As part of the United States’ numerous emergency stockpiles, the National Defense Stockpile is the United States’ largest stockpile of critical and strategic materials necessary to build many of the defense products (ammunition, missiles, guidance systems, etc.) necessary for national security. The National Defense Stockpile has its origins in the Second World War, where the United States needed to stockpile and manage its resources to become the Arsenal of Democracy. Yet since the end of the Cold War, the National Defense Stockpile has faced a major shortfall between what it currently holds and what it needs to hold. This shortage will get worse if the United States enters a major conflict with a power such as Russia or China. With current tensions in the Indo-Pacific only increasing the chance of the United States getting involved in a major conflict, it is essential that reforms of the National Defense Stockpile be implemented in order to ensure that the United States can still function as the “arsenal of democracy” if necessary. Therefore, Congress should implement financial incentives for companies to engage in private stockpiling of critical and strategic materials as a way to supplement the National Defense Stockpile. This should be coupled with ensuring that defense contractors have immediate access to the materials critical to building their products in the midst of a national emergency in order to keep the United States and its citizens safe.
In February 2022, Russia invaded Ukraine, eight years after Russia first invaded Ukraine. In response to the Russian invasion, the United States under the former Biden administration has “committed more than $52 billion in security assistance.” Part of this security assistance has been providing training for Ukrainian military officers alongside “support[ing] conventional weapons destruction, border security, law enforcement training, and counter-weapons of mass destruction capabilities.” Other parts of this security assistance also comes in the form of equipping Ukraine with weapons ranging from Multiple Launch Rocket Systems to lethal Unmanned Aerial Systems (“UASs”).
While the war in Ukraine has had a major impact on United States’ military stockpiles, it is indicative of underlying issues with the United States’ military stockpiles and the United States’ defense industrial base. Even though weapons from the United States have strengthened Ukraine’s defense “and helped bend the trajectory of a war that already seemed to be going badly” for Russia in the first few weeks of the invasion, such security assistance has come at a material cost for the United States. Providing such security assistance to Ukraine, especially munitions, has stretched the United States’ weapon stockpiles, despite the Pentagon’s assertion that aid to Ukraine has not had a significant impact on weapon stockpiles. In a September 2022 analysis of Pentagon stockpiles by the Center for Strategic and International Studies (CSIS), the policy group determined stocks of items like M-777 howitzers, anti-tank missiles, and 155mm ammunition (all critical pieces of equipment for the U.S. military) have all become limited, due to their transfer to Ukraine. However, the Pentagon will not reveal how limited. At the same time, major defense companies, such as Lockheed Martin, have encountered issues meeting production goals of items, such as the Javelin missile due to increased demand combined with supply-chain issues. The inability of some defense contractors to meet their goals can also be tied to a single spark inside a black-powder plant in Louisiana in 2023, blowing up the whole building and shutting down “the sole domestic source of an explosive [black powder] the Department of Defense relies on to produce mortar shells, artillery rounds and Tomahawk missiles.” While, as of 2024, little information has been made public about how the explosion impacted defense contractors, the factory was the sole producer of black powder in the United States, leading U.S. defense contractors to rely on stockpiles and potentially foreign producers to acquire the vital explosive.
As CSIS bluntly determined in a January 2023 report on the status of the U.S. defense industrial base, “[t]he U.S. defense industrial base is not adequately prepared for the competitive security environment that now exists.” If the United States were to go to war today with China over Taiwan, CSIS predicted in 2023 that “the U.S. use of munitions would likely exceed the current stockpiles” of the U.S. Department of Defense (DoD), with certain munitions running out in “less than one week.” This is at a time where the DoD has identified China as the fastest growing challenge for the United States due to China’s “more provocative behaviors in the Indo-Pacific while accelerating its military buildup in a bid to project power abroad.” While the United States and its allies in the Pacific would likely be able to repel China’s invasion of Taiwan today, China is continuing to expand its defense capabilities so that it can “militarily surpass the United States.” As such, it is essential that the United States have the military stockpiling to counter China.
As of 2024, the poor state of the United States’ defense industrial base and military stockpiles does not only directly affect the ability of the United States to fight its wars effectively, but it also impacts the United States’ ability to successfully prevent war. Perhaps the military stockpile most connected to deterrence is the United States’ stockpile of nuclear weapons that can be deployed from intercontinental ballistic missiles, strategic bombers, and submarines. These three delivery systems make up the United States’ Nuclear Triad and showcase the ability of the United States to deliver a decisive nuclear response anywhere in the world from land, air, and sea. This ability deters adversaries from directly challenging the United States due to the credible threat of nuclear retaliation as the United States maintains around 5,044 nuclear warheads. As of 2024, the United States is set to spend an estimated $1.7 trillion over thirty years revamping the Nuclear Triad in response to tensions with China and Russia alongside the expansion of North Korea’s and Iran’s nuclear programs. While these nuclear weapons are the “weapons everyone hopes will never be used” due to their devastating potential, the United States’ large nuclear stockpile has for more than six decades provided an important deterrence from a full-scale war with the United States.
Raw material stockpiles can also provide deterrence value in the fact that it is a major component of the ability of a nation to potentially win the conflicts that it engages in. However, the poor state of the United States’ defense industrial base harms the ability of such stockpiles to create deterrence. This is because it hinders the ability of raw materials to be converted into products quickly enough to win a conflict with a heavily industrialized nation, such as China. In September 2024, the Critical Materials Future Act of 2024 was introduced by bipartisan sponsors in the U.S. Senate, which, if passed, would direct the Secretary of Energy to implement a Domestic Critical Material Processing pilot program to research new ways to support domestic critical material processing, in part to support national security. With such a dire prediction of the outcome of a war with China, it is essential that the state of the United States’ military stockpiles be thoroughly examined. A stockpile that plays an important role is the National Defense Stockpile.
The National Defense Stockpile was established to “decrease and to preclude, when possible, a dangerous and costly dependence by the United States upon foreign sources or a single point of failure for [critical materials] in times of national emergency.” As such, “the [National Defense Stockpile] acquires and retains materials for use by critical civilian and defense manufacturers when supplies are commercially unavailable.” “As of March 2023, the National Defense Stockpile contains $1.3 billion in totals assets, including $912.3 million of stockpiled materials.”
This Note will examine the history of the National Defense Stockpile, how it has changed since its inception in 1939, and describe its current state. This Note will then examine current and proposed reforms to how the National Defense Stockpile procures and maintains its stockpile. Finally, this Note will explain why Congress should implement incentives for companies to engage in private stockpiling of critical and strategic materials to supplement the National Defense Stockpile. Such incentives will ensure that defense contractors have immediate access to the materials critical to building their products amid a national emergency.
The United States’ history of strategically stockpiling resources has its origins in the years following the First World War. Originally thought up as a way to counter fears of American isolationism, leading American scientists and scholars sought to create natural mineral stockpiles that would encourage other countries to implement stockpiling that would “ensure the adequate raw materials dissemination to the entire industrial world.” At the same time, these same thinkers saw stockpiling as a way to shield companies in the United States from countries that might use embargoes that would hurt the domestic mining industry. As such, the first national stockpile proposed was a stockpile that would include “antimony, chromium, and manganese, because of the large dependency on foreign suppliers.” Additionally, another proposed stockpile containing “600,000 tons of high quality ferromanganese” would have to be built up from foreign sources due to the United States’ inability to produce such high quality ferromanganese domestically. However, neither proposal was adopted by Congress, which instead hoped that protectionist tariffs against importing foreign materials would encourage American miners and refiners to increase domestic production of critical resources. Even with these efforts, by the eve of the Second World War, such hopes of increased domestic production of critical resources had not occurred.
“As totalitarianism and militarism arose from the ashes of the First World War” in what would soon be known as the Axis Powers, it became increasingly clear that war was inevitable and would be driven by the need of industrialized nations to procure the raw materials necessary to maintain their industrialized status. Since countries like Germany and Japan had political ambitions that were not supported by natural access to the “vital minerals to fuel their ever-growing war machines,” they turned to expansion through conflict. Policy makers in the United States were aware of how access to mineral reserves was going to shape how the next war was fought but found much of their attention drawn to bringing the United States out of the catastrophic economic slump of the Great Depression. However, throughout the 1930s, the War Department began to prepare suggestions like “settling the lingering war debts from World War I by exchanging strategic materials for payment” in order to begin preparations for a national stockpile.
As the Axis Powers continued expanding in the years following the First World War, Congress began to pass the laws necessary for military stockpiles. In 1938, the first ever national stockpile was created through the Naval Appropriations Act of 1938. As part of this Act, “the Navy received a small appropriation of $3.5 million for the first stockpile of strategic and critical materials accumulated by a [U.S.] military service in preparation for a national emergency” and an additional $1 million for its stockpile over the following two years. While the United States hoped to “avoid a war with the Axis Powers,” Congress was keen to establish a more expansive national stockpile. Although President Franklin D. Roosevelt was initially hesitant to sign a stockpiling bill, he eventually relented and signed the Strategic and Critical Materials Stock Piling Act of 1939. Among other things, the Stock Piling Act gave the Army and Navy Munition Board authorization to create the National Defense Stockpile and “to decide which materials should receive strategic and critical status, and to establish qualities and quantities of materials to be purchased by the Procurement Division of the Treasury Department.” As Nazi Germany continued to gain territory in Europe in the first two years of the Second World War, Congress passed—and President Roosevelt signed—additional laws increasing the amount of funding of the now growing National Defense Stockpile.
In 1941, on the eve of the United States’ entry into the already raging Second World War, the Army and Navy in cooperation created what would later be known as the Victory Plan. According to General George C. Marshall, Chief of Staff of the Army during the Second World War, the Victory Plan was “a study of production requirements for national defense.” Most importantly, “[i]t amalgamated the political and military goals of the American military command structure through military attention to the manpower needs of the civilian war economy and in an understanding that the American economic system itself contained extraordinary power” that could be used as a weapon. Perhaps, most critically, the Victory Plan was built around the assumptions that (i) the war effort would be concentrated against Europe first; (ii) the United States would be fighting on multiple fronts overseas; and (iii) the United States would largely be on the offensive. The fact that these critical assumptions correctly predicted how the Second World War progressed proved effective in dealing with the international crisis.
When the United States entered the Second World War on December 8, 1941, the country soon discovered that the war needs already surpassed the capacity of the National Stockpile. The War Production Board was the primary agency tasked with ensuring that the United States’ economy could fulfill its defense production responsibilities, which helped make the United States into the Arsenal of Democracy. The War Production Board initially used a horizontal system where raw materials procured by the federal government passed directly from the government to its contractors. However, this system proved inadequate for controlling American industry for war production so, in 1942, the War Production Board developed a new system that “set up better allocation and priority controls for the smoother flow of raw materials into necessary industries.” Known as the Controlled Materials Plan, this system “successfully worked out most of the supply, allocation, and priority system bottlenecks” that had hampered American industry, leading to the War Production Board using the system for the rest of the war. However, the Controlled Materials plan did not solve all the issues for American industry’s strategic and critical materials. Instead, “there still remained shortages of these materials for many industries,” though these shortages never caused a significant shortage of end products during the Second World War that would detrimentally affect the Allied war effort. Effects of the lack of these critical and strategic resources on the war effort were partially mitigated by the development of synthetic substitutes, the most notable example being synthetic rubber. As Japan captured most of Southeast Asia, “which provided practically all of the rubber used in the United States” before the war, American industry quickly began producing synthetic rubber that became widely available early during the war. As a result, synthetic rubber became a major new industry in the United States in the postwar years.
Nonetheless, issues with procuring steel, aluminum, and copper—some of the most important materials for the U.S. war effort—would plague American industry even as war production of strategic and critical materials increased dramatically. By 1941, a lack of accurate estimates about how much steel was needed for the war effort led to an immediate shortage of steel as the United States entered the war, which “threatened the production of ships” necessary for the United States to fight on multiple fronts. The United States required “steel facilities that previously produced sheet steel for automobiles” to produce the steel necessary for the war effort. The government even enlisted the help of steel czars such as Hiland G. Batcheller—the President of Allegheny Ludlum Steel Corporation—to procure more steel. Due to the government’s decision to build federal aluminum plants, private aluminum facilities using government aid, and the United States ability to procure aluminum from Canadian plants, aluminum production was able to quickly ramp up to meet the needs of the war effort, leading to 2,250,000,000 pounds of aluminum being produced by October 1943.
In contrast, the amount of copper that the United States could procure and mine was not adequate to keep up with the needs of the war. Importing copper from foreign sources such as Mexico and Chile was expensive. Even with the United States opening or expanding copper mines, less than two percent of the copper needed for the war effort could be mined domestically. Instead, the war effort turned to scrapping, alongside substitution, to fulfill the needs for copper. Substitution took the form of substituting silver for copper, leading to silver initially having no real strategic use as a war material to becoming a strategic material with value in war production.
In 1944, the war began to wind down as Allied victory became increasingly likely with both the successful invasion of “Fortress Europe” and Allied Forces approaching the Japanese Home Islands. At that time, Congress began to plan “downsizing the gigantic war economy” while ensuring that there would be plentiful jobs for returning GIs. As part of ensuring that no economic crash after taking American industry off of the war footing, Congress in 1944 passed the War Surplus Act. Among other things, Section 22 of the War Surplus Act “provided for the transfer of government owned surpluses of strategic and critical materials to those already procured” under the Stockpiling Act of 1939. While the War Surplus Act was created with the main objective of preventing too many materials to flood the economy following the conclusion of the war, the War Surplus Act “set a precedent, that materials acquired by [the Stockpiling Act of 1939] would be the nucleus of the post-World War II stockpiling activities.”
Yet even without the War Surplus Act, it became increasingly clear that the United States was going to maintain a post-World War II stockpile. Even during the midst of the war as billions of dollars of materials were being provided to American companies for war products, the Army and Navy Munitions Board, with the assistance of the Purchase Branch of the Procurement Division of the Treasury, continued to use its authority under the Stockpiling Act of 1939 to maintain a national stockpile. In 1943, to begin work on a post-World War II stockpiling program, the Army and Navy Munitions Board formed the Strategic Materials Committee to handle interagency planning for a post-war stockpile. To better facilitate stockpiling, the Strategic Materials Committee created a three-tier classification system of strategic and critical materials. Although the War Surplus Act was passed in 1944 to move materials from government surplus to the growing national stockpile, none of the surplus actually arrived in the stockpile until January 1946. However, this delay gave the Army and Navy Munition Board the time to plan how to best manage the transfer of these materials to the stockpile.
Following the Allied Victory in World War II, Congress passed the Strategic and Critical Materials Act of 1946 to ensure that the United States would be “better prepared for the next war in the years ahead” by expanding the National Defense Stockpile. The Strategic and Critical Materials Act of 1946 directed the Department of Treasury’s Procurement Division, through the direction of the Secretaries of War and Navy, to purchase “the necessary materials and to provide storage, security, maintenance, refining and processing if necessary, and rotation of obsolete, or deteriorating materials.” However, the Act “forbid the purchase of materials needed by industry in the reconversion period” following the end of the war. Materials currently in the stockpile that were deemed obsolescent were required to be advertised in the Federal Register for sale. Additionally, materials could be transferred to the stockpile from government agencies “if required by the stockpile in order to fill stockpile objectives set for those materials” as long as the need by American industry had already been fulfilled as directed by the Civilian Production Administration. As such, “the National Stockpile began to grow as the economy of the country rebuilt into a stronger, more powerful world force that ever before” in order to meet “those powers with intentions of gaining world dominance” as the Cold War began.
With the outbreak of the Korean War in 1950, the threat of escalation into another world war heightened “Congressional interest in the Nation’s ability to support another world war.” As such, Congress passed the Defense Production Act of 1950 to “authorize the Government to purchase the output of the expanding metals and minerals procuring industries” and to safeguard the security of the United States. To ensure that there was output for the United States to buy, the Act allows the President “to direct private companies to prioritize [procurement] orders from the federal government.” Under this Act, “considerable inventories were collected” for the National Defense Stockpile during the Korean War. Though the United States found itself entangled in conflicts in Southeast Asia for much of the 1960s, the controlled “level of military involvement” in the region by the United States meant that American industry never had to accelerate to a full-scale war capacity. However, materials were released from the National Defense Stockpile during this period to defense contractors to help “reduce the rate of price escalation and to supply the needed material” for the wars in Southeast Asia.
Even after the end of the Vietnam War, “[t]he selling of stockpile materials continued . . . due to . . . [a] widespread shortage of minerals,” resulting from “a weakening dollar and the reduction in US mining operations.” This sell-off of parts of the National Defense Stockpile was further driven by an attitude in the United States that “long-term scarcity of materials was no longer the vital issue” that it had been in previous decades. In fact, “no actual purchases were made in the twenty years prior to the Reagan administration.”
In the face of the seeming weakness of the National Defense Stockpile, Congress passed the Strategic and Critical Materials Stock Piling Revision Act of 1979 (“the Revision”) with the purpose “to update and revise the stockpile program.” Among other changes to the Stockpiling Act of 1939, the Revision vested within the President the authority to determine which materials are strategic and critical and the quantity to be stockpiled, while also directing the President to make numerous quality of life improvements to the National Defense Stockpile using a designated National Defense Stockpile Transaction Fund inside the Department of the Treasury. Additionally, for the first time, the Revision “specified that the stockpile was to be managed for defense purposes only and not to control or influence commodity prices.” By Fiscal Year 1984, funding under stockpile acquisitions under the Revised Stockpiling Act totaled $301.2 million.
In 1988, the National Defense Stockpile became part of the DoD with its operations being conducted by the Defense National Stockpile Center, which is a branch of the Defense Logistics Agency (DLA). Since the end of the Cold War, the planning for stockpiling the National Defense Stockpile has been based around the assumptions of the National Military Strategy in that “emerging strategic threats could be identified and stockpiles of strategic and critical materials acquired to prepare for and deter large-scale armed conflict” over a seven to nine year period. Additionally, stockpiles built up since the start of the Cold War (largely outdated) were mostly sold off and liquidated following the end of the Cold War as foreign markets opening up due to the fall of the Iron Wall.
While the National Defense Stockpile is the focus of this Note, throughout the country, “[t]he United States maintains several strategic stockpiles that the states and the federal government can draw from when supply shocks occur.” The strategic stockpile that most Americans are probably familiar with, perhaps due to its ability to help lower gas prices, is the Strategic Petroleum Reserve. The Strategic Petroleum Reserve is “the world’s largest supply of emergency crude oil,” which is primarily used when disruptions with the supply of petroleum products occurs in the United States. Similarity, a strategic stockpile that has been more noticeable throughout the 2019 Coronavirus (COVID-19) pandemic has been the Strategic National Stockpile, which helped provide personal protective equipment throughout the country “to help prevent COVID-19 transmission.” Lesser-known stockpiles include the Northeast Home Heating Oil Reserve, which stockpiles “one million barrels of diesel fuel,” and the soon-to-be defunct Federal Helium Reserve in Texas, which stockpiles “crude helium.”
Similar to the issues that Russia’s invasion of Ukraine has caused for munitions supplies in the United States, the Strategic Petroleum Reserve and Strategic National Stockpile have recently been plagued with issues. In December 2016, the American Association of Petroleum Geologists determined that the caves in Texas and Louisiana where the Strategic Petroleum Reserve is located are shrinking due to the tectonic stresses placed on the caves, therefore shrinking the amount of oil barrels that the caves can hold. Additionally, with respect to the Strategic National Stockpile, “flawed supply decisions left health care workers without essential protective gear.” The U.S. Department of Health and Human Services’ Office of Inspector General determined that the “stockpile could not meet demand and was not equipped to handle the COVID-19 pandemic.”
The National Defense Stockpile can be dispersed in several ways. The first way is via executive order if “the President determines that the release of such materials is required for purposes of the national defense.” The second way is if Congress declares war. The third way is if a presidentially-appointed officer declares a national emergency, as long as the officer determines that such release is required for national security. As of 2023, both the Secretary of Defense and the Under Secretary of Defense for Acquisition and Sustainment have the authority from the President to release materials from the National Defense Stockpile. An additional restriction placed on the Under Secretary of Defense is that the Secretary of Defense must determine “that the release of such materials is required for use, manufacture, or production for purpose of national defense.” Regardless of method, any such release of materials from the National Defense Stockpile must be reported to Congress through the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives.
It has become apparent that the National Defense Stockpile is currently not as well-stocked as it should be. The DoD selects strategic and critical materials for inclusion in the National Defense Stockpile if they are expected to be difficult to obtain in a national emergency scenario. However, in a 2021 stockpile assessment, “fifty-three materials were determined to be in shortfall” and were critical for a potential armed conflict with China. The majority of these shortfall materials are obtained by supply chains dominated by one foreign nation, while many have only one domestic provider qualified to meet military needs. More recently, the Fiscal Year (“FY”) 2023 assessment “discovered net shortfalls in eighty-eight materials valued at $14.83 billion.”
As the introduction and background of this Note have indicated, the National Defense Stockpile is currently facing shortfalls of the critical and strategic materials in ways that could detrimentally impact the national security of the United States. Due to the threats that the United States as a superpower faces as of 2024, it is essential that solutions be explored to solve the issues that are plaguing the National Defense Stockpile and reduce the current shortages in the Stockpile. If not, the United States risks running out of the critical and strategic materials necessary to produce the defense products necessary to protect the nation and its allies in geopolitical hot spots.
The first area that is worth examining for fixing problems with the National Defense Stockpile is the amount of money that Congress has put into the National Defense Stockpile, especially in recent National Defense Authorization Acts (NDAAs). The question remains as to whether infusing more money into the program would actually improve it. The DoD requested “$253.5 million in new budget authority for NDS acquisitions in FY2023 and $7.6 million for FY2024.” In response, through the 2023 National Defense Authorization Act, Congress authorized $1 billion for National Defense Stockpile Acquisitions, while appropriating an additional $93.5 million for the National Defense Stockpile through the 2023 Consolidated Appropriations Act. Even with the money that Congress has funneled into the National Defense Stockpile since its inception, and especially in the last two financial years, the National Defense Stockpile is still understocked. As of time of writing, there is no reporting or real indication on how efficiently the National Defense Stockpile is spending the money that was recently appropriated to it. However, an audit of the National Defense Stockpile in 2022 reported inadequate policies, procedures, and internal controls for managing physical inventory counts; maintaining National Defense Stockpile Transaction Fund account balances with the Treasury; tracking amounts owed to the third parties for contract work; preparing official financial reports; and operating information system containing National Defense Stockpile financial data.
One potential solution that Congress should implement for fixing the National Defense Stockpile deficit would be revising the Stockpile Act of 1939 again to create a statutory requirement for the President’s budget request to include plans for stockpiling 100% of estimated materials of strategic and critical materials. The President is required under the Strategic and Critical Materials Stock Piling Act to determine what materials are critical and strategic alongside the quantity and quality of materials to stockpiled. At the same time, the President has to notify Congress whenever he proposes to increase “the quantity of any material to be stockpiled that involves the acquisition of additional materials for the stockpile.” However, no language in the Strategic and Critical Materials Stock Piling Act requires the President to take actions to ensure that the National Defense Stockpile is actually fully stocked or that his budget requests to Congress include the figures necessary to fund the National Defense Stockpile in its entirety.
Congress, which has the authority to create laws that require the President to conduct certain functions per Article I of the U.S. Constitution, requires the President to carry out the above listed responsibilities in the Strategic and Critical Materials Stock Piling Act. Therefore, Congress can use this authority to revise the Strategic and Critical Materials Stock piling Act to require the President to bring the National Defense Stockpile to the stockpiling levels that the President’s executive agencies (particularly the DoD) have designated. However, implementing such a requirement on the President would likely be contentious since the President, if he is opposed to such a requirement, may argue that such a requirement is practically impossible to follow based on how unstocked the National Defense Stockpile is currently. This would leave the President open to damage in the press if the President is unable to complete this new requirement. More importantly, Congress may not be willing to spend the money to fulfill the President’s budget for filling the National Defense Stockpile, especially in times when fiscal conservatives have control over the House and therefore the budget, such as the 118th Congress.
Any attempt to implement the above-described requirement would also need to take into consideration that rapidly procuring raw materials could lead to market shortages that would drive up prices and cause economic turmoil. Yet, as discussed above, Congress implemented the War Surplus Act during World War II to better regulate the transition away from a war economy to a post-war economy, with consistent stockpiling in order to prevent a feared collapse of the American economy. Implementing something similar today may be the solution to this potential issue. In the NDAA FY2024, the House included language ordering the DoD to use certain scenarios requiring the total mobilization of the U.S. economy for a global war of at least two to three years as the base of the DoD’s planning for the National Defense Stockpile. Yet nothing in Section 1411 of the NDAA FY2024 discusses whether the House contemplated the market impacts of these scenarios when ordering the National Defense Stockpile to base planning around them. Section 1411 “could triple estimated shortfalls, while adding a requirement for DoD to acquire materials to mitigate these [new] shortfalls on or after January 1, 2028.” Even though the economy is doing better than was initially predicted in December 2023, a sudden rapid acquisition of the billions of dollars needed to completely meet the National Defense Stockpile’s guidelines could have an economic impact on the United States.
The mass recycling of materials in the National Defense Stockpile to obtain funds may also mitigate these potential market ruminations, while simultaneously bringing in new materials to the National Defense Stockpile. Since the Strategic and Critical Materials Stockpiling Act of 1939, the National Defense Stockpile has been authorized by Congress to obtain materials either though market exchange or barter. However, since the NDAA FY2014, the National Defense Stockpile has been authorized “to recover strategic and critical materials from federal agency end-of-life scrap and excess equipment.” Expanding the amount of recycling that occurs within the National Defense Stockpile—while bartering the materials that the National Defense Stockpile does not want with entities that do have the materials that the National Defense Stockpile does need—could “provide a way to acquire shortfall materials while developing new sources of supply.”
Congress seems to recognize that recycling and other alternative recovery methods may be extremely effective to more effectively stockpile the National Defense Stockpile. The Senate passed an amendment in the NDAA FY2024 for “the Stock Piling Act to authorize DoD to co-fund new recycling and recovery business model designs.” Similarly, the White House’s 2021 review of the strategic and critical materials supply chain included a recommendation related to a “government-wide recycling and recovery program to obtain strategic and critical materials” from federal data warehouse e-waste. As such, creating new recycling programs, while taking into consideration the market impact of recycling alongside any rapid acquisitions for the National Defense Stockpile, may be an effective way to build up the strength of the National Defense Stockpile.
Finally, Congress should consider incentive strategies aimed at the private sector that would change industry behavior through stockpiling strategic and critical materials. This possibility would create incentives for private sector companies to maintain their own stockpiles of strategic and critical materials in order to supplement the National Defense Stockpile. The federal government would be creating a just-in-case supply chain through private companies to better promote national security through private stockpiling. Not only would this increase access by American industry to the critical and strategic materials that they need to meet the defense needs of the United States, but “[p]ublic policies and industry behaviors that reliably increase the domestic availability of strategic and critical materials during a national emergency may tend to reduce the [National Defense Stockpile’s] requirements.” Therefore, if private company stockpiles were to start to compromise a high percentage of critical and strategic materials that were available in the United States, then the National Defense Stockpile and the federal government would not have to spend as much taxpayer money for acquisitions to the Stockpile.
The potential issue is that “peacetime conditions may disincentivize emergency stockpiles of strategic and critical materials among competitive firms. “Having too much raw material on hand at any given time may negatively affect a company’s balance sheet and overall financial performance, imposing costs that could otherwise be redirected to more productive activity.” However, due to the drastic disruption that the COVID-19 pandemic in 2020 had on the supply chains in the United States, corporations have become less willing to simply wait on the supply chain to deliver the critical materials they need in times of emergencies. Instead, companies would prefer to maintain their own inventories of critical supplies in case of emergencies while also localizing the supply networks they have to rely on.
In light of these COVID-19 supply chain issues and the industries response to prevent something similar from happening again, corporations would be willing to engage in supplementary stockpiling for the National Defense Stockpile if it better assures the corporations that they will not run out of materials during an emergency. However, an area of concern that would have to be addressed if Congress would like to incentivize supplementary stockpiling to the National Defense Stockpile is the security concerns that the companies would have with providing proprietary information about their supply chains and infrastructure. The DoD may be able to get around this by having robust nondisclosure agreements (“NDA”) for such information while incentivizing companies to willingly provide the information. At the same time, the DoD would need to sign NDAs about the requirements of the National Defense Stockpile, with a potential penalty being fines/debarment, in order ensure that classified information about the National Defense Stockpile is not leaked. Still, private sector stockpiling of critical and strategic resources could provide increase supply chain resilience while ensuring that the government has greater access to larger amounts of critical and strategic resources during times of emergencies.
In December 2024, the National Defense Stockpile is facing a $13.5 billion gap between the value of the current assets in the National Defense Stockpile versus current stockpile requirements that “would support nondefense critical infrastructure demand in the event of an attack on the United States.” At the same time, the conflict in Ukraine, tensions in the Indo-Pacific, and the worsening crisis in the Middle East (all in 2024) might draw the United States into another major war. It is more important than ever now that the United States have the resources and materials necessary to effectively and decisively win the next conflict. As such, it is essential that reforms in the National Defense Stockpile be implemented sooner rather than later to narrow if not completely get rid of the critical shortfalls in the National Defense Stockpile. While Congress has taken some right steps towards fixing the shortfalls in the National Defense Stockpile, further action is needed to correct the underlying issues with the National Defense Stockpile. Therefore, Congress should take into consideration the recommendations that organizations like the Congressional Research Service have proposed for fixing the National Defense Stockpile, especially incentivizing private stockpiles of critical and strategic materials as a way to supplement the National Defense Stockpile. The DoD has made it abundantly clear that a strong industrial base is necessary for national defense in the 2023 National Defense Industrial Strategy and National Defense Industrial Strategy Implementation Plan for FY2025. By implementing some further reforms, the National Defense Stockpile will be a more effective tool for ensuring the United States’ national security and protecting allies across the world through a strong industrial base.
