What happens when COVID-19 infiltrates the defense supply chain?

The Defense Department is extremely efficient at planning and logistics, but the uncertainty surrounding how long and how widespread COVID-19 will be raises concerns on how parts, people, and acquisition will be affected.

The Defense Department had already started launching mass telework, visitor, movement and travel restrictions when the World Health Organization deemed the spread of COVID-19 a pandemic on March 11. But the impact of coronavirus on DOD's operations and supply chains is still unclear.

For now, defense contractors are being considered "essential critical infrastructure workforce" and have a "special responsibility" to stick to normal work schedules, according to a March 20 memo issued by Ellen Lord, undersecretary of defense for acquisition and sustainment.

According to the memo, obtained by Defense Systems, the essential personnel includes "workers who support the essential products and services required to meet national security commitments to the Federal Government and the U.S. military," and names engineers, IT support, mechanics, security staff along with transportation providers and medical suppliers for contractors and subcontractors as covered by the essential and critical designation.

The memo is notable for the categories of work it deems not essential: lawn care, recreational support and office supplies.

Uncertainties abound

"There's so much uncertainty here as the U.S. may be headed to a serious outbreak," Andrew Hunter, the Center for Strategic and International Studies' senior fellow and director for defense industrial initiatives, told Defense Systems.

And the question is: "How long do we have to hold on for?"

"I'm not really sure there is a really good historical precedent other than a government shutdown," Hunter said, who was in the midst of CSIS' telework preparations during the interview.

This time DOD has a budget and money is allocated, and its experience with years of continuing resolutions and sequestration -- where funding lapses meant DOD personnel couldn't come into work and reduced activity became the norm -- could work to its benefit.

"Maybe in a perverse way, the department is prepared for the next couple of months," Hunter said.

David Berteau, the Professional Service Council's president and CEO, said that while DOD has persevered through multiple health crises -- including multiple outbreaks of the avian flu starting in 2014, swine flu and severe acute respiratory syndrome in 2009 and Ebola from 2014 to 2016 -- "none of those matched this one in terms of magnitude or uncertainty of when we will turn the corner."

And that acutely matters when people are the assets at risk.

"Parts don't get sick but people do," Berteau said. "I don't think they have enough information about what [DOD's] vulnerabilities are there."

Hunter said the situation could become "problematic" and give rise to familiar long-term reduced readiness issues if conditions persist longer than a matter of weeks, especially if shipyards, depots have to be shut down.

James Geurts, the assistant secretary for Navy research, development and acquisition, told reporters following an House Armed Services Subcommittee hearing March 10 that he hopes it doesn't come to that. The Navy has taken precautions to understand its supply chain vulnerabilities, he said.

"We've had, for the last couple of years, an effort [to] really understand our supply chain better, understanding where we've got fragility. Because if we have to surge for war or if we have to be able to repair a lot in war, that'll be one of the first constraints."

Guerts said he hasn't seen issues regarding moving materiel, raw goods or transportation but understands that production ability is at risk.

"We're looking across our whole supply chain to understand where we, where we've got … fragility and where we do, make sure we understand where we've got margin to deal with that," he said.

When asked if there was a point of no return with regard to the uncertainty presented by COVID-19, Guerts said the focus is on "smart planning."

"Maybe I'll reorganize my build sequence, or maybe I'll make a better choice of taking something out of a rotatable pool of spares so I can get the production line going," the acquisition chief said. "If I wait until the day I'm looking for it and then the part isn't there, I don't have many options ... and it's different for every program."

The telework conundrum

One of the Pentagon's biggest challenges and opportunities lies with teleworking. It simultaneously allows for defense workers to continue their missions offsite while also opening up DOD's network to more cyberattacks.

But one unique problem is classified work, especially since DOD tends to over-classify materials, Hunter said.

"There's a lot of classified work at DOD -- maybe more than it should be -- because the tendency is to classify," and mechanisms haven't been developed to do much secret work remotely, Hunter said, referencing his time at the Pentagon.

"Even though you can work remotely on a problem, very few people have the ability to do classified work other than [at] their desk at their office," he said, adding that there's some level of secret work that can be done remotely, but doing so is generally discouraged.

"They haven't really developed mechanisms to do classified work in a straightforward way."

Then there's the issue of having contractors work remotely, which isn't always permitted or planned for in government contracts

"Can it be done remotely? If so, what does the government need to do? If that requires a modification to the contract, how quickly can it be done via blanket guidance or by contract?" Berteau asked.

PSC wants universal guidance so that contract officers don't have to make the decisions program by program, which could result in "hundreds of separate decisions of who can come to work and who can work from home, who has access and who doesn't," Berteau said.

There are also lingering questions of what happens when a portion of the defense workforce gets sick with COVID-19.

"Fifty percent of our contract dollars are for services," Berteau said. "There's too little public focus on the impact on the virus for contractors doing services, and we need to have more of that discussion."

James Yeager, the vice president for public sector business for the cybersecurity firm CrowdStrike, told Defense Systems that the coronavirus presents a ripe opportunity for hackers looking to exploit vulnerabilities for financial gain and illuminates the dearth of qualified security workers in the government space.

"Whether it's federal employees or federal contractors, there's not just an abundance of cyber [information security] resources just sitting around, Yeager said. "They're probably going to be accessing [potentially sensitive] applications through Wi-Fi, which I think we all know is dangerous and not so secure."

Additionally, cyber workers may also face technical or infrastructure limitations that may require grace in terms of compassion and contracts.

"The demands from the government end users who own a requirement may be putting pressure on a contracting office to get something done in an acquisition capacity," Yeager said. "But if there's going to be limitations there because of physical health and access to a building or systems that they would normally access to execute something like that.... There's a call for some understanding, some patience and some compassion there."

Some sectors, namely telecommunications and IT services, could see an uptick in government business requests as the federal government moves toward mandatory telework.

"We could see some significant expenditures on IT and telecommunications services. And once people get habituated, that demand may sustain even after things revert to a more normal pattern," Hunter said.

Technology for telework and network expansion is a big part of agency supplemental requests in the $45.8 billion package being put together by the Trump administration. Overall, DOD and its industry base could be more stable than others, he said, but it's too soon to know amid market turmoil. Everyone is "looking for a safe harbor."

This article first appeared on FCW, a partner site of Defense Systems. 

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