Joint Allied Procurement, Supply Chains a Shot to Counter China

The Pentagon should examine its acquisition, procurement, and sustainment practices with its allies to compete with China on emerging technologies, representatives from the Five Eyes intelligence alliance said during a panel Thursday.

Current and retired military officials from the US, UK, Australia, Canada, and New Zealand discussed the need for a joint task force, which in the words of retired Vice Adm. Robert Thomas Jr. would “shepherd and actualize emerging technologies” to stem national security and economic concerns over China’s growing global influence.

Panel speakers at the WEST 2023 conference co-hosted by AFCEA International and the US Naval Institute advocated that Five Eyes allies and other partner nations find ways to mutually fund projects and jointly test some of the desired technology in the Asia-Pacific region to stay ahead of China and move faster on emerging fields like artificial intelligence.

Such change could mean more international opportunities for US defense contractors working with allied nations, as well as confronting changes to data rights and other intellectual property rights.

The panel also discussed the benefits of uniting allied industrial bases to ensure research and development occurs where there is the greatest expertise.

“The only way we’re going to be able to compete is if we view our industrial base as a whole across all of the allies and not view it too independently,” said David McCue, defense director of the Australian Trade and Investment Commission.

There are complexities to sharing technology and data related to national security, Thomas said, adding that issues of exportability need to be factored into acquisition requirements early in the process rather than addressed only once a new technology is fielded.

He also urged greater allied sharing of industrial base capabilities and weaknesses, and supply chain vulnerabilities.

“We do a great job with intelligence sharing, but I’m not necessarily convinced that we do a great job when it comes to sharing information on our collective industrial base,” he added.

McCue also called for combined solicitations where all Five Eyes members could contribute by funding research and development projects together.

Retired Col. Stephen MacDonald, advisor for defense cooperation for the Canadian government, noted how innovation can be hampered by bureaucracy, a culture of risk aversion, and insufficient access to capital for private sector partners—all aspects the US Defense Department is trying to tackle with the Pentagon’s Planning, Programming, Budgeting and Execution, or PBBE, process.

While the Canadian procurement process is meant to “instill accountability” it limits speed, he said.

“We have to find a way to fail quickly and fail inexpensively rather than failing over a slow-burning process where we become committed to a capability that we know along the way that’s probably not so good. But we stick it out for a lot of different reasons and then we field this thing and it’s suboptimal,” he said.

In the morning’s keynote address, Secretary of the Navy Carlos Del Toro spoke of cooperation. “Growing our partnerships with allies worldwide is particularly important and it’s particularly important in the Pacific,” Del Toro said. He added that he’s working on greater interoperability with allied forces in Asia and the Pacific to deter threats from China and Russia, who “have no allies and partners.”

The comments come as the Pentagon announced partnerships with allies like Japan to develop dual-use technology and the Netherlands to produce semiconductors.

Supply Chain Collaboration

As Western powers pivot to the Asia-Pacific region to deter China’s growing defense and economic influence, its dependence on China has created supply chain vulnerabilities in critical areas, McCue said.

“Unless we take actions together, collectively as allies, to stem the tide, to stop the tsunami that could hit us, we run the risk of competing with the country that will at some point in the future have a bigger economy and a more robust science and technology infrastructure to the United States and allies as well,” he said.

The war in Ukraine has also exposed bottlenecks in US supply chains for munitions and weapons sent to help the Ukrainians defend against Russia. The Pentagon has acknowledged industry pleas for greater demand signals to produce needed supplies with multiyear contracts to refill US stockpiles.

A successful economic “decoupling” strategy requires collective action by the allied nations’ governments because moving away from Chinese supply chains and manufacturing could raise costs for their citizens, MacDonald said.

“The problem is that allies and partners have substantial trade with an investment in China.”

To contact the reporter on this story: Patty Nieberg from San Diego at pnieberg@bloombergindustry.com

To contact the editors responsible for this story: Amanda H. Allen at aallen@bloombergindustry.com; Bill Swindell at bswindell@bloombergindustry.com