Supply Chain issues have been a hot topic in the federal contracting community for several years now. But someone thinks the conversation will take place. The focus may be about turning away from whether its supply chains are secure online at how reliable contractors are in foreign sources of supply. Larry Allen is president of Allen federal business partners. He spoke with Jared Serbu in Federal Drive with Tom Teminwhere you see that directed conversation and why.
Larry Allen:We started to see this come out initially about personal protective equipment or all things pandemic related, and how difficult it was to get equipment and pharmaceuticals when international supply chains were strained or even closed for a short period of time. This has caught the attention of people inside and outside the buying community, and is starting to become a real part of the conversation. How can we as a government ensure that our agencies and our people have the necessary supplies when we have an international crisis? Will we be constantly dependent on existing supply chains where everything is globally sourced, or do we need to have an increased domestic resource capability? Everything I am hearing now suggests that policymakers are talking about an increased domestic capability in order to get more things done in and around the US by reducing reliance on global supply chains, but also at the same time disruptive.
Jared Serbu:And as long as President Trump has talked about “buy American” and issued “buy American” executive orders, this particular trend probably does not depend on who the president is next year.
Larry Allen:You really do not, Jared, you are absolutely right. I think we will see this issue move from perhaps the central stage to the center after the election more or less regardless of the outcome. This seems to be an issue that I think the next Congress will want to address for sure. When you look at it, some of the immediate discussions may be specifically about pharmacy, but it won’t end here. I will talk about critical parts of technology. We have already seen this year, for example, that some telecommunications and IT manufactured in China are being banned from the federal market. This will disrupt not only the federal supply chains, but to a large extent, the federal solutions, already installed. So it will cost people a lot of money. However, there is a belief that we need to be confident. We must be able to provide pharmaceutical products, personal protective equipment, whatever the need for people. And that one of the best solutions to this, the current thought is to increase the internal resource. So if you are a government contractor and you are used to having a global sourcing supply chain, especially if you are a trading company that also happens to do government business, this will be something you need to pay more and more attention to. great to
Jared Serbu:And acknowledging that we are speculating here to some extent, but what kind of descriptive measures can you imagine the government deciding on contractors?
Larry Allen:Well, you touch a few things like “buy american”, which has a percentage test now, in the broadest sense. So a certain percentage of the finished product has to be produced, or produced or created in the United States. I think we will see more of this. I think we will see, especially in the field of technology, more technology will have to come from the US or from a country that is not China or is not influenced by China. So I think it could certainly be a benefit for American manufacturers, but potentially also for some of our closest geographical allies – Canada, Mexico. I also think it’s worth thinking about, what are the ingredients of things, not just technology, but what are the ingredients of pharmaceutical products? What are the components of critical medical devices that have specialty metals in them? How can we source those ingredients or how can we reconfigure the manufacturer of those in the products so that we are not dependent on one or two areas of the world to get the critical ingredients that go into the products we use today? That’s all sorts of things I think we’ll see to be an added part of the discussion as we move on to the 2021 calendar.
Jared Serbu:Yes, and if this really becomes a pronounced priority to move forward, I wonder to what extent the government considers it and makes it a government responsibility rather than simply passing the debt on to contractors and saying, hey, you you need to increase your internal supply chain. Can they use them as the Defense Production Act more often to inject government capital into that kind of effort?
Larry Allen:Well, Jared, I’ll say I’ve had some conversations with people in and around the DoD space. And there is a discussion about increasing the use of the Defense Production Act, using it more often. At the same time, there is also the meaning that the act of producing protection takes you so far. So if you are talking about a large commercial and basic commercial service provider item for the government, now, some of those things may be in achieving the Defense Production Act and of course they can affect civilian agencies as well, which, depending on the product segment, you can talk about half the federal market. So it will have to go beyond that. And of course, the preferred place for the government to send money is back in the industry. And you say “here industry, this is our request, you understand how you are going to meet it”. So this is really an issue that contractors will want to look at, because it can radically change the way you do business with the government, who your suppliers are, and in some cases, if you want to keep doing business with the government. .
Jared Serbu:Okay, and our last two minutes want to focus on another topic here, which is the budget allocation process. I think, almost everyone agrees that we will be in a constant state of resolution for at least part of the rest of this calendar year. How – what is your crystal ball that tells you how long that part is and how important it is to contractors?
Larry Allen:Jared, I think the last question – first, it matters to contractors, because if you are a government contractor, what operates under constant resolution means that your government client cannot carry out any new project start-ups. which they would use embezzled dollars. And that is the vast majority of commercial products and commercial projects for the government. So it will certainly slow down your business as long as the government operates under a constant resolution. For his part of the crystal, I am thinking now that we may have an ongoing resolution until sometime in December. In fact, there may be more than one, depending on how the double and triple Congress wants to make the process. But I hope we will have the full budget bills approved in the third week of December. I’m looking at this because I think if the election is real as the polls say, of course, we do not know this, but if they do know, then the best chance for House and Senate Republicans to have a say in, appropriations for VF2021 will be during that lame duck session after the election. So I think we can see a big push to try to implement some spending bills before the end of the calendar year.
Jared Serbu:Larry Allen is president of Allen Federal Business Partners. Thanks as always, Larry.
Larry Allen:Jared, thank you and wish your listeners happy selling.
Jared Serbu:This interview can be found at www.FederalNewsNetwork.com.
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