WASHINGTON, D.C. – Last week, U.S. Representatives Brian Fitzpatrick (R-PA-01), Rosa DeLauro (D-CT-03), Victoria Spartz (R-IN-05), and Bill Pascrell, Jr. (D-NJ-09) introduced the National Critical Capabilities Defense Act (NCCDA) to establish a review process that would protect the United States supply chain from foreign adversaries like China and Russia. This legislation would create a whole-of-government screening process for outbound investments and the offshoring of critical capacities and supply chains to ensure that the United States can quickly detect supply chain vulnerabilities.
The NCCDA will create a National Critical Capabilities Committee (NCCC), which will be empowered to review and block certain U.S. production offshoring, development, or manufacturing of identified critical national capabilities being made within adversarial nations, including China and Russia. The legislation encompasses the production of medical supplies and medicines, articles essential to the electrical grid, and areas vital to U.S. national security, among others.
“The unfolding global supply chain crisis is evidence that America can no longer afford to rely on foreign adversaries like China and Russia for our essential goods and supplies,” said Representative Fitzpatrick. “The NCCDA is an immediate, bipartisan response to the supply chain bottleneck that is plaguing our country and will increase transparency surrounding the offshoring of critical industries and manufacturing. We must act now to ensure the US has a resilient and secure supply chain that will bolster American innovation, job creation, and national security.”
“The COVID-19 pandemic and semiconductor shortages exposed that critical United States supply chains were not up to the task of robustly responding to America’s needs. We have to learn from our mistakes and cannot allow outbound investments from the United States to take critical supply chains overseas and into the hands of our adversaries such as China or Russia,” said Representative DeLauro. “Companies at a minimum should be required to report on their proposed offshoring of supply chains so the United States can better protect critical manufacturing capacity here at home and safeguard American workers and our national, economic, and health security. I am hopeful that this legislation can spur action related to United States supply chain security. I thank my colleagues in the House, Representatives Pascrell, Fitzpatrick, and Spartz, and in the Senate, Senators Casey and Cornyn, for leading this critical effort. Now is the time to act.”
“The recent pandemic highlighted significant weaknesses in supply chain resiliency, geographic imbalances, and material dependencies on the manufacturing output of our adversaries—like China—posing serious national security risks,” said Representative Spartz. “This bipartisan, bicameral legislation will improve transparency to mitigate strategic risks and increase domestic manufacturing capabilities for critical products and materials.”
“The frayed American supply chain and our continued bleeding of industrial capacity offshore represent a dangerous national security threat to the United States,” said Representative Pascrell. “This watershed, bipartisan, bicameral legislation will take a major step to provide needed transparency and tools to prevent supply chains and critical industries from being offshored to our adversaries. The Chinese Communist Party climbed America’s back to economic power and is now using that power to commit genocide, crush democratic norms, empower dictators, undermine workers, rig the world economy, and threaten America’s allies. Putin’s Russian Federation has also leached off America’s economic might to sow discord in the world. It is time to enhance supply chain visibility so our companies and average worker investments are not being hoodwinked into empowering trade that undermines American competitiveness. Our proposal would be an important element for innovation and competition legislation being advanced in the House.”
United States Senators Bob Casey (D-PA) and John Cornyn (R-TX) also introduced this bipartisan legislation in the Senate.
Key provisions of the National Critical Capabilities Defense Act
Creates a National Critical Capabilities Committee to guard the supply chain and against outsourcing. The National Critical Capabilities Committee will be composed of representatives from a broad range of federal agencies, led by USTR, that also includes the CDC, FEMA, SEC, CFTC, and the FAA. U.S. firms operating in critical industries would be required to report any outbound investments to certain foreign markets including China, and the NCCC would have the ability to review or block certain outsourcing which compromises national security or possible pandemic response. Special attention will be focused on supply chains located in non-market economies like China.
Empowers executive action to guard supply chains and national security. In consultation with the NCCC, the President will be empowered to take action to mitigate any national security risks associated with a transaction.
Builds a rulemaking process for transactions. The legislation will establish a rulemaking process to add relevant industries covered under national critical capabilities systems, services, and assets within the NCCC’s purview. Agencies should consider capacities related to the FEMA emergency support functions list as well as critical industries identified under the National Network for Manufacturing Innovation which include but are not limited to energy; medical; communications; defense; transportation; aerospace; robotics; artificial intelligence; semiconductors; shipbuilding; water, including water purification.
Strengthens critical capabilities and government procurement. This bill would revise the Federal Acquisition Regulation to adjust request for proposals (RFPs) to include a request that firms disclose the sourcing and supply chains a contractor would use, including disclosure of any reliance on foreign-made materials, and an estimate of the contract’s impact on U.S. jobs.
Establishes coordination between federal agencies. The legislation will direct the USTR to coordinate with relevant federal agencies to work directly with national allies to craft protocols and procedures for relevant transactions with nations of concern, including China.