Title: Is DOD stockpiling enough critical materials for our national
defense?

Description: The Department of Defense maintains a stockpile of critical
materials that are essential to national defense and civilian life. This
stockpile includes metals like titanium, which is used to prevent
corrosion of weapons, and lithium used in batteries. But the DOD faces
challenges maintaining the national defense stockpile of these
materials. GAO's Bill Russell tells us more about this issue.

Related work: GAO-24-106959, National Defense Stockpile: Actions Needed
to Improve DOD's Efforts to Prepare for Emergencies

Release: September 2024

{Music}

[Bill Russell:] DOD can do more to better understand how much of the
materials it needs to hold in the stockpile.

[Holly Hobbs:] Hi, and welcome to GAO's Watchdog Report, your source for
fact-based, nonpartisan news and information from the U.S. Government
Accountability Office. I'm your host, Holly Hobbs. The Department of
Defense maintains a stockpile of critical materials that are essential
to national defense and civilian life. This stockpile includes metals
like titanium, which is used to prevent corrosion of weapons, and
lithium used in batteries. But the DOD faces challenges maintaining the
National Defense Stockpile of these materials. Here to tell us more
about a new report on this issue is GAO's Bill Russell, an expert on
defense supply chains. Thanks for joining us.

[Bill Russell:] Hey, nice to be here, Holly.

[Holly Hobbs:] So, Bill, what can you tell us about the National Defense
Stockpile? What's in there? And do we have enough of what we need?

[Bill Russell:] Well, the stockpile has been around for quite a while.
The legislation that created it was in 1939. And basically, you can
think of the stockpile as a break glass in case of emergency situation.
If there's a military conflict or any number of scenarios where we need
to draw down key materials to support weapon system development and
other activities, that's what the stockpile is for. So it has a lot of
things that are unique to the military space, but also have commercial
applications--think refined steel, tungsten, titanium, you know, which
can be used to create a number of weapons systems.

[Holly Hobbs:] How does the DOD know what to stockpile? How does it
project what it needs?

[Bill Russell:] The DOD through the Defense Logistics Agency works with
a partner to identify materials that are going to be needed in case of
emergency. So that changes over time. And they have a pretty robust
process for identifying what could potentially be needed for the
stockpile. In our report, what we found was there were some limitations
in the data that can be collected around some of the materials to know
how much of it to put in the stockpile. And we found that almost 40% of
the items that DOD identifies as maybe needed in the stockpile, it
doesn't have a good way to model how much of that to need, which is
important, because once you know how much you need, you can go to the
market and start to buy that over time so that you can ensure the
stockpile has what you need when you need it in case of an emergency.

[Holly Hobbs:] So this is so important that the DOD is required to
report annually to Congress about it and its efforts. We looked at DOD's
most recent report to Congress. What did it say?

[Bill Russell:] It really catalogs the actions that the department has
taken to increase the amount of materials in the stockpile. Sometimes
requirements can change, and they can actually sell some things from the
stockpile that's no longer needed at the quantity in which it's held.
But I think the most important thing we found, in terms of reporting to
Congress, was what was not in the report. And just a couple of examples
there--there wasn't a full list of the items that could not be modeled,
so that it didn't include potential risks for things that DOD knows that
it needs. It just doesn't know the right amount. One of our
recommendations was for DOD to be a little bit more transparent, and
some of those areas in its future reporting to Congress.

[Holly Hobbs:] Are there shortfalls?

[Bill Russell:] There are shortfalls. And over time, the number of
shortfalls has increased by 167%. A lot of that is the changing
analysis, more items being modeled, right. Different weapons systems are
coming online. They have different material requirements. So. it makes
sense that there would be dynamic changes there. There's also some
evolution in the market conditions. Right. How much is available to buy
at any given time? So that's what we found accounts for some of the
increases in the number of shortfalls reported. 

[Holly Hobbs:] The U.S. is not the only country stockpiling these
resources, right? What does that mean for us?

[Bill Russell:] Well, that's something that is important for DOD to
monitor. So, a number of items that are in shortfall, there's one or no
domestic supplier for those materials. That means having the ability to
assess risk on which foreign suppliers that we going to rely on or take
other measures to mitigate those risks. For example, DOD has a process
to potentially use the Defense Production Act funds to create domestic
suppliers, right. Help provide seed money to create a capacity in the
U.S. There's also a risk mitigation effort to look at the number of
foreign suppliers, like where are they? Are they in China or Australia?
Those are different risk postures. Another thing that the department is
doing is thinking about ways to better recycle materials. So, you know,
steel, tungsten, titanium, depending on what the item is there might be
a way to harvest that from other equipment that's no longer used. So
there's a lot of efforts in play to try to get smart about reducing the
risk when there is no domestic supplier for some of these critical
materials.

[Holly Hobbs:] GAO has a lot of work--some of it new--about critical
materials. Why is Congress asking us to look into this? What's the
bigger picture?

[Bill Russell:] It's resource competition, right? There are limited
resources that fuel all the high-tech items that we want to use and make
in the future. So there's almost like this race to, , lock down your
source of supply. But right now, what we're finding is even if you can
mine it in a certain country, like in Africa or someplace else, who
refines it? And a lot of the that part of the process is in China. So
it's a big issue that will have to be managed over the next decade
because you can't turn these things on overnight. Right? Even if you
decide I want to spend $5 billion to fix this problem. Well, to set up a
mining facility and go through all of the regulatory process to do that.
I mean, you're talking 10 years, so these are long-term problems. It's
good that people are paying attention to it now. But there aren't that
many quick fixes.

{MUSIC}

[Holly Hobbs:] So, the Department of Defense is stockpiling critical
materials that are important to our national security, but Bill just
told us that DOD is not modeling some materials to know how much it
needs, which could risk shortfalls. So, Bill, what more do we think DOD
should be doing to better manage the national defense stockpile?

[Bill Russell:] DOD can do more to better understand how much of the
materials it needs to hold in the stockpile, as well as to get better
information from some of the DOD components that use the materials. And
then on the back end, we found that the policies could be strengthened
around how to actually use the materials in the stockpile in case of
emergency. Right now it's not clear that the department knows which
office would initiate the request to actually, you know, break the
glass, it's emergency and go and get some of the material in the
stockpile. And we had a number of recommendations that the department
agreed with to help address those issues.

[Holly Hobbs:] And last question, what's the bottom line of this report?

[Bill Russell:] The bottom line is DOD can improve the way that it
manages the national stockpile to ensure that we are best prepared for
emergencies. 

[Holly Hobbs:] That was Bill Russell talking about GAO's recent review
of DOD's National Defense Stockpile. Thanks for your time, Bill.

[Bill Russell:] Thank you.

[Holly Hobbs:] And thank you for listening to the Watchdog Report. To
hear more podcasts, subscribe to us on Apple Podcasts, Spotify, or
wherever you listen. And make sure to leave a rating and review to let
others know about the work we're doing. For more from the congressional
watchdog, the US Government Accountability Office, visit us at GAO.gov.