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Learn how to secure aerospace and defense supply chain resiliency with five key areas to note in the National Defense Authorization Act (NDAA) for FY 2025.
The FY 2025 National Defense Authorization Act (NDAA) tackles aerospace and defense supply chain resiliency head-on with new mandates to secure critical resources and reduce foreign reliance. Here’s your guide to NDAA for aerospace and defense supply chains—and how Resilinc’s aerospace and defense supply chain risk management solutions can help you navigate these changes.
What is the National Defense Authorization Act (NDAA)?
The NDAA is a federal law that defines the budget, policies, and priorities for the U.S. Department of Defense each fiscal year. It covers everything from funding for defense programs to weapons procurement and national security initiatives.
For Fiscal Year 2025, the NDAA places significant focus on supply chain resilience, ensuring the U.S. and its allies can maintain secure, reliable access to critical materials, pharmaceuticals, and defense manufacturing resources. Read more about the NDAA and other resiliency challenges in our special report: Aerospace Supply Chains: National Defense Authorization Act (NDAA) and Geopolitical Challenges.
In this blog post, we will explore important sections of the NDAA and then how Resilinc’s solutions can help address these key areas:
- Pharmaceutical supply chain security
- Domestic industrial production of critical materials
- Defense industrial base and manufacturing resilience
- Procurement and acquisition transparency
- Logistics and infrastructure resilience
1. Pharmaceutical Supply Chain Security
Section 744: Enhancing Access to Safe, High-Quality Pharmaceuticals
Section 744 aims to ensure access to pharmaceuticals for armed forces members while reducing reliance on high-risk foreign suppliers. Notably, this section plans to improve visibility into the country of origin for finished drugs, Active Pharmaceutical Ingredients (APIs), and Key Starting Materials (KSMs).
This aligns with FDA regulations for assessing excipients and KSMs, emphasizing the need for transparency. Transitioning to domestic sourcing is a strategic move to reduce vulnerabilities, but it requires significant investment in U.S. manufacturing capabilities. Contractors may face initial cost increases, but the long-term payoff is a more secure and resilient supply chain.
Section 847: Compliance Requirements for Pharmaceutical Suppliers
Section 847 mandates that suppliers submit production data to the Defense Logistics Agency to ensure transparency across the pharmaceutical supply chain. This section requires contractors to comply with the Federal Food, Drug, and Cosmetic Act’s reporting standards by submitting the amount of each drug manufactured, prepared, propagated, compounded, or processed by the contractor for commercial distribution to the Secretary of Health and Human Services.
Section 848: Updated Guidance on Pharmaceutical Supply Chain Risks
Section 848 requires the Department of Defense (DOD) to provide a report of pharmaceutical supply chain risks in two years. This report will particularly highlight dependencies on high-risk foreign suppliers. Using the findings of the report, the DOD will also develop risk management guidance for supply chain diversification and domestic sourcing. This aligns with FDA regulations for assessing excipients and key starting materials.
2. Domestic Industrial Production of Critical Materials
Section 852: Increase Domestic Capacity for Strategic and Critical Materials
Section 852 requires the Secretary of Defense to submit a report examining domestic industrial production capacity for strategic and critical materials in peacetime and emergencies. This report will evaluate barriers to increasing production and procurement from domestic sources, with a focus on reducing reliance on foreign suppliers, especially China and Russia. This is particularly relevant because a contractor sourcing rare earth metals from a nation such as Russia could face sanctions or disruptions. Section 852’s focus on domestic capacity offers a path forward, but it requires proactive risk management.
3. Defense Industrial Base and Manufacturing Resilience
Section 846: Strengthening the Solid Rocket Motor Industrial Base
Section 846 evaluates domestic production capacity for solid rocket motors (SRMs) and develops funding and infrastructure expansion plans for suppliers. In line with this goal, on January 7, the DOD announced a $14.3 million award to California-based defense technology company Anduril Industries Inc. to expand sources of SRMs.
Section 849: Impact of Mergers & Acquisitions on Defense Supply Chain
Section 849 requires a DOD report on how corporate consolidations affect supply chain security and industrial competition. A strong industrial base is critical for national security, but mergers and acquisitions can reduce competition and innovation. Understanding these dynamics is key to maintaining resilience. To learn more about how mergers and acquisitions can impact the supply chain check out our blog: How Do Mergers and Acquisitions Impact Supply Chains?
Section 850: Defense Industrial Revitalization
Section 850 establishes a National Defense Executive Reserve to oversee supply chain risk management. It develops a five-year roadmap for strengthening the defense industrial base and incentivizes defense contractors to illuminate their supply chains by implementing risk monitoring, reporting, and transparency measures. Finally, it encourages the adoption of supply chain risk management best practices to mitigate vulnerabilities and improve resiliency.
4. Procurement and Acquisition Transparency
Section 871: Small Uncrewed Aerial Systems (sUAV) Supply Chain Strategy
Section 871 develops a domestic supply chain for small unmanned aerial vehicles (UAV) components, reducing reliance on foreign suppliers. Drones like these are in high demand. In fact, the DOD has an army program for drones with a FY 2025 budget request of $21.1 million to acquire 540 new systems.
Section 878: Supply Chain Risk Mitigation in DOD Logistics
Section 878 increases procurement flexibility to stockpile supplies specifically in anticipation of supply chain disruptions.
5. Logistics and Infrastructure Resilience
Section 331: Warehouse Optimization & Supply Chain Efficiency
Section 331 improves the Defense Logistics Agency (DLA) warehouse utilization for better inventory management. As part of this initiative, advanced tracking and automation will be used to help prevent future shortages. Efficient warehouse utilization isn’t just about space—it’s about readiness. Section 331’s push for optimization can prevent shortages and ensure strategic stockpile readiness.
Section 334: Army Munitions Supply Chain Assessment
Following section 334, The Secretary of the Army will develop a plan to identify bottlenecks and potential alternative production facilities for ammunition. They will also evaluate reopening closed production lines to ensure strategic stockpile readiness.
How Resilinc’s Aerospace and Defense SCRM Solutions Can Help
1. Supply Chain Mapping
Organizations must map their supply chain across multiple tiers to identify both domestic and foreign dependencies. This will help identify reliance on suppliers which introduce risk into the supply chain across multiple categories, such as geopolitical, macroeconomic, and natural disaster risks. The ability to understand all tiers of a supply chain will enable an organization to actively manage risk proactively, as well as react in a timely manner if a disruptive event occurs. Learn more about how Resilinc’s Multi-Tier Mapping can help secure resiliency.
2. Supply Chain Monitoring
Monitor your supply chain actively for risks in order to respond quickly to disruptions and ensure continuity of supply. AI-monitoring can save you time, by quickly sifting through noise to find disruptions that are relevant to your supply chain, across all commodity areas. Learn more about how Resilinc’s AI-monitoring solution, EventWatchAI can help.
3. Supplier Risk Scoring
Assess the reliability and resilience of your suppliers by scoring risks associated with their sub-tier suppliers, sites, and parts. For example, imagine a prime-contractor who relies on rare earth elements from a threat nation—mapping will identify the risk, and risk scoring can identify the severity of the risk, so the contractor can make a data backed decision to address any issues. Learn more about Resilinc’s risk scoring solution, RiskShield.
4. Predictive Analytics
For stockpiling and increased domestic capacity, predictive analytics can help forecast disruptions and optimize inventory levels. By analyzing historical data, geopolitical risks, and market trends, you can preemptively secure critical materials before shortages occur Monitoring your supply can also help identify bottlenecks before they cause disruptions and assess alternative production facilities. Learn more about Predictive AI.
The NDAA’s Overall Impact on Supply Chain Security
The FY 2025 NDAA introduces major initiatives aimed at securing the U.S. supply chain, ensuring access to pharmaceuticals, strategic materials, and defense manufacturing while reducing reliance on foreign suppliers. As a leading provider of supply chain risk management solutions, with a proven track record of helping aerospace and defense companies navigate complex supply chain challenges, Resilinc can help aerospace and defense companies grow resilience.
Founded in 2010, Resilinc offers an AI-driven platform that provides comprehensive visibility into the supply chain, enabling companies to identify risks, and build resilience. Their solutions are trusted by over 100 Fortune 500 companies, including many in the aerospace and defense sector. Resilinc’s aerospace and defense SCRM solutions can assist government agencies and contractors in:
- Mapping and monitoring critical supply chains.
- Identifying supplier dependencies and reducing foreign reliance.
- Providing predictive analytics to mitigate supply chain risks.
- Enhancing visibility and compliance with new DOD requirements.
Enhance Your Aerospace and Defense Supply Chain Resiliency
The NDAA FY24 mandated a program to “analyze, map, and monitor supply chains,” and the FY25 Act targets supply chain vulnerabilities, promotes transparency, and reduces reliance on risky foreign suppliers. With requirements designed to bolster national security and safeguard the integrity of defense supply chains, is your organization ready?
Learn more about how to protect your supply chain. Read our special report on the National Defense Authorization Act (NDAA) and Geopolitical Challenges.
