EDITOR: | June 3rd, 2013

House Armed Services Committee Recommends Rare Earth Stockpile, Review of Foreign Magnet Waivers and Tests of DOD Mitigation Strategy

| June 03, 2013 | No Comments

June 3, 2013, Washington, DC – Recent proposed legislation before the House Armed Services Committee recommends strong action to ensure that the Department of Defense enforces defense acquisition regulations and implements cost-effective policies to secure supplies of rare earth elements and other strategic materials. The House Armed Services Committee’s “Chairman’s Mark” to the National Defense Authorization Act for Fiscal Year 2014 (NDAA) authorizes $41 million to stockpile six critical materials, two of which are rare earths, and requires detailed reporting about the Joint Strike Fighter (JSF) supply chain — including an investigation of how non-compliant rare earth magnets were included in the aircraft, bypassing three domestic and foreign-qualified suppliers.

“That the House Armed Services Committee may pass not one, but five, legislative provisions and reporting requirements on rare earth elements is unprecedented,” said Jeff Green, President of J.A. Green & Company. Speaking with regard to the stockpiling plan, he continued, “Though this stockpiling plan would mitigate immediate national security risks, more needs to be done to develop long-term and sustainable industrial base solutions.”

The $41 million authorization proposal includes funds to stockpile, among other materials, dysprosium metal and yttrium oxide. The former is a key additive to neodymium-iron-boron magnets, applications of which include actuator motors in flight control systems, landing gear, and munitions. The latter is critical for a range of ceramic applications, such as investment casting and thermal barrier coatings in high-performance jet engines.

In discussing the JSF, the Chairman’s Mark notes that each aircraft contains 920 lbs. of rare earths, and it would require the Navy to assess whether substitute materials can be introduced without compromising performance or causing cost-overruns. Another report would require the Government Accountability Office to investigate lower-tier distributors and fabricators of samarium-cobalt magnets and determine the extent to which distributors or fabricators of those magnets knowingly or willfully introduced non-compliant material into the JSF supply chain.

“These assessments are designed to move beyond the theory of policymaking to determine if the Department’s industrial base strategy — diversification of supply, recycling, and substitution — is workable in the real world,” said Green.

Additionally, the lead acquisition officer in the Pentagon would be required to provide an update on what action the Department has undertaken to secure rare earth supplies since the military published its annual requirements for the materials. The Chairman’s Mark also inquires which rare earths the Department plans to obtain via the Defense Priorities and Allocations System (DPAS, Defense Production Act – Title I), which can be used to compel U.S. and, under specific circumstances, foreign firms to fill defense contracts prior to commercial orders.

“This legislation blends smart, new policy and strong accountability,” said Green. “It is the result of many years of education and engagement with the Department and the industrial base.”

The House Armed Services Committee will hold its full committee markup on Wednesday, June 5.

A complete copy of the Chairman’s Mark of the 2014 NDAA is available here.

For more information contact:
Jeff Green, J.A. Green & Company
info@jagreenandco.com | 202-546-0388



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