December 7, 2021

Volume XI, Number 341

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December 07, 2021

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December 06, 2021

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Finding the Weak Links – President Biden Executive Order Demands Review of Critical U.S. Supply Chains

On February 24, 2021, President Biden signed Executive Order 14017, “Executive Order on America’s Supply Chains,” requiring a review of global supply chains that support key U.S. industries in an attempt to improve supply chain security for the U.S. government and U.S. companies. The new Executive Order appears to be an initial step focused on information gathering. Comprehensive reforms and supply chain strategies are likely to follow once the White House has collected key information.

The Order outlines two types of assessments by government agencies: (1) an initial 100-Day Supply Chain Review focusing on key supply chain risks relating to semiconductors, batteries, strategic minerals, and pharmaceuticals; and (2) Sectoral Supply Chain Assessments in certain critical business sectors (e.g., national defense, public health, information and communication technology, energy, transportation, and agriculture), which will determine the extent to which these critical sectors are reliant on products from so-called “competitor nations.” Both categories of assessments require coordination among various executive agency heads, the Assistant to the President for National Security Affairs (“APNSA”), and the Assistant to the President for Economic Policy (“APEP”).

The initial “100-Day Supply Chain Review” requires, over the next 100-days, various agencies to assess vulnerabilities and consider potential improvements in four areas:

Supply Chain Area

Responsible Agency

Semiconductor manufacturing

Department of Commerce

High-capacity batteries (including those for electric vehicles)

Department of Energy

Rare earth elements

Department of Defense

Pharmaceuticals

Department of Health and Human Services

The broader “Sectoral Supply Chain Assessments” must be completed within the next year. For these assessments, the Order requires similar reports, but covering a broader range of supply chains, not focused as much on specific products or technologies:

Supply Chain Area

Responsible Agency

Defense

Department of Defense

Public health and biological preparedness

Department of Health and Human Services

Information and communications technology

Department of Commerce / Department of Homeland Security

Energy

Department of Energy

Transportation

Department of Transportation

Agriculture and food production

Department of Agriculture

The review called for in the Executive Order was prompted, at least in part, by a global shortage of semiconductors (a key component in card and electronic devices), which began shortly after the Coronavirus pandemic began in 2020. The shortage highlighted the need for the U.S. to refocus on its supply chain security for critical items by reducing its dependency on foreign countries.  But, as noted in the Order, the government is looking at other issues more broadly beyond semiconductors, attempting to ensure that the U.S. (and other friendly nations) continue to have access to cutting-edge technologies while reducing reliance on supply chains that are vulnerable to disruptions and to interference by foreign powers.

The Administration has noted this Order is intended to be a successor to the “Ensuring the Future is Made in All of America by All of America’s Workers” Order that President Biden signed on January 25, 2021. (You can read our previous blog about that Order here). This Order, along with the 2021 National Defense Authorization Act, Pub. L. No. 116-283 (you can read about the key provisions, including those on supply chain security, here), continue to indicate supply chain security likely will be a primary focus for the Biden Administration.

Industry partners may find themselves asked by agencies for input on these reports. To ensure that the government has the latest information, especially regarding supply chain risks, companies may find it useful to cooperate with these reviews. Where the end-result will inevitably be tightened restrictions requiring more U.S.-sourced products (including, potentially, products sourced from U.S. allies), and where the heightened restrictions will almost invariably mean higher costs, industry should be prepared to help government agencies conduct a proper cost-benefit analysis when making supply chain recommendations to the White House.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 90
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About this Author

Nikole Snyder Associate DC Government Contracts, Investigations and International Trade
Associate

Nikole Snyder is an associate in the Government Contracts, Investigations and International Trade Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Nikole represents government contractors in various government contracts litigation and counseling matters, including in the following areas:

  • Civil False Claims Act litigation defense;

  • Cybersecurity counseling;

  • Internal investigations;

  • Small business issues under the Small Business Administration regulations, including...

202-747-3218
Townsend Bourne, Government Affairs Attorney, Sheppard Mullin Law FIrm
Associate

Ms. Bourne's practice focuses on Government Contracts law and litigation. Her experience includes complex litigation in connection with the False Claims Act, bid protest actions both challenging and defending agency decisions on contract awards before the Government Accountability Office and Court of Federal Claims, claims litigation before the Armed Services Board of Contract Appeals and the Civilian Board of Contract Appeals, investigating and preparing contractor claims, and conducting internal investigations. 

Ms. Bourne advises clients on a...

202-469-4917
David Gallacher, Attorney, litigation, administrative, and counseling issues
Associate

David Gallacher is a partner in the Government Contracts, Investigations & International Trade Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Mr. Gallacher's professional experience involves a wide variety of litigation, administrative, and counseling issues related to federal procurement laws. His experience is extensive and includes complex litigation in federal court under the qui tam provisions of the False Claims Act, claims disputes before the Boards of Contract...

202-218-0033
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