have a $30,000,000 battleship.
I'm sure that would be cool. But how does that affect our ability to buy all of these other critical munitions that we're using day in and day out? I wanna see from congress, congress as much as it is the executive branch, us make some choices instead of just starting down a thousand different roads. And when half of them don't pan out, we end up wasting a whole bunch of money. Those types of choices are really going to need to be made.
Last area of questions is on the procurement side. We've, as I mentioned in my opening statement, a lot of companies making investments in new technologies. We're doing a lot of R and D. The one consistent complaint that we hear from them is, okay, we do the R and D, we get a product that you want, then it takes forever for you to buy it. And that really discourages investment.
I know we made some changes last year with the acquisition reform to try to get at this problem. What would you say is the key to enabling us to make those purchasing decisions more quickly, so that investors can see a return? As I say, they don't mind if the answer is no. But if the answer is yes, and they still don't get the money, that's gonna push them away from making the investment. Even if they win, they lose, they can't do that.
Speaker 3
I appreciate your focus on this topic. I think, every dollar spent by private industry to advance technology or to scale production that the Pentagon or the federal government does not have to spend is a dollar earned for us towards national security. And I think we need to approach this explosion of private-sector investment. With that in mind, that we number one, of course, the primary purpose here is to ensure that we're acquiring capability that serves the warfighter. I think that we've got tremendously innovative companies that are building those things.
And so I think the second thing is we also wanna make sure we don't squander this moment where we have this explosion of private investment, to ensure that it's being leveraged to the benefit of the warfighter. I would say that, in my exploration and discussion of where the challenges are, I think that the acquisition transformation work of empowering the portfolio acquisition executives is a step in the right direction because what we need in the system is flexibility. I think the old system where you had rigid structures of programs that were trying to meet rigid requirements gave no flexibility within the system to say, oh, this is a great technology that we should figure out how to reconfigure our requirements or recalculate our resources so we don't have to wait for the entire two-year cycle to have the authority and the budgeting to do that.
Speaker 2
Let me just end on that note of agreement. Programs of record, requirements, those are the things we really gotta slash and go after if we're gonna be able to innovate more quickly. Thank you, Mr. Chairman.
Speaker 5
Thank you very much, Chairman Mike Rogers. And, indeed, mister secretary, what you're doing is so important to piece your strength. And so I wanna you're frontline, and so we appreciate your efforts. And, of course, where we are today, our sympathy is for Americans who have been killed by Iran. And Iran has been at war against the American people for 47 years, killing and wounding thousands of Americans.
Every envoy Steve Witkoff has exposed just this week that in negotiations last week the Iranian negotiators boasted that they can produce 12 nuclear bombs. With that in mind, this is so essential for America, Israel, and our allies. And president Trump is defeating this mass murderer who chant death to America by taking the actions, particularly knowing how close they are and have been. With that in mind, war criminal Putin has collaborated with Iran to develop UAV drones to murder Ukrainians. And now I was really pleased to see The United States has reverse engineered these drones to go after the Iranian revolutionary guard, which has been persecuting the people of Iran who want to be free.
With that in mind, I believe that Ukraine will be victorious, and America will be victorious. And it's really personal to me. I'm grateful that I've had four sons serve and face the Iranian IEDs and drones. My oldest son, Alan, was in field artillery in Iraq. My CAB, my second son's a doctor in the navy who served in Baghdad.
My third son served in Egypt, to back up our great ally Egypt White Star. And my youngest son, an engineer, was for a year in Afghanistan. And so our family takes it very personally, that indeed, what President Trump is doing is protecting American families by defeating the terrorists overseas who have every intent of death to America, death to Israel. With that in mind, it's so important that we revitalize the defense industrial base through recruiting of skilled workers. With that in mind, Secretary Bridge Colby has testified that before the Senate Arms Service Committee, we need to supercharge our defense industrial base.
How do you foresee, and what actions have you taken to create the necessary skilled force to meet defense needs? Should we be looking at foreign skilled workers to fill the gap as we expand our domestic workforce?
Speaker 3
Well, Congressman, thank you for your family service to the country. Had a chance to meet Alan a few years back in the Pentagon, and so that was a great pleasure. And thank you for your leadership on these issues. I think, absolutely, you put your finger on a key issue. The workforce is a major impediment.
We have challenges in terms of maintaining competitiveness within commercial industry and service industry when it comes to compensation. Of course, we have a more hazardous and challenging work environment for our defense industrial because we're building things. But I think, the department has taken steps with up to 50 individual, sometimes regional, sometimes national programs that are focused on how do we start, for example, back in kindergarten, encouraging k through 12 students to take seriously the trades and science and engineering, disciplines all the way through, how can we do trades training, in partnership with local universities and vocational schools, to ensure that we can directly supply the needs of industry within local communities where we have workforce shortages.
Speaker 5
And indeed, working with great allies like The Republic Of Korea, the skilled workforce they have there, to work together will be so positive. Additionally, you point out in your written testimony that 90% of materials identified in the shortfall have either zero or only one domestic supplier. I'm very grateful that in Aiken, South Carolina, we have a specialty glass fiber manufacturer, AGY. It's a great company employing people, creating jobs, and it's so important that we have that capability. What are you doing to address the issues that we have of one or zero suppliers?
Speaker 3
That's a great question and a big challenge for us. First of all, I think that I'll go back to what I think were great sort of out of the gate exemplars of what we can do to stabilize the industrial base, and that is those munitions deals that we rolled out in January. Because what they do is not only create stability for the prime contractors, it creates stability for the supply chain. And I think part of the reason you have such fragility in the supply chain, single source supplies, single source suppliers, is because of the fluctuation of demand, the uncertainty of will this contract go beyond the next year. By creating these long term contracts, we've required the prime contractors to flow down that certainty of demand to all tiers of the supply chain, and we believe that will make great strides in terms of both creating new ventures so we can get competition, but also in creating stability so that existing ventures can make the investments they need to, to ensure that we've got supply for the foreseeable future.
Speaker 6
Thank you, Mr. Chairman. Thank you, Mr. Duffy, for your testimony here today. Again, I think your sort of different programs that the department is employing right now, like the Defense Production Act, the Apex Accelerator, Industrial Based Analysis and Sustainment, IBAS, program. Again, in my district, where the Gratin shipyard is, I mean, all of those agencies have really done a lot in terms of, you know, stimulating more supply chain growth and, you know, obviously, you know, trying to get the production cadence where we all want it to be. But your testimony on page five where you, you know, again, just said that probably the most important tool is multiyear procurement because and you just sort of ended your last testimony about the fact that, you know, procurement instability, you know, has been just consistently identified, you know, within industry as the biggest sort of reason why there's hesitation for people to invest and get into the game that's there.
And that's particularly true in shipbuilding because it is a long game, and also because the post-Cold War experience in industry is still felt, you know, in terms of just hesitation, that's out there right now. So pending before the department, you know, speaking of multiyear procurement, is the block six contract for the Virginia class submarine program, as well as multiyear for Columbia. This committee authorized those contracts in 2023, and it's very late, in terms of executing the contract. And it's something that people, and again, I interact with them a lot, watch like a hawk in terms of so, again, unlike battleships, which, you know, last one was launched in 1944, there's no question about submarines in the twenty-first century that's there. There was complete bipartisan consensus on that point.
And we've authorized it. There's been negotiated. You know, can you just enlighten us about when this is gonna get done? Because, frankly, that would turbocharge, you know, really the next decade of growth in that industrial base.
Speaker 3
Yes, sir. No question about the criticality of our submarines and their strategic value to the joint force. I'm aware that we are very close, and I'm also aware of the urgency to get that done. So we're working in partnership with the Navy to continue to drive that to a conclusion. I will, I'm sure you're already aware, but we'll work to keep you aware of when we think that will conclude.
But I know we're actively working towards that.
Speaker 6
Thank you. And, you know, again, in terms of, you know, other interested parties in this, the president in October said full speed ahead on AUKUS. Australia has come forward and invested $2,000,000,000 in the US Treasury to help with our industrial base. That block six cohort of submarines is precisely the subs that really would be sort of in line in 2032, 2035, and 2038 per August that's there. So, as I said, this is really something that is at the next decade at least.
And I know some of my friends on the other side agree 100%. Mister, chairman, there's an article in The Wall Street Journal again about this submarine contract, which, again, I would ask be added to the record.
Speaker 6
Thank you. So, you know, I was struck listening to your testimony about multiyear procurement because your predecessor, William LaPlante, issued a 26-page roughly document that, again, procurement instability was identified by the department back then as probably the biggest hindrance in terms of industrial base expansion. And, again, some of the DPA stuff started in the FY '24 NDAA, where we actually added Australia and the UK as domestic sources to help with the industrial base that's there. So, I mean, there's some continuity here in a good way that, you know, it clearly, you get it. And, obviously, there's a lot of support on this committee to see that happen.
But, again, block six, it's time. It's more overtime in terms of getting that done. With that, I yield back.
Speaker 1
Gentlemen, yields back, chair. Now I recognize the gentleman from Virginia, Mr. Whitman.
Speaker 7
Thank you, mister chairman, mister secretary. Thanks so much for joining us. I wanna go to the second part of your title, sustainment. We talked a lot about acquisitions. Sustainment, though, is really the backbone of what we need to do to generate fighting force capability.
I think you would agree that using multidecade-long efforts are what we need to do to overcome the current sustainment crisis, and that's where we are. When you look at the F-35, a subo operational availability below 50%, you look at amphibs, a subo 38%. We can spend a whole lot of money on new systems. But if you don't take care of the systems we've got, guess what? We don't have the tools necessary to fight the fight, and that's what our warfighters need.
Last year in your report to Congress, I wanna give your words back to you. You said the department faces significant and systemic readiness challenges across its major weapon system portfolio, and you also said these challenges are impacting operational effectiveness and strategic deterrence. All things that in today's world are priorities. This problem is urgent. I think there are things that we have to do.
There are long-term aspects of that, also short-term aspects. I wanted to get your perspective. We did some things last year. We moved program support managers essentially to program manager status to be able to put a little more effectiveness into these programs. Give me your perspective really on two things.
How are you gonna prioritize O and M budgeting this year, as far as the president's budget, things that come to us? And how are we gonna be able to leverage modern technologies? Things like artificial intelligence, digital twin technologies, additive manufacturing, especially when it comes to systems that we have to maintain. But we struggle with the right to repair. We struggle with intellectual property to be able to actually do the things that we need to do because we get wrapped up over, you know, what the limitations are and how those systems were acquired.
If you can give us that perspective.
Speaker 3
Well, thank you for your attention to this important matter. I agree with you. The criticality of sustainment is probably undervalued. 70% of the cost of an average, 70% of the cost of a weapon systems. Total cost is in the sustainment of the weapon and the operational weapon system.
And so I do think we need to think about ensuring that we're budgeting for that. And I think in the past, that hasn't been the case. I do think you have good attention to that now. We have regular engagement on looking at the F-35 and ensuring that we've got adequate both funding and strategy, contract strategy, acquisition of parts strategy, defense industrial base, examination where there's vulnerabilities. And so I think this is, again, an area where it requires leadership attention.
I think the system is incentivized to think about procurement as acquiring new technology, as, you know, keeping advantage and, the sustainment can be neglected. We need to shift that culture.
Speaker 7
How do you think broadening the use of modular open systems approach would help us in the process being more iterative, and that is being able to update things. And how do you see software as being the foundation of what happens with hardware systems? You know, today in today's world, we see what's happening, both in Iran and in Ukraine. We live in a software-driven world. You build the hardware around the software.
So give us your thoughts on Mosa and how that is used, and are there better ways for us to use iterative updates to make sure that when we're looking at sustainment, we do it rather than through keep changing the hardware is through continuous software upgrades.
Speaker 3
Well, that's a great and powerful, I think, initiative. Appreciate your leadership on it, and, you know, the acquisition transformation strategy called it out explicitly, modular open systems architecture. And I think we actually have a really great use case that precedes the acquisition transformation and the great work General Dale White did down the F-47 to build MOSA as a primary strategy in the design of that weapon system, which allows us to interchange mission systems throughout the life cycle of the program. That's powerful in my mind because that creates the ability to compete below the platform level throughout the entire life cycle of the weapon. And that competition, I think, is healthy in terms of making sure that we're not neglecting the industrial base.
We're not neglecting advanced capability with those mission systems within the platform. And so I think, you know, we are really working to drive that example from '47 into other systems. I was just out at Edwards Air Force Base a couple weeks ago, and they were talking about the F-22 as being, how are we thinking about Mosa, even a legacy platform like that, which I think is tremendous. In terms of software, the more the capability of our systems is embedded in the software, the more flexible we are to sustain it over life. I think that 47 is another example of that.
A lot of the hardware in the system, I think, can endure while we're upgrading software and making a difference in the capability of the platform.
Speaker 8
Thank you, chairman. And I wanna go back to one of the first statements you made. You mentioned 400,000 open jobs, industrial base. That's a scary number, given what we're facing. And what we've done in the last years, quite frankly, in the last few NDAs to take care of the acquisition reform.
There are a lot of things that connect many of our contractors who build our greatest platforms, whether it's the F-35, what will be the 47, our ships. I have a common theme, which happens to be the longest lead item on the sheets, the human side of the skilled people, whether engineering or those who build it. It's the longest lead item. And you touch base on a couple of innovative programs, the MIRROR program that starts at a younger age. In many ways, we're fighting for that next generation of worker who unfortunately have come through a pandemic and learned they can do a lot of that from home.
Well, you can't build ships. You can't build planes. You can't build the next generation at home. Over the last few years, the Department of Defense spent $6,200,000,000 working to attract that next generation into our armed services. That's great.
There are many ways to serve your country, and the suggestion would be to incorporate. One way to serve your country is to go to work for the defense industrial base. We're fighting not only for that individual, but more importantly, you're fighting for their parents who are instilling in their next generation. Many of you got to go to college whether you want to or not. Now it's starting to change a little bit, but we have to put the value.
The ones that go to work each and every day might put a pair of work boots on and gloves to build it. So how do we attract on a national basis that we need you to help our country, and you can do it more than or if you want to put it in a uniform one, how do you get to the nation as a whole?
Speaker 3
Well, thank you for your leadership on this issue. I think the very, an initiative that I think there was recognition in the leadership of the Pentagon on this problem last fall. And, you may have seen coverage in the last two months that the secretary himself has gone out to visit the industrial base and companies, both traditional and nontraditional, to speak to the workforce and to thank them for the work they're doing to stand behind the warfighter and build the capability that he or she needs in order to make sure that we can prevail in any conflict. That's been very well received across the board. But I think, more, we also need to make the investments and make the targeted investments that are not just doing the training, because we do need to do the training.
But I think you're hitting on how do we change the cultural attitude towards these jobs to say that this is rewarding work, this is mission oriented, and we're doing a lot of thinking and developing of programs within the department that can partner with civilian institutions and to help create a greater appeal to that workforce. Because I think we need to work on training. We need to work on compensation, but we also need to work on an understanding of the importance of the mission.
Speaker 8
Just as we are trying to attract that next generation to join the services, we need a national program. You already spent 6 point 200,000,000. We have the ability. We need a program to win the hearts and minds of that next generation because, quite frankly, it's not happening except in a few locations where we've targeted. We need to do it on a national basis.
With that, I yield back.
Speaker 1
Gentlemen, yields back here. Now I recognize the gentleman from Tennessee, Mr. Desjardins.
Speaker 9
I thank the chairman. Mister Duffy, first, I wanna express my support for the department's announcement that the Sentinel program will seek milestone B approval this year. This program is vital for the future of our deterrent, and I appreciate the work your team is doing with General White to move the program forward. And I also appreciate the push you're making to increase the production of critical munitions. Can you talk to us about how your office is making sure that the focus on those critical munitions, which are mostly tactical systems, doesn't come at the expense of some of our strategic systems like the next-generation interceptor, Sentinel, and even space launch, as we saw recently with Vulcan?
Speaker 3
That's a great question. You know, one of the things that we also highlighted in the acquisition transformation strategy was what we call a direct to supplier strategy. So I think you're putting your finger on the fact that there's a common set of components not just across the tactical systems, but the strategic systems like solid rocket motors. And then going a level down into what are the ingredients that build a solid rocket motor. How can we ensure that the nation has an ample supply to support growth across all of these systems?
And so we're employing this direct to supplier strategy so that we can engage. For example, the L3 deal is an example of how where we have a cross-cutting supplier that has supplied multiple systems that we're thinking not just about the prime level, but about what is the adequacy of supply at the subtier level and where we need to, as a department in partnership with industry, engage those suppliers directly.
Speaker 9
You kind of stole my second question there because I was gonna say now that the department has made an investment to support the incumbent solid rocket motor industry or industrial base. What specific plans does your office have to support the development and qualification of second sources for solid rocket motors for those same critical munitions? So you kinda answered it, but maybe you can elaborate.
Speaker 3
Sure. So I think we understand the congress's views and agree with the fact that there's a need for second sourcing. That's just a principle upon which we're building the entire defense industrial base revitalization effort, ensuring we've got competition. The l three deal was driven by the fact that we need supply now. And oftentimes, unfortunately, between qualification, certification, building a workforce, building a supply chain, you know, we want and we'll continue to pursue second sources, but we also want to make sure we get speed and volume and growth.
And the L3 deal gave us that while we continue to pursue second sources in the solid rock and motor industry.
Speaker 9
Okay. Finally, we've been trying to have a conversation with your office about the next-generation operational control system or OCX. So far, we haven't had much luck. Can you help me get that on the books?
Speaker 10
Thank you, Mister Chairman and ranking member and my colleagues. Secretary Duffy, I appreciate your being here. You got a large portfolio and a lot of work to do. I'm curious. We're at war.
So maybe the Department of War name is appropriate. In the preparation for this war, was there an analysis done on the rate of use of munitions of all kinds? And if so, given the current conduct of the war, which is by the president's most recent, it's going to ramp up. So how are we doing on munitions, first? All of them from defensive, air defense, as well as offense.
And after you've told me how we're doing, did anybody think about this before we started the war?
Speaker 3
I have great confidence in the professional military judgment of General Cain, and he stated this morning very clearly that we have adequate munitions to support future operations, now and in the future. My focus has been, since I got in this job, to think about how to accommodate for the lack of a defense industrial base this administration inherited. And we have pursued that aggressively since June.
Speaker 10
And most of the questions have been asked thus far deal with the ramp up of the defense industrial base across its entirety, and the sustainment of that through the next, I don't know, decades. But my question goes here and now. Are you telling me that the munitions necessary to carry on the war as described by the president are sufficient, and that the magazines are filled, and the war was determined and set in place with full understanding of the rate of use of the munitions? So tell me that tomorrow morning, I'm not gonna wake up to some news report that we don't have sufficient patriots or THAADs.
Speaker 3
No. It's not his number. It's not his problem. It's his judgment. He expressed that very clearly this morning.
Speaker 10
Then why did I wake up this morning to report that we don't have sufficient Patriot missiles and THAAD missiles to protect our assets in that region.
Speaker 3
I'm not sure what source you got that from, but Fox. I trust the judgment and statement and clear determination of General Cain this morning. He's running the operation. I think he has the clearest sense of both the planning and the execution of that mission.
Speaker 10
Well, it's the third time you answered my question the same way, so I think I better move on to another question and get a different answer. You are making the department's making significant equity investments in companies to ramp up their capability to manufacture. Not a new concept. It's been around, I think, forever. How are you monitoring the use of that investment?
And, ultimately, what will the department be doing with the equity that it has acquired as a result of those investments?
Speaker 3
Excellent question. I think, first of all, each of these deals comes with clear milestones on what we expect the industry partner to make of their own investment. That was part of the deal, as we make an investment, they make a counter investment, multiples of ours. And then we have established milestones of when those investments will be made so that we can ensure that investment is stimulating the growth that is required in the reason we entered the investment in the first place. During the course of the investment, it is we are looking this as an economic stake in the company.
We are not pursuing control. K. We are actively trying to bifurcate.
Speaker 10
I'm just about out of time. This entire area of investment and where the money goes, how it's being used, and ultimately, what the Department of Defense will do with its equity investment is of interest to me. I would appreciate a specific readout on how you're monitoring it and, ultimately, what the department intends to do with the equity investment. Mister chairman, I thank you very much for the time.
Speaker 1
Gentlemen, time has expired. Gentlemen from Florida, Mister Jimenez, is recognized.
Speaker 11
Thank you, Mr. Chairman. And I heard General Cain this morning, he was very confident in the munitions that were there, and he was also very confident. And also stated that a lot of the defensive munitions were actually prestaged to make sure that we protect our servicemen and women. So I'm also confident in his capability and his assessment. And so I'm good with that.
And I don't care how many times you ask the questions, it's just the answer. Okay? Have we ever done any analysis of the difference in cost, say, for the same system for the Chinese and the US. And I would assume that it costs us more to acquire the same system than it does the Chinese because of labor costs and all that. Am I off on that, am I correct?
Speaker 3
So I haven't done the specific analysis, but I can speak to the principles of why I think that your statement is correct. I mean, one, they employ a command and control government where civil military fusion where they compel their entire economic enterprise to support on an as needed basis. And so those are tools we don't want to apply. And state subsidization, I think, is another tool that they apply.
Speaker 11
So could I, I hate to interrupt you, but I only have a certain amount of time. So have you do you have a roundabout figure for, like, for every dollar that they spend is equivalent to how many dollars that we spend?
Speaker 3
Sir, I do know that figure. I think I've seen that figure. I do not have that figure, but I think it's an important one to understand what is the purchasing power that they have versus we have for each.
Speaker 11
So they spent $300000000000. What's the equivalent of American dollars? Is that trillion dollars, America? Are they spending basically the same that we are?
Speaker 3
I hesitate to wager a guess on it, but I think that it's probably a multiple.
Speaker 11
Yeah. Good. I'd like to have that figure so that we know exactly. Because when they say they're spending $380,000,000,000 or whatever equivalent, and say, well, gee, we're spending a trillion dollars, but it could be that $380,000,000,000 that they're spending is equal to our trillion dollars. Okay?
The only way that I think that we're gonna bring this back, bounce this out, is through automation. So are we making investments in artificial intelligence and robotics so that we can manufacture at a much cheaper cost and a much more rapid pace? Are we doing that, and are we leading the charge?
Speaker 3
I agree with you 100%. Not only to manage cost, but as Congressman Norcross mentioned, our deficiency and skill. As much as I'd like to make sure that we have the workforce by enhancing our workforce, we may also need to think about how do we decrease the demand for the workforce if we can't fill it by pursuing automation and without, you know, inhibiting our great workforce that makes sacrifice every day to build weapons for the warfighter. But, we're pursuing additive manufacturing. We're pursuing automation and robotics.
We're pursuing the application of artificial intelligence. But I think the great news is we're seeing a lot of that invested independently of the department by private sector investors who are seeing these problems and bringing solutions to us, which is the model we want to see across the defense industrial base. So leveraging that, I think, will allow us to maintain our advantage in that strategic competition.
Speaker 11
What are you doing in order to speed up the development and the deployment of weapon systems? I mean, some weapon systems take decades to develop and then deploy. And in today's battlefield, I don't think that's sufficient. I mean, we're gonna have to adapt a heck of a lot faster as we learn on the battlefield that this system works, that system doesn't work. By the way, what's your countermeasure?
How are we gonna counter their countermeasure? What are you doing in order to speed up the process?
Speaker 3
Well, that's, I would say the acquisition transformation strategy and the leadership of the committee on driving the speed act into the NDA covers a whole range of initiatives that we're pursuing, but I'll highlight a couple. Number one, in the near term, under the deputy secretary's leadership, we've created a program called the business operatives for national defense. We've been able to attract talent of retired executives across the commercial industry who bring tremendously valuable transferable skills. For example, you know, automotive manufacturing, leaders of automotive manufacturing, global manufacturing operations coming into the department and our defense industrial based partners to examine, do we are up to scale, up to speed on the latest, most modern ways to manufacture so we can introduce automation and additive manufacturing? This is a near-term opportunity to think we're really getting some gains in the shipbuilding industry and the munitions industry.
But there's a whole other range. I think I'll just touch on one more because I know we're short on time. But the ability to, I think, convert to a commercial model both from a commercial first standpoint where we can pursue where the commercial industry is better incentivized to have efficient means of production, and bring that into the defense industrial base. And then also bringing that commercial model through the thanks to the committee, the multiyear procurement, and enabling and empowering the industry to make their own investment, put their skin in the game, and really own the efficiency of production, I think, gets us great gains.
Speaker 12
Thank you, Mr. Chairman. Under secretary Duffy, do you have the dollar value of munitions we've expended so far in this World War Iran?
Speaker 12
When do you expect you'll have that? I understand each day it's rising, but at what timeline do you expect to know that?
Speaker 3
I don't know. I think believe that the, you know, the folks that are expanding the missions have the best calculus of that. I don't know when that is available.
Speaker 12
Presumably, for folks watching at home, there is coordination with your side on the acquisition for replenishment replacement. So is there communication across the departments that you know the needs of the branches here? The
Speaker 3
You know, we've been working on this problem set on munitions supply long before this conflict. And, while it's certainly useful for folks within the department to know what that level is. My job is to maximize our production independent of our supply. And I think knowledge of our supply wouldn't make me go faster. We're going as fast as we possibly can.
Speaker 12
Are you part of analysis or discussions about the speed at which we can replenish what is being expended right now? Every day. I'm not gonna ask about the burn rate, given our open setting here. I think we need to understand in a more classified setting what that burn rate is. But is that analysis being done?
Has it been done?
Speaker 3
Well, I'll so we are driven by maximizing production capacity of our defense industrial base independent of expenditure rate. We were focused on maximizing our production rate a week ago, six months ago. And so, that is the crux of our conversation, to say, how could we maximize the defense industrial base's ability to produce a full range of weapons, and what are the tools we need to put in place to empower them to do that.
Speaker 12
I'll ask a very specific question. And I understand your part of this is the acquisition, but is there analysis being done at about the pace of our ability to replenish what's being expended? I don't want the details in this setting. I'm asking if that analysis is being done.
Speaker 3
Yeah. I, you know, I know what I focus on every day, which is how do I get the accelerator to the floor on our defense industrial base's ability to produce these and acquire them. And that's, you know, that's what's driving the conversation right now, is how do we get the growth that we need out of the defense industrial base to ensure that we are prepared for the fight of the future.
Speaker 12
So I wanna ask about the three F-15E variance. As I understand, we lost $90,100,000,000 dollar price tag. Is that generally about right for each of those?
Speaker 12
It's not a trap. I'm just curious. Assuming f15ex is the variant that we would replace those, what kind of production timeline do we have to produce new aircraft there?
Speaker 3
I think that we're producing at about a rate of 20 a year. I'd have to come back to you to get that precisely, but that is approximately the rate at which we're purchasing those right now.
Speaker 12
So I wanna build off Mr. Raminez's question. And, by the way, that figure that he asked for, I'd also like to know. I think it's important for us and the committee to understand it. How fast are the Chinese building their top strike fighter aircraft?
Speaker 3
I do not know the answer to that question. I'd be happy to get it for you. It is an important factor.
Speaker 12
And, look, I they're different platforms. We have different capabilities. I don't, I'm not saying they're the same, but if they're cranking out 10 for every one we're cranking out, that matters. That's something we need to understand in this committee.
Speaker 12
Okay. Thank you. Last piece, little bit of time I have. You mentioned it on pushing the defense industrial base as fast as possible on munitions, and that certainly predates this war and our concerns in this committee. The industrial base has gone, it's been too slow.
It's heavily consolidated. I think there's bipartisan concern here. What more authorities or tools do you need from us to get our defense industrial base doing what they need to do for our military?
Speaker 3
Well, I appreciate the question. I think the way I'd answer it is we have, since the secretary's speech in November and the passage of the NDAA, I've got a team of hundreds of folks within the department, across the military departments and within my office, who are aggressively pushing forward to implement as many of these initiatives as we can. My expectation is as we get to a place where we're encountering obstacles that we have not yet encountered, we're sort of keeping notes on that, so we can come back to the committee and say, this additional authority would be helpful. I don't have that today, but we are.
Speaker 12
And, look, I'll make the point that I think Mister Jimenez's ratio gets to. If we're spending five, six, seven, whatever the number times as much, that's not delivering the kind of value to the American people that we need. And so that is a big part of this concern, certainly where I sit. With that, mister chairman, I'll yield back.
Speaker 1
Gentlemen, yield back. Chair, not recognized, gentlemen from Louisiana, mister Higgins.
Speaker 13
Thank you, Mr. Chairman. Undersecretary Duffy, thank you for being here today. The authorities that you enjoy, from the executive branch, are vast. And congress has empowered you as such, and we've authorized and funded a tremendous amount of reform, regarding purchasing and acquisition and actual fabrication of our warfighting machines, the mechanisms of war that our warfighters require, and that, indeed, world peace requires in be because we have a responsibility to project force across the world in areas of the world that are threatened by war to whereby we can quell existing threat or extinguish, active threat. So we have a hell of a responsibility, and we believe, as a congress, as a Republican majority congress, we believe we have empowered you.
And I don't think there's any new legal authority or legislative writ that's required to pass through this body in order for you guys to get the job done. And I hope you have your foot on the gas regarding procurement, contracting, streamline, and actually getting the mechanisms of war manufactured. Under 10 US Code 4811, the Secretary of Defense is required to develop a national security strategy for the national technology and industrial base based on a prioritized assessment of risk and challenges to the defense supply chain. And under the Defense Production Act of 1950, which was reauthorized in 2018, the president has the authority, a number of authorities, to influence domestic industry in the interest of national defense. So there's a broad spectrum of authorities that you enjoy.
Now the maritime industrial base, which I'm gonna focus on here and ask you a question about, the maritime industrial base, good sir, does not fail because of lack of capability. These guys have been performing for 200 years, man. Some of their companies go back three or four generations. They fail or risk failure because of instability. Most of that instability is a result of the kind of things we're asking you and your people to fix.
So in South Louisiana, this is true, but across the country, it's true as well. Small and midsize shipyards, they can hire and train and invest, but they cannot survive repeated stop-and-start cycles caused by continuing resolutions out of this body, delayed awards, shifting procurement profiles, etcetera. Because when production breaks down, when it stops, those smaller maritime industries and shipyards, they lose their skilled workers, the suppliers shut down, and, ultimately, costs go up. So it breaks everything down. So I'm gonna ask you, beyond multiyear procurement for major munitions programs, what concrete reforms is the department implementing to prevent production gaps in smaller programs?
Speaker 3
You know, I struggle to find another tool that is as effective as the multiyear procurement because in our conversations with industry, and I'll just munitions happens to be the use case that we got after immediately as soon as I was confirmed, and, you know, from the top down, president, secretary, the deputy secretary, all committed to growing the industrial base for munitions. And we brought industry together, and we said, us the barriers to your stability, your resilience, your speed. And we did get a lot of regulatory.
Speaker 13
Not to interrupt, but as it relates to shipbuilding, and you stated you don't see it's difficult to see another tool that's more effective than long term contracts. I concur. That's a significant factor. Mhmm. Would you and your staff be receptive to my office communicating with you, good sir, regarding some other mechanisms that we believe, based upon our conversations with the industry, would effectively work and that you have the legal authority to implement.
Would you receive that?
Speaker 1
Gentlemen, yields back here. I recognize Jen Lee from California, Miss Jacobs.
Speaker 14
Thank you, Mr. Chairman. Mister Duffy, this hearing is about revitalizing the defense industrial base, getting innovative American companies to build for the warfighter faster. Right?
Speaker 14
So I wanna understand how blacklisting one of the most capable American AI companies advances that goal. Last July, Anthropic signed a $200,000,000 contract with the Pentagon and became the first frontier AI company to deploy on classified military networks. And by all accounts, warfighters love it. Gregory Allen at CSIS said publicly that DoD users love Claude, and that its usage restrictions have never been triggered on a single government mission. The contract included two restrictions.
One, that Claude could not be used for mass domestic surveillance of Americans, and two, that Claude could not be used in fully autonomous weapons. The Trump administration reviewed those terms, and in July 2025, ex accepted them. Then Secretary Hegzetz demanded that Anthropic drop those provisions entirely. Anthropic refused. And on February 27, the president ordered all agencies to stop using Anthropic, and Secretary Hegzetz designated the company a supply chain risk, a tool Congress designed to protect against foreign adversaries who might sabotage or subvert defense systems.
Mister Duffy, as the undersecretary responsible for acquisition, sustainment, and the health of the defense supply chain, 10 USC 3252 is an acquisition statute. DFARS is your responsibility, and industrial-based policy is your portfolio. Were you consulted before this designation was made?
Speaker 3
Well, I think, you know, the beauty of the innovative economy that we have is that we have competition. And since this designation, we've seen competitive AI companies come to the table that are not willing to make demands on the department's use of the service they provide, which is critical for our ability to have the flexibility to employ the services and technologies in the defense of the nation and the warfighter.
Speaker 14
So, mister Duffy, I hear you, except that almost every contract we have comes with these kinds of stipulations. So, for instance, defense contracts routinely contain privately imposed operational restrictions. Starlink restricts which countries can use its terminals. For instance, fighter jets come with certification limits. IP clauses let contractors prevent the resell of their technology.
Contractual limitations on the military use of technology are not unusual. They are the norm in defense procurement. And if the department objected to anthropic terms, it had straightforward options. Cancel the contract, issue new GFARS guidance, write a clause requiring subcontractors to waive such terms within a set period. Did your office evaluate any of those less restrictive alternatives before the designation was announced?
Speaker 3
The nature of artificial intelligence introduces specific and very great vulnerabilities, and the need for continued updates from the company introduces those vulnerabilities such that if we cannot have a trusted relationship with the vendor that's continually providing those services, they introduce unnecessary risk into our acquisition process, and the president and the secretary declared that very clearly.
Speaker 14
Mister Duffy, the citing making a company considered a supply chain risk was literally something Congress designated for things like Huawei and Kaspersky, not American companies that you just might have a disagreement with. Here's the part that should concern all of us. Hours after Anthropic was blacklisted, OpenAI announced it had secured a classified Pentagon deal with the same two red lines: no mass surveillance, and no autonomous weapons. OpenAI CEO admitted the deal looked opportunistic and sloppy, and has since renegotiated it twice. And even OpenAI publicly said anthropic should not be designated as a supply chain risk.
So can you explain to this committee how the Pentagon blacklisted one American company for insisting on restrictions and then accepted from a competitor the exact same restrictions that same evening?
Speaker 3
OpenAI's opinion on the department's determination is interesting, but not relevant. We've made a judgment based on our engagement with the company over time and their clear lack of willingness to provide the flexibility that we require in order to acquire in order to employ these very sensitive capabilities in defense of our warfighter. We will not be held hostage to the whims of a company's policy when it comes to life and death of our warfighters.
Speaker 14
Mister Duffy, I think every American probably agrees that we do not want the Department of Defense doing mass surveillance of Americans, nor do we want weapons that can go off by themselves without humans in control, which is why we've passed such stipulations in previous NDAs. And with respect, if two vendors offer functionally identical terms and one gets a contract while the other gets treated like Huawei, that's not a procurement decision. That's retaliation. And retaliation through acquisition authorities is the exact kind of abuse Congress should be concerned about, and that we should work to prevent. I yield back, Mr. Chair.
Speaker 1
General, lady yields back. Chair and I recognize the gentleman from Indiana, Mister Mesmer.
Speaker 4
Thank you, mister chairman, and thank you, secretary under secretary Duffy. I appreciate you being here today. And, first, I'd like to thank you and your staff's engagement with me on the Prometheus en energetics project located outside Ukraine in my district. The Prometheus project is increasing the production rate of solid rocket motors, and this need has been made crystal clear by the military actions being undertaken in The Middle East. I look forward to continuing work with you and your staff on supporting this project and guaranteeing the timeline for Prometheus to start production in 2027.
On the topic of munitions, the defense industrial base, how could the department better utilize authorities already granted? The department like the IBF fund to combat single point failure in the supply chain and defense supply chains.
Speaker 4
How could programs like the industrial defense industrial based fund be used to combat single point failures of the supply chain?
Speaker 3
Thank you for the question. I mean, this is fundamental. Unfortunately, the nature of a lot of our goods and services procured is bespoke for the defense department, meaning we're the only customer. And that, I think, discourages the kind of investment and resilience that we see in our commercial, industrial base. The generosity of the committee in providing for the industrial base assessment and sustainment fund provides the tools that we need in order to ensure that we're investing where there's fragility in the industrial base.
However, that's not our preference. I think our preference, which you'll see both from the leadership of the committee in introducing acquisition transformation initiatives in the NDAA. Then the secretary's rollout is to prefer commercial because with a broader customer base, I think you get the resilience of investment, you get the resilience of multiple suppliers, and that can only benefit the defense industrial base and our ability to procure the equipment that we need.
Speaker 4
K. I would also recommend looking at the IBF's new authority to procure, install equipment owned by the federal government and private, industrial factories if such action supports the defense interests of The United States. And when the Pentagon is the only customer, sometimes it's a pretty good tool.
Speaker 4
Is the color of money restrictions still slowing down industrial scaling? And what more flexible funding categories material would materially improve that speed?
Speaker 3
Yes, sir. Thank you for that question. We have spent I think the department's been an advocate for greater flexibility in the allocation of funding since the PPBE commission back in 2023. We continue to embrace that as a priority. And I think that especially with this new acquisition construct and the portfolio acquisition executives where we're trying to empower those ex acquisition executives to have the team under their command to drive towards schedule and capability, as the single priority, having the flexibility to trade requirements, which I think we have the authority to do, and we've introduced with the capability trade councils within the system so that they can prioritize schedule.
But then also the flexibility to move the funding. I mean, the reality of our current environment is commercial technology merges at a pace that's much faster than our budget cycles. And if we don't have the flexibility to reallocate funding so that we can take advantage of that technology and pivot, I think, it really inhibits our ability to make sure we're maintaining pace with our adversaries.
Speaker 4
K. Thank you. Would software acquisition be improved by allowing software to be funded by colorless money? I know.
Speaker 3
that we do have some flexibility. I'm not sure we're fully leveraging, when it comes to the software acquisition pathway, the flexibility of funding. Is that what you're referring to, sir? Yeah. I think, you know, those are purely for software programs, which are very much appreciated and probably do require a level of flexibility beyond what hardware programs provide.
But I do think that can be a model potentially for within understandable and agreed upon restrictions, how could we create some flexibility across all platforms.
Speaker 4
K. What percentage of critical minerals, energy and energetics still originate from our adversaries or nonallied sources?
Speaker 3
Sir, I'm not sure I've got the specific figures. I'm sure I can get back to you with that, but it is a concerning amount. We have made strides in the last year to make investments in a number of areas. Our team has done tremendous work to assess across several critical minerals and across what we call the value stream of those critical minerals from mining to processing to magnets, ensure that we're bringing the domestic capability to do each step of that, and increase our own self reliance on those absolutely important raw materials.
Speaker 15
Thank you, mister chair, mister secretary. We've talked about munitions production being a priority. I appreciate that. And the systemic, but also the very urgent needs, to meet those operational demands we have at this moment. The challenges, of course, and the opportunities lie both in the private industry, but also in domestic government facilities that produce energetics and munitions that are critical to warfighting.
I'm thinking of Naval Surface Warfare Center Indian Head, down the street in Maryland, and its energetic comprehensive modernization plan that includes some much needed Milcon dollars for a new contained burn pit, a new contained burn facility, and a new larger mixer. Those are kind of the perfect, in my view, investments that we should be making to make sure we have private and government facilities meeting the moment here. And, of course, Indian Head is unique for its ability to provide kind of full spectrum RTD and E, to this challenge. Can you please speak to the department's plan to provide continued robust and sustainable funding to support the concentration and energetic production capacity at facilities like Indian Head, but there are others across the country? And then I have a quick follow-up to that.
Speaker 3
Congresswoman, thank you. I can't speak to specific Indian head initiatives, but I would be happy to in a follow-up if that's helpful. But I can speak to, I think, what we see as a tremendous asset for the department in the organic industrial base. And, you know, we recently had an investment that Hanwha announced at Pine Bluff in Arkansas. I think being able to leverage the government facilities that we have, the workforce that we have, the institutional knowledge they bring on handling energetics and other capabilities that, you know, are challenging to get growth in the industrial base, is really an opportunity.
And we see investment from the private sector to enhance these facilities. Private sector brings in their expertise that, you know, I think the organic industrial base can benefit from. And so we're aggressively pursuing these partnerships because I think that's a win win for many, for all parties if we can find the right partnerships.
Speaker 15
And I think the key to this is gonna be a sustainable plan. So when we see the ebbs and flows of demand, that we're also having a sustainable supply side to this. And part of that is I would be remiss if I didn't mention the hundreds of thousands of federal civil servants in Maryland, many civilian DOD folks who work at Indian Head who are experts in their field in this. Mhmm. And we can't lose that talent.
Speaker 15
From this space. Thank you. So I look forward to working with you if I could follow up with your team on those investments. I wanna follow-up moving to similar issue of skilled workforce. Mister Norcross' questions around a resilient industrial base includes and really relies on thoughtful and strategic planning for producing welders, pipefitters, other skilled trades as we, you know, I think have great bipartisan agreement and the need to invest in shipbuilding.
When can we, as this committee, expect a workforce development road map identifying projected labor gaps in shipbuilding and other critical sectors, and how your office plans on addressing that? And, similarly, what you need from this committee to meet that?
Speaker 3
Well, thank you for your leadership on this issue. I'll consult my team and come back to you with current work on that, and what we see in the future in terms of requests or plans going forward.
Speaker 15
I think it's important because we have the best relationships with our community college, with our technical schools. We want to be helpful in building out, again, this sustainable pipeline of talent to meet this moment. I was going to quickly move to some foreign dependency and some of our reliance on our allies. I had the opportunity to visit with our NATO allies in Sweden and Finland with congressman Bergman last month, meeting with large and small industry. I'm very interested in your thoughts around co-production.
We do a lot of things well in the United States. There are some exquisite capabilities. Our allies do better than we do. Can you give me your thoughts around what are the to expand coproduction and kind of further cement those ally ships that are important, not just to national security, but frankly, our economy?
Speaker 3
I think coproduction is an important tool. I do think we make the best weapons, and the president has been very forward-leaning in terms of exporting those weapons. I recently inherited the foreign military sales mission within my office, which I think is a great initiative by the secretary to bring our production capacity to support our needs and our partners' and allies' needs together. But we will probably also, and you mentioned, you know, in some cases, there's exquisite capability that our allies deliver that we don't. And so I think it'll be important to kinda create an integrated industrial base to think through where we can leverage those to support our own operational readiness and create interoperability with our partners.
Speaker 15
I'm out of time. I'd love to follow up with you on this and hear your plan to this committee. Thank you, Mr. Chair.
Speaker 16
Thank you, Mr. Chairman. Thank you, mister secretary, and your team and all of our military folks here for all you're doing to support our warfighters. We wouldn't have a country without our brave men and women. And, right now, as a country, we need to be united in supporting them in their efforts and what they need to get the job done. I'm familiar with the recent investments the department has made in solid rocket motors.
However, what are your plans to expand capacity and resilience through both funding and diversification of new entrants to the market?
Speaker 3
Well, we're thankful that we have several performers that have emerged that are privately funded that are interested in getting into the solid rock and motor space. And, so we're partnering with them to pursue a current state, many of them are not yet qualified or certified, which, you know, with the volatility of that component of the weapon system, we need to make sure that we've got all of the quality assurance done to bring that component into the supply chain. And, we are pursuing opportunities with multiple vendors to make sure we can help them get across that finish line.
Speaker 16
Mister Secretary, ultra-high molecular weight polyethylene is foundational to the production of hard and soft armor across the joint force. We understand it is not a munition or a critical mineral, but it is certainly a strategic material, as it offers protection to every service member in harm's way both domestically and internationally. With only two domestic manufacturers, how is the department addressing the vulnerability of this single point of failure in the supply chains for ballistic protection?
Speaker 3
Sir, if I could, I'd like to consult my team and get back to you with the specifics on that. You know, we do have a robust team of analysts who understand this at depth, and I'm sure that I can come back to you with that answer.
Speaker 16
Yes, sir. Alright. Secretary Duffy was excited to see in your testimony that you highlighted the accelerated training and defense manufacturing, ATDM, in Danville, Virginia. That's in my district. You also mentioned the department's enthusiasm in the Civil Reserve Manufacturing Network, CRMN.
As the department works to bring the CRMN online, has the department considered ways in which the program could be complemented with regional training centers such as ATM to ensure the availability of a skilled and ready workforce?
Speaker 3
I'm sorry, sir, can I ask you to repeat the last part of your question there?
Speaker 16
Sure. So as the department works to bring the CRMN online, has the department considered which program could be complemented with regional training centers such as ATDM to ensure the availability of a skilled and ready workforce?
Speaker 16
Alright. And follow-up. Given the success of programs like ATDM, how does the department and specifically IBAS plan to transition them from annual pilot-style ads into a stable, accountable program with standard funding under the Department of Navy?
Speaker 3
I think that relies on our ability to create the partnership with the service and the industry to understand how to pass it off. That's certainly our goal. Right? The IBaaS program is intended to make investments that we can transition to the services, especially around workforce development. And so where we have specific plans on that, I'll also follow up with you.
Speaker 16
That sounds great. You know, I heard you talk about the work and family tax cut, the one big beautiful bill, and how it helped you. And, of course, we had close to a $900,000,000,000 NDAA we just passed. We're working on 27 now. What are some things that we can do as a committee to help support your efforts?
Speaker 3
Well, I appreciate the question and the leadership on driving the industrial base. As I mentioned, I think we're really in the heart of sorting through and implementing the great authorizations you've already provided. But while we're doing that, we're keeping tabs on where we could use additional help. And I think at some point in the near future, we'd be able to bring that back to you to talk through if we can get additional resources.
Speaker 16
There's an advance, I guess you would call it additive manufacturing company in Los Angeles called Divergent. How is, how are companies like that gonna be game changers for what you're doing?
Speaker 3
I've had the pleasure of visiting Divergent with the secretary of war recently, and it is amazing what kind of technology they've been able to produce to create opportunities for additive manufacturing. I think one of the things that we're working very hard to accomplish in order to enable companies like Divergent is changing the culture within the department to be open to accepting these new technologies. Is additive manufacturing trusted within the engineering workforce in the government? And how can we build that confidence that a new emerging technology like this that offers tremendous benefit in terms of schedule gain and efficiency also fulfills the mission and the quality assurance that we need in order to provide secure capable weapons to our warfighter. And so we've got a team that's working very hard right now.
Speaker 1
Thank you. Gentlemen, yields back. Chairman, I recognize you from California, Mr. Whitesides.
Speaker 17
Thank you, Mr. Chairman. And thank you, sir, for appearing before us and for your service to the country. We appreciate you. My background is in aerospace. I ran Virgin Galactic and was chief of staff at NASA.
So I have a bit of experience in terms of how we move from a small company up to sort of a midsize company. I got a bunch of stuff to cover, so I'll be relatively quick. I'm proud to represent Palmdale's Plant 42 Skunk Works. First, let's hit b21, the requisite b21 question. I think we got a program there that's operating roughly on budget and on schedule.
I think it'd be great to formalize higher production goals if we can soon. Can you give us any update on how that's going?
Speaker 3
Well, first of all, I had a chance to visit your district a couple of weeks ago, went to Edwards in Palmdale, and very impressive operations they have there. Got a great report from the Edwards team on the performance of the aircraft, which is phenomenal. We are working to work through what the future potential production rates could be. I can assure you there's a lot of attention on that.
Speaker 17
Thank you, sir. Okay. Just one small point on that. One of the challenges at Planet forty two is we're getting so many people there that we have big traffic jams outside, and it's actually a big issue. It's a safety issue.
And so maybe we can get a little help from your department to just, we wanna make sure that the thousands of folks who are helping us to achieve this super important strategic goal get there safely. And so maybe we could talk to your folks about that. Sort of a minor problem, but we gotta make sure that the workforce is safe and secure as they get around to things. Great to work with you on that. In terms of early-stage companies, this is more a comment.
I know you're working on it. Getting through the valley of death is absolutely crucial. You know, you can get your early STTRs and SBIRs. But then getting through that is really important. So I hope you're working on that because, you know, you get to the other side, and there might not be money for a few years, and you might die in the middle.
And so we were losing out potentially on innovation there in the middle. I'm just gonna leave that up, keep working on that. And then similarly for mid-tier companies, they don't necessarily want an equity investment. Maybe they're doing okay. They have positive cash flow.
But, you know, a government-backed loan or something could enable them to expand production capacity quickly to enable, you know, us to reach our goals. So I would encourage you to think about those things, you know, sort of essentially stage-specific help, you know, early, mid. You know, what does each stage need? And be in constant communication with those folks, as I'm sure you are, because that's kinda what we need to be agile and grow those different pieces of things. Do you have any quick comments on that?
Speaker 3
I think valid death is something we definitely need to overcome. I think how do we introduce flexibility in the acquisition system? We're starting to see uptake on an interest in, for example, manned ships in the navy. And how do we I think my opinion is the barrier has been the rigidity of the structure of our programs where there's really not a champion if you don't have requirements in a program. And so, you know, I think recently the Navy created the deputy assistant secretary of the Navy for unmanned ships.
That becomes a champion within the infrastructure that can help overcome some of the barriers. We need to create more of that.
Speaker 17
Yeah. I think that's a good idea, actually. So I'd encourage you to do that. Last point I just wanna make is, look, I think you're a pretty pragmatic guy. I think what's been happening with the anthropic OpenAI stuff is just a shame.
Like, we shouldn't have gotten to that point in my opinion. We have a supplier who is basically all over the military now and has been helpful. You know? And to get to a place where we have this fight out in the open, I think, has been mismanaged. And I wouldn't, first of all, like, I don't even understand labeling them a supply chain risk.
But the more important point I wanna make is I think it discourages innovative companies from wanting to work with the Department of Defense. And so I think we all need to work together as we navigate through these new technologies that are gonna be coming forward. Being, you know, flexible and appropriate as, you know, they're gonna have their views and having these discussions in an adult way rather than having them pop out into the public, I think, is just it doesn't help us bring innovative stuff to the table. So I don't know if you have any comments on that, but yeah. It's just more sort of I'm trying to be in a, I think this committee tries to be adult on this stuff and avoid the politics.
That was an example where I don't think the conversation or the endpoint was conducive to advancing innovation in our national security.
Speaker 3
I agree with you that we need adult conversations. In this case, it was the vendor that brought it into the public, and I think that exacerbated the problem.
Speaker 17
Okay. Hopefully, we can all do better going forward. Thanks for your time. Mister chairman, I yield back.
Speaker 1
Gentlemen, yield back to you. Recognize the gentleman from Georgia, doctor McCormick.
Speaker 18
We have a lot of highlighted technologies right now in play with drones and counter drone technologies. The secretary, Rubio, just said that one of the big problems we had, we were being out produced basically a 100. For every 100 drones that they were producing, we're producing about six to seven anti-drone missiles, which is obviously gonna put us way behind. And we're gonna continue to face that. I mean, Russia is doing the same thing.
China's doing the same thing. I'm sure North Korea would love to do the same thing. These are the adversaries we have to face down. One of the bottlenecks I've noticed in my district, which we produce a lot of this kind of technology, is FAA regulation, being able to test this stuff, the military's application to the industry, and actually producing in high volume these technologies. What are we doing to deconflict that regulation, that barrier that keeps us competitive, that keeps us at pace to develop new technologies?
Speaker 3
So we do have a regular dialogue with FAA, and we've stood up the drone dominance initiative, which is led by Owen West, recently announced as the director of the defense innovation unit, in an attempt to invest the, you know, generous allocation of the Congress of $2,000,000,000 in the one big beautiful bill to allow us to build out that domestic industrial base. And so that we've got the suppliers, the competitiveness, and the suppliers within the industry. But I do appreciate and agree with you. We need to ensure that we're representing those perspectives in the regulatory discussion. And so we're in contact with FAA to do so.
Speaker 18
Okay. What do you think about the joint interagency task force 41's performance so far? How can we do better?
Speaker 3
Yeah. I think I was, so I came on just as they were formulating. I think it's an important initiative. It gives us a single point of contact within the department to represent the commonality of our counter UAS efforts, being led by tremendous leader, brigadier general Ross, who is looking for where can we make procurements that are common across all services while respecting where there's unique service needs to acquire Counter UAS within each additional service. And so I think it's kind of an optimal hybrid model for our Counter UAS acquisition.
Speaker 18
Okay. Final question because I know we got about two and a half minutes left, but I'm gonna focus on our shipbuilding, which I think is one of the things that are hamstringing us right now. I'm a marine. We don't have enough amphibs, but we're very behind in all the shipbuilding. I think our best contract's, what, six months behind, at 150% of our budget.
That's a significant problem. Just got back from Korea in the Far East. And if you look at all those ship holders, whether it be Japan, Korea, China, the Philippines, Cambodia, Thailand, they're kicking our butts. I mean, it's not even close. We should be leading the way, but we are so far behind.
The chairman mentioned this in his opening remarks that this is one of the things that really concerns us. That is our bread and butter, especially in the, you know, PACOM region, which is 70% of the world's trade, 70% of the world's population, 70% of the world's might. This is a significant problem, but we seem like we keep on sticking to the antiquated system that keeps us way behind. We go to Korea. They deliver ahead of time, on budget.
We can't even take that as a joke to us. What are we doing to address that problem?
Speaker 3
Yeah. It is a big problem. I think, we're, I think, number one, at a tactical level, the department is, I mentioned earlier the business operators for national defense where we're bringing in production and industrial engineering experts who have proven records in other industries to come in, bring a fresh set of eyes to the shipyards. The companies have been very open about receiving these experts and allowing them to integrate into their operations. And we're seeing opportunities, some significant opportunities for production gains.
I think, know, we haven't made the investment. I haven't studied the history of the Korean shipbuilding industry. I know they're tremendous. I think they've made a significant investment. I think we don't have the competition that I think, we generally benefit from in other industries.
And so that's, and I'm not sure that that's a near-term opportunity for us to fix. But I think if we bring, from the department's perspective, tremendous leadership in bringing experts on production into the shipyards and helping us get to a place where we can two or three x our production capacity, that's a start. Secondly, I think there's a lot of innovation coming. I met with the CEO of Ceronic yesterday who's bringing these unmanned ships, and they're making tremendous investments in the growth of shipbuilding capacity. And so I think we need to think about how we are encouraging new entrants into the space as well.
Speaker 18
I'm almost out of time, but I just hope you're also reflecting on how we build that talent pool domestically of skilled labor that we need to get this job done. That amount of time, I appreciate it.
Speaker 1
Jeremy yields back here, and I recognize the gentleman from Missouri. Mr. Bell.
Speaker 19
Thank you, mister chair, and the ranking member to our witness. Thank you for being here today. My district in the greater Saint Louis region is home to the production of some of the most advanced fighter aircraft in the world. Generations of skilled machinists, engineers, welders, and technicians in our community have built the aircraft and weapon systems that protect our service members and deter our adversaries. Saint Louis is a sleeping giant in the defense industrial base.
We have the infrastructure, we have the workforce, we have the supply network, and we have the innovation ecosystem to scale product production rapidly when the nation calls. What we need is predictability, investment, and a department that sends clear, stable demand signals, so industry can hire, train, and build with confidence. At a time when China is expanding its industrial capacity at a pace we cannot ignore, the United States cannot afford boom and bust procurement cycles that hollow out our workforce and weaken our supply chains. Speed to scale is not just a slogan. It requires stable, multiyear procurement, accelerated qualification of advanced manufacturing, and a workforce strategy that meets the moment.
If we get this right, we strengthen deterrence, lower long term costs, reduce reliance on foreign supply chains, and create good paying jobs in communities like mine. Saint Louis stands ready to do its part. The question before us is whether we will provide the policy certainty and acquisition discipline necessary to unleash that potential. Mister McDuffie, given historic instability in air force procurement profiles, how is the department ensuring long term forecast stability so suppliers in places like Saint Louis can confidently invest in tooling, workforce, and throughput?
Speaker 3
Congressman, thank you for your question. I also had the privilege of visiting your district recently in the Boeing facility. Congratulations on the relocation of the Boeing headquarters to St. Louis. I think that's a tremendous initiative.
And I agree with everything you said about how do we build in long term stability into the industrial base. Munitions is the first case that we took a look at. I think we're interested in exploring and working with Congress to see if that can be extended to other platforms, because of all the benefits that you outlined. Investment that comes from the stability when industry knows that there's certainty of demand over a period of time, that they can spend on their workforce, on their production capacity, on any means of production that requires enhancement or efficiency, and they know they're gonna get the return on investment. I think that comes from the multiyear procurement that we piloted with the help of the congress last.
Speaker 19
And as a follow-up, what concrete steps are you taking to avoid the boom and bust cycles that hollowed out skilled aerospace labor markets?
Speaker 3
Well, I think the announcement of the F-47 is a good step to ensure that we've got a sixth gen fighter, and we can maintain that workforce beyond our current inventory. And I think ensuring that we've got the funding there is the other thing. And you know, obviously, we're working the FY27 budget right now. And I think the third thing is where we can pursue a multi-year procurement. So whether it's fifteens with Boeing and, f 30 fives, f 40 sevens, we know we're gonna need these systems, and there's only one vendor delivering them.
And so how do we keep the pressure on to ensure that we get the delivery that we need, also provide the certainty so they can make the investments to deliver on time?
Speaker 19
Across the department, there's been a slight shortage of skilled workers, including welders and machinists. In aerospace-heavy regions like my district, workforce shortages directly constrain output. Here in Congress, I've made it a priority to expand workforce opportunities across educational programs and partnerships with schools and universities across the greater Saint Louis region. Does DOD currently have the authority to partner with regional tech schools and workforce boards to expand pipeline programs?
Speaker 3
We do have current programs that pursue training within these key disciplines where we don't have the workforce that we need. If there are specific areas where you see a need for investment, I'm sure that my team would be happy to work with your team to identify any candidates where we could expand that capability.
Speaker 1
Gentlemen, yields back. You're not recognized as a gentleman from Guam, Mr. Moland.
Speaker 20
Thank you, Mr. Chairman. Under secretary Duffy, thank you for you and your team and the hard work you're doing to protect our soldiers and our freedom. Thank you, sir. And I'm representing Guam, of course, and I wanna bring your attention to the Indopecon. Guam being the most western soil, where we have our ammunition and our fuel, it's a great concern for me.
And in a Taiwan conflict, considering that a 2023 CISIS analysis estimates the United States will be depleted of guided ammunitions, the PGMS, within one week of the start of hostilities. And in our current operation in Iran, we know that interceptors are being consumed more quickly than we can put them together. And I know your office does recognize this vulnerability, and you're working really hard to improve our munitions industry base. But, of course, we have a shortfall, and there's potential to leave our service members at greater risk. So question, sir, is how long can we sustain this operation in WIFARAM before needing to transfer munitions from the Indo Pacific region?
Speaker 3
So this is clearly a focus of ours is ensuring that we are really driving the industrial base to drive up the growth and the production capacity within the industrial base. I wanna thank the, your leadership and Guam for being such a strategic asset for the department and all the work that's going on there. I think this will be a continual effort over time for us to continue to engage industry, identify the opportunities to increase the production rate to ensure that we've got munitions across the board for all challenges that we may face.
Speaker 20
Thank you. And give me your concern about our limited magazine depth and how it would undermine our deterrence in the Pacific.
Speaker 3
Listen. I mentioned earlier, I believe that General Kain stated that we have adequate munitions for any fight at any time at the President's choosing, and agree that to be true. That doesn't mean that we shouldn't be investing our energy and our treasure and our expertise to expand the defense industrial base and munitions across multiple portfolios. And so that's where my focus is on a day-to-day basis.
Speaker 20
So on that line, sir, do you feel or see value in establishing munitions production in the endo... Endopacon Pacific Theater? Because of our logistics, distance, and the chain that we had to go through, when we finally had to look at our forces overall. So would that be an option for you, sir?
Speaker 3
My office is consistently considering and evaluating opportunities for not just co-production, co-sustainment opportunities to partner with our allies in the region, both in Europe and in the Asia Pacific region, to provide capability for means of production and sustainment. And so I think it's a constant consideration as we engage our allies in the region.
Speaker 1
Yield back. Gentleman yields back chair. Now I recognize this gentleman from California, Mr. Cisneros.
Speaker 21
Thank you, Mr. Chairman. Thank you for being here, Mr. Duffy. Secretary Duffy, the president Trump just didn't say adequate. He said the US has the ability to fight wars forever. Virtually, we have an unlimited supply of weapons and munitions.
Where did he get that from? Who told him that? Was that you who told him that? Was it Secretary Hexath? Who told him we have an unlimited supply of weapons?
Speaker 3
I haven't been a participant in a conversation directly with the president.
Speaker 3
I believe we have the weapons that we need, and I'm working every day to ensure that we have.
Speaker 21
So we do not have an unlimited supply of weapons. I can tell you that. I'm pretty sure that's why we're having this hearing today. But so was the president just lying to us right now? Is he lying to the American people when he says we have an unlimited supply of weapons?
Like my colleague just said. Right? We're patriot missile interceptors are it's taken us we make them in the teens per month. We're flying them off, firing them off hundreds at a time. We've used numerous ones there.
We're not replacing them at the pace we are using them.
Speaker 3
I'm focused on ensuring that we're making up for the industrial base that we inherited from the last administration and creating multiples of production capacity, so that we do have as many weapons as we need for any future conflict.
Speaker 21
Well, this administration is a year in the job already. Right? So they can't keep blaming the previous administration. They gotta get going here and get this rolling. So, you know, with that, right, we need to kind of work on our industrial base.
We need to pick up the pace, and this is something that is going on back to the previous administrations, including the first Trump administration. And I'll even give you the benefit of the doubt, the administration before that. Right? So it's an ongoing problem. So, how are you gonna fix this?
Right? You're in the job now. How are you gonna get production up?
Speaker 3
Well, I think, you know, we started last month with these deals that we negotiated with industry where, thanks to this committee and the Congress' willingness to grant us a multiyear procurement authority, we have been able to pursue long-term contracts with these vendors. And what that provides them is the confidence to invest their own money. This is really, I think, unprecedented, at least with our traditional defense contractors, to be willing to put up the billions of dollars that is required in order to quadruple production of these exquisite weapon systems. And we're looking to pursue other avenues and other platforms to apply that model.
Speaker 21
Well, I don't know how willing they're gonna be to put up their own weapon systems. They're not gonna be able to make the money back on it if we're not going to choose them. Second question, the 2026 national defense strategy explicitly calls for revitalizing the defense industry base through nontraditional vendors to better integrate and mobilize our nation's unrivaled creativity and ingenuity. This past January, though, secretary of defense initiated line by line review of small businesses and eight contracts to eliminate waste and focus strictly on lethality. There's a paradox here. The DoD wants a broader, more resilient industrial base but is simultaneously cutting the vast contracts that allow small, nontraditional companies to innovate and survive.
So how does the department plan to reignite the industrial base while simultaneously creating an environment of high risk and contract liability that drives small innovative firms away from the defense market?
Speaker 3
The secretary's review is focused on eliminating waste and fraud, as you had suggested. Quite honestly, I think small businesses that are performing will benefit from this because this will enhance the program as a high-confidence place where innovative companies can come to do business with the department and not be crowded out by people who are not delivering capability to the department.
Speaker 21
Well, I've talked to many businesses that were delivering, who were performing, who had earned these contracts through what they've done. And I've also talked into numerous businesses that don't wanna commit the financial, the dollars into this because they're not sure that these the investment's gonna come or that these weapon systems will ever be done. Right? We need to encourage innovation. We need to encourage the businesses to kind of come to us with new ideas, and we need to be able to support that.
So with that, Mr. Chairman, I yield back.
Speaker 1
Gentlemen, yields back. Chair now recognizes the gentleman from Virginia, Mr. Vindman. Thank you, chairman.
Speaker 22
So, given the casualties we've sustained during this war, from drone threats, the public reporting seems to at least indicate that the casualties that we sustained, the six KIA, and the many more wounded were from a drone strike. Is the department going to work on an effort similar to Jayato? Do you know what Jayato is?
Speaker 22
So that was an effort stood up to deal with the IED threat that we faced in our wars in Iraq and Afghanistan. It was kind of initially an ad hoc effort to deal with what was not a well understood threat. Obviously, we should have known about the drone threat for years now, given that we've seen this in the Ukrainian context. So it's disappointing that no precautions or insufficient precautions were taken there. But how are we going to deal with this threat going forward?
Speaker 3
Last summer, the secretary stood up in partnership with the secretary of the army, the joint interagency task force 401, which is probably not quite as robust as Jaido, but it's got its own independent acquisition authority led by a one star brigadier general. And it's intended to procure, develop the cutting edge counter UAS capabilities, a single point of contact within the department, while also allowing bespoke, for example, navy counter UAS capabilities to be procured within navy service lanes. But this is similar to Jaido, a cross-cutting single point of counter UAS, technology acquisition.
Speaker 22
So it sounds to me that the department has already anticipated this threat. Is that correct?
Speaker 22
So if it has anticipated a threat, then, I guess the casualties already sustained were as a result of a lapse. And I'm sure there's gonna be a full investigation conducted by the department. And I look forward to seeing that, given that, again, public reporting indicates that there were complaints from the leadership talking about insufficient protection against drone threats. So you talked a little bit about this 401, task force 401. Can you talk a little bit more specifically about what exactly, like, how is it gonna streamline?
Where can we help as members of Congress? This is absolutely, obviously, a major threat. We've seen it again over the years. This has to be I don't know if a one-star is enough horsepower, but to elevate this now to something that is much more significant, because I'm being told by senior leaders that the threat from the ballistic missiles is actually easier to deal with because we have sufficient interceptors and air defense capabilities, but we are not prepared for drone systems counter UAS.
Speaker 3
I think it absolutely is a key priority. I think what JIATF 401 is focused on is a full range of technologies that are emerging, both privately funded and government funded technologies. Directed energy, the APKWS is a modified Hydra 70 rocket that, for low cost, has been very effective at intercepting counter UAS, excuse me, in intercepting UAS threats. So I think I'm sure my team would be happy to come give you a more fulsome briefing of what we are working on. But I assure you that I believe the congress made somewhere near to billion dollars.
I don't know that specifically, but the giant of 04/2001 is moving quickly to expend those funds to make sure that we both develop the technology and get them into the field as quickly as can.
Speaker 22
So I am interested in the briefing, and I'll take you up on that offer. And I hope that some of these systems, even though they're not proven and they're not in the ordinary procurement system, some of them are being deployed forward to prevent the strikes that we're seeing. Just quickly, changing tack here also on UAS, but one of the things that we've seen effective in the Ukraine battlefield is fiber optic drones. So, basically, wire-guided. Are there efforts?
Is anybody looking at that? Because these are obviously EW, rich environments that we operate in, both in The Middle East and the Ukrainians in Europe. Are we looking at those capabilities?
Speaker 3
Yes. We have a drone dominance initiative that was launched last summer. It's being led by Owen West, the new director of the Defense Innovation Unit. He's been able to deploy up to $2,000,000,000 worth of funding that the one big beautiful bill made available, which is looking at building out the domestic industrial base for unmanned systems. I can't speak specifically to fiber optics.
I'm sure we could look into that and get you a specific answer on that. But given the robustness of the effort, I wouldn't be surprised if he was looking at a full range of technological solutions.
Speaker 22
I would appreciate you looking into that, and thank you for your time. I yield back.
Speaker 1
The gentleman yields back. We have a hard stop at 12:15, so the members in the room will be allowed to ask their questions. If any other members are thinking about coming to the chamber, don't bother. We will now recognize Mr. Conway from New Jersey.
Speaker 23
Thank you, Mr. Chairman. Mister Duffy, I want to thank you for your testimony and the information you provided to this committee today. This being my first hearing, as a new member of the Armed Services Committee, I can announce that I'm a proud representative of New Jersey in the 3rd District. As I'm sure you're aware, New Jersey has a strong defense ecosystem that is vital to national security, innovation, research, and development. Also, in the areas of manufacturing and technological advancements.
My state is home to roughly 7,000 defense contractors who collectively receive over 7,000,000,000 in DOD contracts. Of this, over 1,000,000,000 supports manufacturing research and development across more than 1,700 New Jersey companies. In just one facility in Morristown near my home, over 35,100 employees work to support critical integrated warfare systems and sensors, which includes radar and weapon systems that are utilized by the department to protect our service members. My district is also home to the joint base McGuire Dix Lakehurst, which employs more than 46,000 people. And, as you can tell, ensuring continued support and strengthening of the defense industrial bases of critical importance to the people of my district and across the state of New Jersey.
I wanted to ask you about the SPY-one radar and system that's developed and integrated within the Aegis Compact System for the Navy for now over 40 years. SPY-1 and IJIS have been indispensable systems in enabling the navy to protect the fleet, our service members, our allies in recent combat engagements, including right now in the Middle East. What are you doing to sustain the SPY-1 radar through the duration of these ships' expected service lives?
Speaker 3
Well, it's a critical capability that our sailors are dependent on. And, as far as I'm aware, we will continue to rely upon it until there's a and if and any subsequent upgrades would be made to that system. So I don't have specifics on the program. I'd be happy to get back to your team, but I do know it's a critical capability for us.
Speaker 23
I appreciate that. We've heard, during this hearing, about the importance of demand signal and the briefings that I've attended here to date. Certainly, that has been something that has been emphasized by those who work within the defense establishment. They are critical to ensuring that we have enough suppliers and skilled workforce, retain the skilled workforce, and train the skilled workforce necessary to meet the various production demands that we have. And imagine you've answered this in one way or another, but it's important that the demand signals, I understand, are accurate and signal our industry partners to produce what is needed for a national defense like those that are currently working in my district.
What more can you do to reassure those production facilities that, when they're receiving the right signal and acting on that signal?
Speaker 3
Well, we're very dependent on the joint staff to help us find what that true demand signal is. What are the weapon systems that the warfighter needs in order to prevail, to deter conflict, and prevail. And so, when it comes to specific systems, working with the joint staff and our partners in the military departments, we're actively now looking at how can we create as much certainty of demand as we can, where we have an understanding that we're gonna need a system, you know, into the foreseeable future.
Speaker 24
Thank you, Mr. Chairman. I'm glad I snuck in there. Appreciate it. Thank you for the good grace, and thank you, secretary, for being here and your team. I wanna start by commending you from day one, just really a ruthless focus on speeding things up, driving urgency, driving culture change in addition to all the processes that need to go along with that, the partnership with the committee, with the chair and the ranking member on Speed Act and all that's come.
And, it's just encouraging to me given, especially things happening right now, that everybody's working together in this space. And it's a credit to your leadership. Thank you. I'm hearing from companies that have had great initial success in OTAs and outfits, other competitions. And I'm also hearing from warfighters who have been participating in those competitions.
We're happy. Things are going well. But then when we try to move from that success in that competition or sort of rapid prototype, it still feels like we're not fast enough on getting to that scale point, finding the right owner to scale, and moving it. And I know you're familiar with a lot of these as well, but I just heard a story of some of the ground autonomy stuff happening, which is very exciting, with a company that literally spun out of a university, funded by DARPA, gone through all the competitions. Their mission customer loves them, but it's just they're running up to a point where, you know, the warfighters need it.
Their investors are saying, what's the next step? So, I know you understand that and are working on it. Just wanna ask, what more can we be doing? What can I do to speed that up?
Speaker 3
Thank you. Yeah. I think awareness, I mean, it's hard for us to be fully aware about all the great opportunities that are out there. I do wanna make sure we're embracing all the private sector investment and making sure they're connected with the right folks. I mentioned something earlier that I think is a barrier that we need to work through, which is the legacy structure of our acquisition system, I think, makes it challenging for these new entrants to find champions inside the system.
And you're only gonna get across the Valley of Death and get into the pipeline if you've got a champion inside the system. So thinking through what kind of mechanisms could we use. I mean, we've created the defense and innovation unit in SCO, and, of course, DARPA and others are helping incubate that technology. But it's my hope that one of the outcomes of the portfolio acquisition executive with what we believe will be flexibilities will be provided to those leaders that they can potentially be champions of new and emerging technology that are contributing directly to the mission area where they have responsibility for acquiring capability.
Speaker 24
That's great. And we would love to work with whoever on your team makes sense if we're hearing those data points, to make sure if you're not tracking them for whatever reason. So we could follow up with you on that. I appreciate, again, that you guys clearly get, and you personally get the culture change component of this, in addition to authorities and everything else that we've been working on. I also want to, and I know this has been talked about, but I think it merits another minute and thirty-five seconds that I have.
I wanna read a quote from the commander in chief from 48 hours ago. The United States munitions stockpiles have, at the medium and upper-medium grade, never been higher or better. As was stated to me today, we have a virtually unlimited supply of these weapons. Wars can be fought, quote, forever and very successfully using just these supplies, which are better than other countries' finest arms! Were you involved in stating that to the president?
Because I'm not trying to play gotcha, but I that justifies everything we've heard in every hearing I've been in for every year I've been in Congress. I'm just trying to understand where the disconnect is.
Speaker 3
So my focus is on accelerating the industrial base to ensure that we maintain maximum supply.
Speaker 24
So you weren't involved in briefing the commander-in-chief on that issue. Do you agree with that characterization? I believe we have an unlimited supply.
Speaker 3
So I deferred to the chairman, reinforcing the president's views, which is that we do have what we need to. But do
Speaker 24
Virtually unlimited. Okay. That's right. Do we have a virtually unlimited supply?
Speaker 24
I don't, and we've heard that over and over. And the reason I'm asking this is, if we don't honestly grapple with the problem and fully recognize it, if we're deceiving ourselves about the scope of the problem, we're never gonna solve it. Right? I know we all understand that. So that's why I'm asking it in good faith, and I yield back, mister chair.
Speaker 1
Gentlemen, yields back. Gentle lady from New Hampshire, we finally made it to you. I'm glad you waited. You're recognized.
Speaker 25
Thank you, Mr. Chairman. Definitely worth the wait. Thank you so much, Mr. Duffy, for being here today. I'm gonna jump right into it. I wanna thank you for your commitment to really supporting the workforce.
And when you were here in July, we talked a bit about childcare. And I really appreciate your commitment to helping us solve one of the core challenges that I hear from service members, from our exceptional top tier workforce at the Portsmouth Naval Shipyard, really across the board, that child care is standing in between the people who are serving us and readiness. In the National Defense Authorization Act, we were able to secure a bipartisan provision. It's a really simple one. It just requires the department to come and give us a briefing on your efforts, which I'm sure are underway, to develop solutions in child care.
You know, the Department of Defense is the largest employer-sponsored child care in the world. But we're eager to hear from you, and I just wanted to ask if you could commit. The briefing was supposed to happen by February 1, so we're eager to get this on the books. And just wanna ask for your commitment to get that scheduled as soon as possible.
Speaker 25
Thank you. I appreciate it. I also wanna thank you for your written testimony and your testimony today, your commitment to building the robust talent pipeline that we're going to need to bring about the next generation of skilled tradespeople, in this country. And I wanted to ask you, what are the biggest barriers that have been standing between the department and the creation of apprenticeship programs and support for career and technical education? Since I know it's a patchwork of 50 states with differing rules.
You had a great start, it sounds like, to the pilot program in Michigan. But can you just say a little bit more about what the barriers are that you're facing?
Speaker 3
I think so. I believe we have a robust pipeline of programs that are working to, you know, generate interest in the K through 12 and STEM and even vocational trades, and partnering in regional areas to enhance the workforce by training where we have deficiencies in particular trades. I think we can continue to grow that program, but I do think it's more systemic. I think it's how do we get the workforce motivated by the mission of this, of the job, of the vocation, and how do we overcome some of the challenges we have with compensation and difficulty of workforce. So I'm not sure training programs are gonna get us across those. And so we're devoting a lot of thought internally to are there broader scale initiatives that we can undertake that champion the importance of the mission of this workforce and, you know, embedding that thinking into the national culture, not downplaying.
I'm actually very much think those training programs are significant. I just wanna think about maybe there's a bigger challenge we need to undertake.
Speaker 25
Well, I would love to work with you on that, especially as we are gearing up for the NDAA for the coming year. So thank you for your commitment to work together on that.
Speaker 25
Huge priority for me. In your written testimony, you talked about the importance of multiyear procurement contracts, and you testified specifically about the ways in which you've used this tool to triple, quadruple production of key missile defense interceptors. So I'm assuming that's to try to shore up what was a depleted and insufficient stockpile?
Speaker 3
I was addressing the insufficiently invested defense industrial base. The production capacity is there. We have tremendous growth needs, for ensuring that we can secure, you know, we're seeing increased expenditures in our European allies. We hope.
Speaker 25
You know, we want a triple and quadruple production because we wanna shore up the what is a stockpile that hasn't exactly met the moment. My concern, mister Duffy, is we started this war five days ago with an insufficient stockpile in these key missile defense interceptors. We are expending them at a rate that's not entirely clear to me as I sit here now. And my concern is that I read your national defense strategy. How is this how are we going to be able to actually meet this moment and be successful in a strategy of denial, as you put it, very well, in the Western Pacific?
So this is a question I'll submit to you on the record because I see I'm out of time, but this is my core concern.
Speaker 3
I, first of all, when it comes to the adequacy of the stockpile, you know, chairman of the joint chiefs of staff, Dan Cain, stated very clearly today that he planned and is executing a mission that has an adequate stockpile. So as I mentioned, my focus is way before this operation started, ensuring that we're making the investments required to expand the industrial base that we inherited, that doesn't account for the future growth needs of our security. And we are focused, and I am focused every day on ensuring that we get the industrial base to produce more.
Speaker 1
Gentlemen, yield back. Thank you, Mr. Duffy, for being here. We have asked this committee for an accounting of all equity deals that you've made to date. Can you get that to us by the end of the week, please?
Speaker 1
Thank you. Been a long day. You did a good job. Thank you very much. We're adjourned.
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