The Tangled Web We Wove

To promote more resilient and secure supply chains, the U.S. government must enact a range of policy actions. Cooperation with industry and allied and partner countries should be an essential feature of this strategy. The following recommendations comprise specific actions focused on bolstering the government’s ability to manage supply chains through greater organizational capacity and authorities. Also proposed are investments and initiatives that are likely to transform supply chains to the long-term benefit of U.S. national and economic security.

Manage Supply Chains

The White House, with the support of Congress, should:

• Craft a supply chain strategy. The United States needs a blueprint for how to think about, and prioritize, the security and resilience of its critical supply chains.
• Remap critical supply chains. Many supply chains important to U.S. economic security and national defense are dangerously brittle. Addressing these vulnerabilities will be expensive, complex, and time consuming. The risks of not restructuring these supply chains, however, are even greater.
• Institutionalize supply chain reviews. The U.S. government should institutionalize the use and frequency of supply chain reviews for critical sectors as part of a comprehensive framework to monitor and continuously improve supply chain resilience efforts.
• Engage with industry leaders and private sector partners on the development and implementation of supply chain restructuring. Policymakers and government officials must continue to engage private sector partners and leverage existing models of public-private partnerships when considering the restructuring or remapping of critical supply chains.
• Leverage existing federal legislation and regulations to incentivize and drive transformation beneficial to the U.S. economy and defense. U.S. executive agencies have the authority to enforce, as well as regulate through supervision authorities in critical infrastructure, critical sectors related to U.S. defense or economic security.

Congress, in consultation with relevant government agencies, should:

• Expand the use of existing industrial survey authorities. The Department of Commerce’s Bureau of Industry and Security (BIS) has the authority under section 705 of the Defense Production Act to conduct “industry studies assessing the U.S. industrial base to support the national defense.”¹
• Promote efforts to improve software supply chain security. Existing governmental efforts to strengthen the resilience of supply chains should acknowledge and address software supply chain security.
• Evaluate vulnerabilities in U.S. stockpiles of critical materials and supplies for national defense. The U.S. government must prepare its strategic stockpiles for widespread disruption to global supply chains by increasing funding and resources for emergency preparedness and response.
• Encourage relevant government agencies to adopt emerging technologies, such as blockchain, to build transparency and accountability. Distributed ledger systems ensure transparency for all parties along a given supply chain by providing verifiable and certified information at every level of production.
• Identify, develop, and apply security principles for technologies in supply chains. As private industry continues to adopt emerging technologies such as 5G and Internet of Things infrastructure, cybersecurity concerns remain a persistent threat.² Congress in consultation with the Federal Communications Commission should review relevant principles for ensuring safe and secure usage of these technologies throughout critical supply chains.
• Review and amend outdated provisions in the Uniform Commercial Code and others to optimize supply chain coordination. The governing legal standards for supply chains in the United States are based on the privity of contract doctrine, which prevents external parties and individuals from enforcing the obligations of a contract they are not a part of.

Transform Supply Chains

Congress should:

• Expand the mission of the Bureau of Industry and Security. BIS should assume authority to regulate and protect U.S. technology supply chains. It should be reorganized to model the Department of the Treasury’s Office of Terrorism and Financial Intelligence.³
• Create an assistant secretary of commerce for supply chain and technology security. This position would centralize the department’s policy and regulatory programs involving supply chain integrity, availability, and resilience, such as Defense Production Act programs, and planning and administration of BIS industry surveys.

Congress, in conjunction with the State Department and the White House, should:

• Establish a network of like-minded countries to collaborate on technology policy.⁴ Technology policy coordination among like-minded countries is often sporadic and disjointed. The United States should create a multilateral technology alliance with a core group of like-minded countries to collaborate on supply chain diversification.⁵
• Bolster U.S. capacity to conduct tech diplomacy. The United States needs a robust tech diplomacy capability to address the international dimensions of supply chains and technology competition more broadly.

The Department of Commerce should:

• Establish an information fusion center, headquartered in the International Trade Administration’s Office of Industry and Analysis. Anticipating and mitigating supply chain risk will require a permanent and dedicated effort to monitor and analyze developments in industry and actions by foreign governments that impact supply chain dynamics.

The National Science Foundation, in collaboration with relevant agencies, should:

• Invest in next-generation tools, platforms, and technologies for supply chain security. For example, AI tools hold great promise to improve supply chain management such as by analyzing vast data sets, enhancing understanding of relationships, and supporting decision-making.