From Capacity To Capability: Strengthening US Defense Supply Chains

Expanding US production of critical materials including rare-earth magnets is an important step toward strengthening defense supply chains. Turning that capacity into supply that programs can use also requires clear material requirements, targeted qualification and an understanding of dependencies below Tier 1.

These connections shaped the discussion at the Hellios roundtable at AUSA, where representatives from government, defense primes and industry explored the practical challenges of developing more resilient supply options. A recurring theme was that better information can help direct sourcing, qualification and investment. Obtaining it, however, depends on suppliers already managing considerable demands.

Understanding what each application needs 

Critical minerals and rare-earth elements have a range of applications across the defense industrial base. Understanding which products contain these materials, the grades required and the qualification requirements can help prioritize constrained capacity and identify where alternative grades or recycled materials may be suitable.

Participants acknowledged that establishing this detail across complex supply chains is difficult. Yet it provides a stronger basis for decisions about production, sourcing and stockpiling, including the material’s form, processing needs and intended use.

Connecting production with program requirements

Jonah Glick-Unterman, Head of Strategy at Vulcan Elements, described the work involved in expanding US magnet production while demonstrating that its products meet specific defense program requirements.

Additional capacity takes time to translate into qualified supply. Early engagement with primes can help producers identify priority applications and focus qualification efforts where they will have the greatest impact.

Program offices can help bring buyers, producers and sub-tier suppliers together around a defined priority. Earlier clarity about requirements gives producers a better basis for deciding where to focus their resources.

Looking beneath the immediate supplier 

Multiple defense primes may rely on the same sub-tier supplier, processor or manufacturer, creating a shared dependency across programs. A disruption at that common source could therefore affect several primes at once, even where their direct suppliers differ.

Suppliers may be reluctant to disclose commercially sensitive relationships or sourcing difficulties. Building confidence in how that information will be used and shared is therefore important to obtaining a reliable picture of the supply chain.

Visibility of material origin, processing locations and sub-tier relationships can help identify these concentrations. Participants also highlighted the importance of examining dependencies beyond materials already subject to Chinese export restrictions or covered by DFARS requirements.

Making supplier participation workable  

Sam Stein, Critical Materials Management Engineer at Lockheed Martin, highlighted the burden of repeated surveys. The wider discussion also recognized that suppliers do not always understand what buyers need or how to provide a useful response.

Clearer questions, practical guidance and less duplication could improve the speed and quality of information gathering. Explaining why information is needed and how it will be used also helps suppliers respond with confidence.

Many sub-tier businesses serve several sectors, with defense representing a relatively small share of their sales. Their resources and commercial incentives may not reflect defense buyers’ urgency. Information requests and sourcing expectations need to recognize those realities.

Clarifying sourcing priorities alongside price

Participants raised a potential gap between buyers’ sourcing priorities and suppliers’ assumptions about competitiveness.

Suppliers may believe that winning a contract depends primarily on offering the lowest price. Where buyers are prepared to accept a higher cost for domestic sourcing or greater supply security, those priorities need to be reflected clearly in requirements and evaluation criteria.

That clarity helps suppliers understand what the customer values and whether changes to established sourcing arrangements will be recognized in purchasing decisions.

Key takeaways 

The discussion points to four practical priorities:

• Define demand precisely. Understanding materials, grades and applications helps focus capacity, sourcing and qualification efforts.

• Examine shared dependencies. Multiple primes may depend on the same sub-tier supplier, creating concentration risk across programs.

• Make participation manageable. Clear questions, coordinated requests and practical support help suppliers provide useful information.

• Align expectations early. Producers and suppliers need to understand program requirements and how buyers will evaluate sourcing choices.

Government and industry are already mapping supply chains and connecting producers with purchasers. Building on that work can help turn a clearer understanding of requirements and dependencies into reliable, qualified supply.

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