The Defense Department expects the global coronavirus outbreak will delay its major weapons programs by about three months, the Pentagon’s top weapons buyer said Monday.
Ellen Lord, the Defense undersecretary for acquisitions and sustainment, did not name specific programs or companies but suggested the delays would be widespread.
“Domestically, we are seeing the greatest impacts in the aviation supply chain, shipbuilding and small space launch,” Lord said.
The Pentagon has tried keeping its industrial base solvent and working during the pandemic, including increasing reimbursements for work that is not yet complete.
That change, Lord said, will start this week and provide $3 billion in increased cash flow to the industry. Lord praised defense giants Lockheed Martin Corp. and Boeing Co. for committing to push those extra funds out to their smaller suppliers and said she hoped other major primes would follow suit.
The Pentagon also wants additional relief from Congress to help companies pay salaries and keep their specialized workforces intact even where the pandemic has forced production lines to shut down and caused other disruptions. Lord did not specify how much.
By and large, the defense sector has kept working during the COVID-19 crisis, thanks in large part to its workforce being declared essential by the Homeland Security Department. But some facilities, including Boeing production lines in Puget Sound, Wash., have had to shutter at least temporarily due to health concerns.
Lord said only 106 out of 10,509 prime defense companies are closed, with another 68 having closed and reopened. For 11,413 vendors that make up the department's expansive supply chain, 427 are closed and 147 have closed and reopened.
Byron Callan, an analyst who covers the defense market for Capital Alpha Partners, said Lord’s three-month timeframe for delays appeared to be a best assessment and was not based on some specific timeline where everything gets back to normal.
“A more interesting question is why other parts of the defense industry that support MDAPs (Major Defense Acquisition Programs) are not seeing impacts: for example, electronics, precision-guided weapons and munitions, and vehicles of all types,” he wrote in a note to investors.