Hearing Entitled: Securing the Supply Chain: The Defense Production Act in Focus

Chairman Warren Davidson (R-OH)SPEAKER_06

Illicit Finance, and International Financial Institutions will come to order. Without objection, the chairman is authorized to declare a recess of the committee at any time. Today's hearing is titled "Securing the Supply Chain: The Defense Production Act in Focus." Without objection, all members will have five legislative days within which to submit extraneous materials for inclusion in the record. I now recognize myself for four minutes for an opening statement. Good morning and welcome to today's National Security Subcommittee hearing, "Securing the Supply Chain: The Defense Production Act in Focus," which is devoted to evaluating the Defense Production Act ahead of its expiration in September. This year, this subcommittee has had a June hearing and a July briefing that provided fundamental overview of DPA for members of Congress. We convene here today at Wright-Patterson Air Force Base because of its significance in implementing DPA's Title III through Wright-Patt's hosting of major Air Force commands involved in defense acquisition. This ensures that Title III-funded defense-funded capabilities are integrated into operational systems. It affects the base sustainment activities and enhances its ability to address national industrial base vulnerabilities. My colleagues and I are grateful for the opportunity to address the critical role of Wright-Patterson Air Force Base in executing DPA's Title III authorities and the urgent need to modernize and enhance these powers to strengthen our national security. We will feature two panels, the first offering military officials' perspective on the current DPA functionality and the second panel incorporating feedback from civilian defense contractors from our region on today's procurement landscape. Enacted in 1950 during the Korean War, DPA was designed to secure America's industrial base for national emergencies, prioritizing domestic production over foreign reliance. Today, as our dependence on foreign critical materials—semiconductors, rare-earth materials, pharmaceuticals—grows, the DPA's importance is undeniable. However, from 2018 to 2024, there's been a significant change in the pace of some of the Title III activity. The COVID-19 pandemic exposed a reactive posture, proving that waiting for crisis results in a delayed response and not always well thought out. Modernizing DPA demands a proactive approach to bolster domestic capabilities. Wright-Patt is central to addressing these challenges through the Air Force Research Lab's Executive Agent Program Office. Wright-Patt manages Title III projects to expand manufacturing capacity for advanced materials, but also for older technologies. And nevertheless, limitations persist. Streamlining the DPA process could enable faster agreements and expand flexible contracting. Increasing funding flexibility would allow Wright-Patt to prioritize emerging technologies as well as improving existing supply chains. Reauthorizing DPA offers a chance to reset and realign its authorities with today's threats. By enhancing Wright-Patt's role through simplified procurement, expanded funding, and proactive collaboration, we can rebuild a more resilient industrial base. I urge this committee to consider an opportunity I urge this committee to reconsider the Defense Production Act and the opportunity we have before us to modernize it. I would now yield my time, and I will recognize the chairman of the full committee, French Hill, for 1 minute.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Well, thank you, Mr. Chairman. It's great to be here in your home state of Ohio and here at Wright-Patterson with our colleagues. America is navigating one of the most dangerous and complex global threat environments in recent history. Our adversaries are accelerating innovation, scaling production, and heavily investing in their national defense capabilities. It's critical that America keeps pace and expands our dominance as the leader in the free world. That requires not just military might, but economic resilience, financial agility, and industrial strength. During today's field hearing, we'll explore ways to use the Defense Production Act to secure supply chains and strengthen our domestic industrial base, while ensuring that our federal agencies have the tools they need to meet 21st century threats. The DPA needs to be anchored in its strategic goals embedded in the Truman administration, but be modernized, reorganized, and focused for these 21st century challenges. I thank Chairman Davidson for his leadership on our subcommittee and look forward to today's discussion. I yield back.

Chairman Warren Davidson (R-OH)SPEAKER_06

Thanks, Chairman Hill. Today we will divide our witnesses into two panels. For the first panel, we welcome the testimony of Mr. Jeffrey Frankston, the Acting Deputy Assistant Secretary of Defense for Industrial Base Resilience at the Office of the Assistant Secretary of Defense for Industrial Base Policy; also, Dr. Charles Ormsby, Acting Director of the Materials and Manufacturing Directorate at Air Force Research Laboratory. We thank you both for taking time to be here. You will each be recognized for five minutes to give an oral presentation of your testimony. Without objection, your written statements will be made part of the record. Mr. Frankston— Mr Frankston, you are now recognized for five minutes for your oral statement.

Mr. Jeffrey W. FrankstonSPEAKER_00

Thank you, sir. Chairman Hill, Vice Chairman, Committee Chairman Huizenga, Subcommittee Chairman Davidson, Representative Moore, good morning. Thank you for the opportunity to speak with you today on the critical role the Defense Production Act plays in ensuring the United States maintains the industrial strength needed to support the interim National Defense Strategic Guidance and sustain its competitive edge. It's an honor to speak to you, for this aviation geek, in this facility to talk about the industrial base and building back to where we need to be. Unlike some of the airplanes in this facility, the DPA is not a Cold War relic. It is a vital statutory tool, one that enables the department to identify and respond to industrial shortfalls, reinforce supply chain integrity and resilience, and accelerate production in support of urgent operational needs. In an era where geopolitical competition is intensifying, particularly from China, industrial capacity remains a key determinant of our deterrence. We continue to see challenges that test our industrial resilience, and we have seen renewed cyberattacks targeting U.S. aerospace and shipbuilding firms, expanded Chinese restrictions on exports of critical minerals, and mounting cost pressures on cross-defense manufacturing. Our shipyards are overburdened. Our munition suppliers are operating at maximum throughput, but still still falling short of surge demands. These challenges are cumulative and compounding, and they demand more than reactive procurement. They require flexibility and coordination between government and industry, and the DPA provides that and more. Revitalizing the defense industrial base is foundational to restoring deterrence and rebuilding our military. Under this administration's leadership, we are executing a deliberate, data-driven strategy to rebuild U.S. defense production capacity and shore up domestic supply chains. We're leveraging key authorities like DPA Title III to address fragile nodes across priority sectors like munitions and strategic and critical minerals. We have reduced barriers to entry through to expand participation in the defense industrial base for small businesses and nontraditional vendors. Through operational through other transactional authorities, flexible acquisition vehicles, and improved acquisition guidance, we are fostering competition and accelerating innovation. These vehicles offer a unique ability to scale the department's effort to force foster competition and collaboration between the government, traditional businesses, and nontraditional vendors. Efforts like this are about more than improving industrial capacity. They are part and parcel to ensuring a resilient, responsive, and adequately distributed defense complex capable of meeting both wartime demands and maintaining a credible military posture that effectively deters our adversaries. The DOD uses the DPA every day in our mission to safeguard vital U.S. national interests. Title I authorizes the president to require industry to accept and prioritize contracts and orders to promote the national defense. We leverage the Title I authorities for priority capabilities, including long-range fires, integrated missile defense, and replenishment of critical munitions. We are taking active steps to continue to improve the Defense Priorities and Allocations System, including clearer onboarding guidance for new suppliers, rapid internal approval processes, and streamlined compliance mechanisms for small- and mid-sized vendors. Title III is a force multiplier where market dynamics alone are insufficient to ensure our domestic industrial base has the capabilities we need for national defense. In fiscal years 2020 through 2024, approximately $2.8 billion was awarded to 194 projects under this program. So far in FY25, the program has made awards totaling more than $500 million, and these investments are complemented by $88 million in total recipient cost shares since the beginning of the fiscal year. They are these investments go, just a sample, go towards restoring critical chemical production, expanding domestic manufacturing for solid rocket motors, establishing secure supply chains for strategic and critical minerals and materials, and in concert with our allies and partners. These investments are also designed to improve economic viability where sustained demand is critical to maintaining a healthy market and resilient industrial base. Title VII is a key enabler of investment screening and supply chain protection. The department co-leads approximately 60% of all Committee on Foreign Investment in the United States, or CFIUS, reviews and has referred more than 75 non-notified transactions just in the past year. These authorities allow us to identify and present and prevent adversary capital from gaining control over sensitive production pathways. The recent expansion of CFIUS review over more real estate sites is a good first step, but we need to build on this foundation. The department strongly supports full reauthorization of the DPA. Let me close by underscoring that deterrence is built long before the potential for conflict emerges. It is built in our factories, on our shop floors, and in the continuity of our supply chains. The DPA is how we turn strategic priorities into industrial reality. It's how we ensure our warfighters are not waiting for parts, materials, or readiness itself. I look forward to your questions and continued collaboration in this shared mission.

Chairman Warren Davidson (R-OH)SPEAKER_06

Thank you, Mr. Frankston. Mr. Ormsby, or Dr. Ormsby, you are now recognized for 5 minutes for your oral statement.

Dr. Charles D. OrmsbySPEAKER_01

Subcommittee Chairman Davidson, Committee Chairman Hill, Vice Chairman Huizenga, and Representative Moore, good morning. Thank you for the opportunity to testify today. I'm happy to speak regarding the Defense Production Act Title III program. I will discuss the Executive Agent Program Office, our role, our history, and the status in executing the Defense Production Act Title III. I serve as the Acting Director of the Materials and Manufacturing Directorate within the Air Force Research Laboratory, headquartered here at Wright-Patterson Air Force Base, and in this position, I lead the Defense Production Act Title III Executive Agent Program Office. The Executive Agent Program Office is staffed by a multidisciplinary team, including program managers, scientists, engineers, National Environmental Policy experts, purchase agreements specialists, financial managers, and other subject matter experts required to execute often complex and unique projects. The Executive Agent Program Office is central to the practical execution of Defense Production Act Title III investments for the Department of Defense. While the Executive Agent Program Office manages the operational and technical aspects, the projects are authorized and funded by the Office of the Under Secretary of Defense for Acquisition and Sustainment. Specifically, the Manufacturing Capability Expansion and Investment Prioritization Directorate within Industrial Base Policy is responsible for the Title III program and its funding. This organizational structure indicates a clear division of labor, with Industrial Base Policy providing the strategic guidance and financial oversight, and the Materials and Manufacturing Directorate that I represent serving as the primary technical and execution arm. I'm pleased to have Mr. Jeffrey Frankston, Acting Deputy Assistant Secretary for Industrial Base Resilience, joining me today. The Executive Agent Program Office initiates project solicitations through a funding opportunity announcement. We issued a hybrid funding opportunity announcement in July of 2019, which allows for both unsolicited inputs from industry and government-initiated calls for specific proposals addressing vetted requirements. We are also executing other transactions using a Washington Headquarters Services procurement vehicle. We are executing 109 technical investment agreements from the funding opportunity announcement. Additionally, we are processing one other transaction prototype award that will include project management support, and we are providing purchase agreement— agreements officer representative and project management support for an additional other transactions to be awarded by the Washington Headquarters Services. The Executive Agent Program Office executes from six funds, including core Title III dollars, CARES Act supplemental, Ukraine supplemental, Inflation Reduction Act, Indo-Pacific security supplemental, and Israel security supplemental. These funds have varying structures. For some funds, obligation and expenditures have no expiration dates. For others, there are expiration dates stated. The Executive Agent Program Office's diverse staff of engineers and scientists are proud to provide critical technical depth for assessing industrial base capabilities and ensuring investments achieve a resilient defense industrial base. Notably, recent examples include a project that significantly improved production of gallium nitride monolithic microwave integrated circuits, achieving a threefold yield improvement at a 76% cost reduction. Another project expanded domestic nickel production, identifying the purest nickel in the United States and perhaps globally. The purity was so good, examples were placed in the Smithsonian just last week. Our expertise extends to managing projects across critical chemicals, critical minerals and materials, hypersonics, radiation-hardened microelectronics, castings and forgings, and energy storage and battery value chains. The Executive Agent Program Office employs over 60 government civilians and contractors to support the program in full-time and part-time positions. Executive Agent Program Office personnel benefit from a strategic understanding of their technical fields that extends to science and technology projects they support outside of the Title III program. This enables our team to initiate materials and manufacturing technology programs of great value to the Department of Defense. The Materials and Manufacturing Directorate, through the Executive Agent Program Office, takes pride in our 33 years securing the defense industrial base for our nation. I thank you for the opportunity to testify today, and I look forward to your questions.

Chairman Warren Davidson (R-OH)SPEAKER_06

Thank you, Dr. Ormsby. We'll now turn to a number of questions, and so I'll recognize myself for 5 minutes. You know,. Mr. Frankston, you highlighted really the three titles that are functional, and you look just by structure—Title I, Title III, and Title VII—that'll tell you it's undergone some revisions. For the most part, it's been deletions and not additions over the years. But Title I for simplicity, prioritization, Title III for investments, and Title VII for screening. I wonder if you could highlight particularly an example, maybe a cost-share example, of how you're deploying capital to address a DPA priority for the supply chain and how that works. How do you screen for it? How do you decide to make the investment? How does that work out? You highlighted $88 million that you're deploying in the market. Maybe one of those projects that is addressing a critical shortage.

Mr. Jeffrey W. FrankstonSPEAKER_00

Sir, thank you very much for the question. The DPA gives us flexibilities to attack a number of different key priority areas. One of those that we have been focusing on intently of late is critical and strategic minerals and materials, given some of the supply chain challenges that have been highlighted due to Chinese export restrictions and controls. We have recently put out a couple of projects just in the last few weeks, but previously to those, we have a number of projects where we give just a little bit of dollars with DPA, and that comes to a cost share either from a private equity or venture capital for those projects. A lot of times we are just giving a signaling to the company to show that we have a sustained interest in this priority capability, or mineral, in this particular case. And that is what these companies are needing for their own investments or to get outside banking help and support to sustain their critical mineral production.

Chairman Warren Davidson (R-OH)SPEAKER_06

Yeah, thank you for that. And you highlight critical minerals, and obviously that's a shortage for the country. It's a crisis not just for the defense supply chain, but maybe more broadly. And given that this is the first time we're updating DPA post-COVID, maybe you could talk about some of the other areas that you look at in terms of prioritization or investment in, you know, healthcare, pharmaceuticals, other sectors that, that maybe are on your radar screen?

Mr. Jeffrey W. FrankstonSPEAKER_00

So thank you. Our current priorities are critical minerals, missiles and munitions are at the top of our list. There are many other sectors where we have critical shortfalls in our defense industrial base. Minerals and materials are at the basis and the fundamental nature of everything that we do. If we do not have a particular mineral, it doesn't matter if we have 95% of all the other ones for a particular weapons system. We're still short because of that requirement. And so that has our direct key focus and attention. Missiles and munitions are our direct way to project force and enable capability. And so we have challenges to meet the needs that our nation demands for the conflicts and the adversaries that we may face. And so we are deploying our capital, deploying DPA to get after key shortfalls, to expand capacity ahead of a conflict so that we are not short once the balloon goes up.

Chairman Warren Davidson (R-OH)SPEAKER_06

Yeah, thank you. It's an adaptation of a different quote, but you go to war with the supply chain you have, not the one you wish you had, right? And, Dr. Ormsby, you've highlighted both cutting-edge technology and then more mature technologies like castings and forgings. And I wonder if you could highlight in your work how you balance those needs to really meet the national security threats that that we need to address.

Dr. Charles D. OrmsbySPEAKER_01

Yes, sir. Thank you for the question. I would say that, first off, it is absolutely a partnership with Mr. Frankston. He sets the priorities, we execute the programs. So, he sets the balance of the portfolio, but we do have a number of projects in the last several years that have focused on castings and forgings for Navy applications, for Air Force applications, as well as, as I said, balance across microelectronics needs, hypersonics needs, you name it, really set by the priorities coming out of OSD. And then we go out and work with the industry partners to actually execute the programs.

Chairman Warren Davidson (R-OH)SPEAKER_06

Yeah, thank you, and not only is Wright-Patt central to the capability to run procurement in the Materiel Command, the cutting-edge procurement at AFRL, we also have capability at threat assessment, and so it was nice to bring some colleagues in and highlight the capabilities here at Wright-Patt. So again, thanks to the team for hosting. I'll yield my time and now recognize Chairman Hill. Mr. French Hill is the chairman of the full committee and represents an area of Little Rock, Arkansas.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Thanks for both of you being with us today, and greetings from Little Rock Air Force Base and the 19th Airlift Wing in Little Rock to everybody here at Wright-Patt. Mr frankston, let me start with you. Looking at Title 1, just on the priority setting, I'm a business guy, so I'm going to ask a pretty obvious question, which is if everything gets a priority rating, what's a priority?

Mr. Jeffrey W. FrankstonSPEAKER_00

It's a great question, sir. Thank you very much for the opportunity to answer. So, we spend a lot of time working with the services, hearing from industry about the prioritization matrix. All DOD orders are generally given a higher priority just to compete against civilian markets to ensure that we get the weapons and the capabilities that we need. But we work daily with our services and our industry counterparts to be responsive when an issue is raised, when there's a conflict on a particular prioritization. That, in and of itself, giving it a priority rating doesn't solve the issue if there's still a challenge in the supply chain itself. That's where DPA Title III and the other authorities that we have to go resource that supply chain come in. But we will flag it and raise it for attention, and these have our highest priority to be responsive when a bottleneck is raised.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Does that mean that you really have a super priority system, that should we—should the DPA process, should the Advisory Council, for example, set DOD priorities, but you have a different grade that's a step above that when there's a bottleneck and it's a DPA priority, and make that distinction so that instead of 2.5 million priorities over the last 5 years, that there are fewer that are directly related to the specific benefits of Title III, for example?

Mr. Jeffrey W. FrankstonSPEAKER_00

Sir, there's two ways we approach this. So one is we have something called the DX rating. It does not actually stand for anything, but that is our highest priority systems. And so there's a handful of those because, to your point, there is only so many silver bullets that you could spend from a prioritization, but these are given to our most sensitive, critical, urgent capabilities. And so they do have a little bit of a step above the rest. Alternatively, we also have within Title I something called special priorities allocations where we work down at the lower component level. So where we find that there's a bottleneck or a key widget or item that is a choke point in supporting multiple programs, we can work to prioritize that, work with the services, work with industry, and then, if necessary, given a capacity shortfall or other challenge, we then would deploy DPA Title III to help.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

So in Title III, if you look back over the past five years, has been very active. What's the civil service and contractor breakdown in your chain of command?

Mr. Jeffrey W. FrankstonSPEAKER_00

So we have a very small but highly skilled and empowered team. I only have a handful of people on our side, and it's similar, I would think, with AFRL. I have one DPA Title III manager. I have a couple other civilians that are assisting. I have one DPAS, so the prioritization manager. We have several billets that we're trying to fill, and then we have a handful of contractors behind that. With the support from the Congress and our administration leadership, we have support to expand that, but it's necessary to manage the breadth and scope of both the program and then the challenge in front of us.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Well, given the pressure on the supply chain from the current conflicts around the world that we've— you've talked about in your opening statements, and then this existential threat to reshore or friendshore our strategic needs that are so competitive, how many additional staff do you think you need that would accelerate the application processing, and how do you quantify the— what is a right speed on application processing?

Mr. Jeffrey W. FrankstonSPEAKER_00

Thank you for the question, Chairman. We feel that at least two more civilians for each of the programs and titles would be useful. We're conscious of not becoming a large staff that adds bureaucracy to the process, but a couple of trained, skilled civilians. Luckily, we have support for our leadership to move out on this, and then with some requisite contractor support, but then also we rely on the partnership with our services, like AFRL, but then all the other military services who are helping us evaluate, assess, and ensure that when we make an investment or plan to make an investment, that there is a receiving end of that investment, whether through an industry partner or a program office, to ensure that that investment is worthwhile.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Thank you, Mr. Chairman. I'll yield back and look forward to the second round.

Chairman Warren Davidson (R-OH)SPEAKER_06

Thank you, Mr. Hill. I now recognize the Vice Chairman of the full committee, Mr. Huizenga, who represents Western Michigan.

Rep. Bill Huizenga (R-MI)SPEAKER_05

Thank you, both Chairman Davidson, Chairman Hill. Appreciate the opportunity to be down here. I actually represent the Battle Creek Air National Guard facility up in Battle Creek. We had a briefing earlier with someone from the 110th Air Wing, and I just want to say thank you and extend my gratitude to them. They operate the MQ-1s and 9s out of Battle Creek, and obviously that is part of the portfolio that we're talking about here. I want to try to touch on a couple of things that might seem a little disjointed, but, based on some experience that we had had previously going through reworking of CFIUS, I'd like to know more about specifically from Mr. Frankston how your operations fit into that CFIUS operation and that review.

Mr. Jeffrey W. FrankstonSPEAKER_00

Thank you for the question, Vice Chairman. So CFIUS is managed by one of our sister offices, so still within the umbrella of of our Industrial Base Policy Office. We collaborate with them daily. The CFIUS reviews, they have the lead on how they work with the Department of Commerce and the other interagencies that review each of these potential cases, but a lot of that is informed by where an adversary or a foreign partner may want to make an investment. We need to be aware of that as we're targeting our own supply chains too. It helps us to know where China or another adversary is trying to gain leverage against a key shortfall that we may have or something else. So there is a constant exchange of data.

Rep. Bill Huizenga (R-MI)SPEAKER_05

And typically that had been in manufacturing space previously. Now we've sort of expanded into strategic locations, correct? Which is, which is literally the review of land and acquisitions. Positions that might be outside of either a technical ability or some sort of manufacturing ability, correct?

Mr. Jeffrey W. FrankstonSPEAKER_00

That is correct, sir. Yes.

Rep. Bill Huizenga (R-MI)SPEAKER_05

Okay. And it's appropriate in your view?

Mr. Jeffrey W. FrankstonSPEAKER_00

Yes, it absolutely has a direct bearing where our adversaries are. So that land that might be next to a base or that might be next to an industrial facility may just be an opportunity for espionage or a different

Rep. Bill Huizenga (R-MI)SPEAKER_05

probably not just sheer coincidence Incidents that the Chinese are interested in picking up land next to a facility, yeah. Okay, I'm going to track over to Dr. Ormsby here a little bit, because I think this is something that, as we've gone through discussions of DPA previously, kind of famously, at least in Michigan, there was discussion when we saw the shortfall in ventilators, for example, during COVID and the supply being cut off by China, there was discussion of implementing DPA to to compel our manufacturers to go into that specific manufacturing. Ford, is my recollection, actually voluntarily stepped up and changed some of their production to be able to fulfill that, but that's outside of sort of the traditional role of DPA and certainly what you've been talking about with these these core six funds, the core Title III dollars. I'm more interested in how you see how the CARES Act supplemental funds, how the Inflation Reduction Act funds fit into that. And then we see the foreign policy side of this with Ukraine supplemental, the Indo-Pacific Security Supplemental, and the Israel Security Supplemental funds. So explain to everybody that might be watching this, and certainly for us up here, where you see these different funds and how they fit. And you had mentioned there's expiration dates on those, and if you could outline that.

Dr. Charles D. OrmsbySPEAKER_01

Yes, thank you for the question, Vice Chairman. I think a lot of that really does go to Mr. Frankston, where we're setting the priorities within the legal authority that we get and the funding authorities that we get. And then in our office, we execute the priorities basically. So I would say the various funds do apply to needs that we have, you know, as we look at replenishing munitions, replenishing stocks, It does help. The expiration date issue that you bring up can be a bit of an execution hindrance for us, to be honest with you, in that especially as we get large dollar infusions coming in and I don't wanna say unplanned, but maybe not expected well in advance, right, with restrictions on how you can use them, then we have to fairly rapidly come up with a strategy and we have to get those funds on agreements and issued, which causes us to have to do some prioritization of who we're working with, when we're working with them, with our limited staff.

Rep. Bill Huizenga (R-MI)SPEAKER_05

My time's expired, but I look forward to exploring that a bit more, maybe in second round. So yeah, we'll

Chairman Warren Davidson (R-OH)SPEAKER_06

will have a second round. I now recognize the gentleman from North Carolina, Mr. Moore, who's also the former Speaker of the House of the state of North Carolina's House of Representatives.

Rep. Tim Moore (R-NC)SPEAKER_07

Thank you, Mr. Chairman, and thank you for hosting us here. This has been an incredible visit, and this is an absolutely amazing facility, an amazing base. I'll tell you, with the continued consolidation of our domestic industrial base, it seems to me more important than ever to recognize and support the critical role of our existing industry. Like, back home in North Carolina, for example, we have a lot of companies that contribute greatly to the supply chain when it comes to national defense. And Shelby, which is actually my home county, we actually have one of the very few copper smelting and refining facilities in the United States. There's talk about the availability of rare earth minerals, but you also have to have the capability to produce those. And so they actually have a facility that produces 100% of copper, pure copper, from copper scrap. And the Department of Defense, of course, has identified high-purity copper as a strategic metal essential to our national security. So, Dr. Ormsby, with copper being DOD's second most utilized material, which China, though, currently controls, as I understand, 50% of the global smelting capacity, what are the national security consequences when our domestic smelting and refining capabilities lag behind those of our global competitors?

Dr. Charles D. OrmsbySPEAKER_01

Sir, thank you for the question. I think you're hitting on the critical issue honestly that Mr. Frankston brought up early on about the priority for critical chemicals, critical minerals, critical materials. We are seeing a number of issues exactly like the one that you bring up in our supply chains, particularly down very far into the supply chains, often at levels below where our prime contractors would even recognize that there is an issue that they can't get that specific material that is necessary for our weapons systems, and that's where the priority on the critical chemicals, minerals, materials really plays into our strategy here and where we're investing, because it is a big issue for the department.

Rep. Tim Moore (R-NC)SPEAKER_07

So how would you say, you know, export restrictions by other nations affect the ability to refine and produce copper in the U.S.?

Dr. Charles D. OrmsbySPEAKER_01

Sir, it's, it's obviously a major issue for us. And to the point, it's not just about getting the materials that we need. It's also about being able to process them, right? And that's, that's why we have such a priority on this investment.

Rep. Tim Moore (R-NC)SPEAKER_07

So, let's say if another nation were to manipulate global prices, what actions could the DOD take to safeguard domestic manufacturing?

Dr. Charles D. OrmsbySPEAKER_01

Sir, thank you for the question. Would you like to take it or would you like me to answer, sir?

Mr. Jeffrey W. FrankstonSPEAKER_00

So, thank you very much. I'm Happy to help. So as Dr. Ormsby noted, it's not just at the mine itself. It's not just at the processing itself. It's across the entire supply chain for critical minerals and materials. And China has absolutely been manipulating the market, has been placing export controls. And so that is one of the reasons why we've placed such a high priority. It's why one of the earliest executive orders from this administration was on critical minerals. It's why we have a presidential determination waiver to be able to use DPA for critical minerals and materials across the entire supply chain so that we can rebuild or reinforce our domestic capability and capacity. Or in the case of—so for the mines itself and where these minerals are coming out of the earth, geography matters. And some of this isn't just always, not available in the U.S., and so that's why it's leveraging key partners and allies that we can utilize certainly at the mine level, but then build the processing and the supply chain capabilities internal to the U.S.

Rep. Tim Moore (R-NC)SPEAKER_07

And to that point, even beyond metals, I think it's equally important that we be able to identify, for example, and be able to source textiles. You don't think of textiles a lot of time when you're just talking about national defense, but the ability to have the proper uniforms, the proper material for our fighting men and women is critical. And of course, the Berry Amendment requires the DOD to procure textile and clothing products made with nearly 100% U.S. content and ensures a stable domestic supply chain that will protect us from other nations that seek to manipulate it. So, I guess it's kind of a softball question here, but how does maintaining— how important is maintaining an independent domestic textile supply chain improve the resiliency in the event of a near-peer conflict? Either of you want to take it?

Mr. Jeffrey W. FrankstonSPEAKER_00

it's fine. Thank you for the question. It's absolutely critical. It's not just in clothing. Those textiles and materials go into our weapons systems themselves too. So We need to have that domestic capability.

Rep. Tim Moore (R-NC)SPEAKER_07

And we're very proud in North Carolina to have a a significant production capacity of textiles, so yeah I won't start a fight about being the home of flight since we're in Ohio right now, but we do have some textiles.

Chairman Warren Davidson (R-OH)SPEAKER_06

I thank the gentleman. We'll go ahead and start our second panel now. And so, I'll recognize our second second round, not the second panel, second round for this panel, to be more precise. So, I recognize myself for five minutes. And talking about flight, they do have some beautiful real estate in North Carolina, but we do have the engineers here in Ohio. So I knew it was gonna go there,

Rep. Tim Moore (R-NC)SPEAKER_07

but I did start it.

Chairman Warren Davidson (R-OH)SPEAKER_06

is here in the in the birthplace of aviation. Now, the the dialogue that with Mr. Huizenga really, I think, highlights the coordination necessary across multiple federal agencies. And of course, on on 7, Article 7, or Title VII, when you're looking at CFIUS, for example, threat assessments, things like that, it's important. In Title I, I think Chairman Hill highlighted that if you've got 100 priorities, you really have zero priorities. But as picking up with the dialogue with Mr. Ormsby, how's the collaboration across agencies going within Title III? And when you think about multiple federal agencies, there are times where FEMA is really the lead coordinator. So what's what's the overall office doing to kind of coordinate kind of across agencies? Mr. Mr. Frankston.

Mr. Jeffrey W. FrankstonSPEAKER_00

All right, thank you very much for the question. So, there is a monthly working group that FEMA hosts for all of the federal agencies that has DPA authorities. DOD happens to have the vast majority of actual DOD appropriation or appropriation for DPA, but we work hand in hand with our partners. When we have challenges or areas that occur or incidents that occur that cross into one of our other interagency partners, we have a fantastic working relationship where we can reach out to someone like Energy or Transportation to identify opportunities to collaborate. This can be strengthened. We could work at an even higher level, at the executive level, more collaboratively. But again, we work across the interagency. I will add in particular, on DPA Title I, Commerce has the lead role, and we have a phenomenal working relationship with Commerce. When we get a prioritization, when we need their help and request, we turn that quick ourselves and they're turning it back even quicker to us. So it is a really, really strong relationship.

Chairman Warren Davidson (R-OH)SPEAKER_06

Yeah, thank you. And I guess it also highlights the importance of how Congress appropriates money. And, Dr. Ormsby, you highlighted several buckets that you're actively managing. When you think about not just the appropriations and the status quo that we have, not just in DPA, but in the procurement, one of the things that DPA does at times is sort of bridge the gap between status quo thinking. And a lot of times the supply chain functions at least adequately for the status quo. The real question is when you have those moments of crisis where you have to surge, how resilient is the supply chain? How important is it to maybe use some of what we're learning from DPA to look at the rest of the procurement process or be able to waive even our own procurement process? And I think just to illustrate, SpaceX out there gave us deep space launch capability that we were, for a while, dependent on Russia. Atlas is still under development using status quo traditional procurement operations. So at a certain level, the supply chain arbitrage was really part of the success story there. So how do we make this better?

Dr. Charles D. OrmsbySPEAKER_01

Yes, Chairman Davidson, thank you for the question. I think you're hitting on a key issue that that we have right now. These authorities can really help us to address supply chain issues, but I believe Mr. Frankston said earlier what we really need to get to. And to your point earlier, you go to war with the supply chain you have. We need to be more proactive and looking forward, right, because we've already identified a number of strategic problems in our supply chain where where we need to address those issues. These authorities have been very helpful to us in doing that. I think they're just part of the puzzle, to be honest with you. There are a number of other tools that we have also from our science and technology portfolios to other investment opportunities. But I believe we need a whole-of-nation approach, honestly, that looks at everything that we have to be able to start to proactively prepare for a surge. What we saw during COVID as the fund jumped up significantly in importance and number of projects, number of dollars invested, etc., we mobilized very quickly. It was an all-hands-on-deck kind of effort, and we have a number of lessons learned in how we've organized now that we've continued to try to be more effective and efficient in identifying issues and setting priorities, but I believe we have to keep that going into the future.

Chairman Warren Davidson (R-OH)SPEAKER_06

Yeah, thank you both. My time's expired, and I now recognize Chairman Hill for 5 minutes.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Mr. Davidson, thank you, and I do recognize that Ohio is the birthplace of aviation, but the actual aviation took place in North Carolina at Kitty Hawk, I think. And the University of Michigan's aeronautical engineering program was started by people who were connected with the Wrights. So all all the states here, we're all in good stead by being here at the birthplace of aviation. Mr frankston, our current industrial base, does it have surge capacity? Where are we the weakest in our defense industrial base? Going back to my earlier point that we have wars underway with supply chain constraints and we have strategic supply constraints, so what down at the Pentagon, what worries you the most about surge capacity?

Mr. Jeffrey W. FrankstonSPEAKER_00

Thank you for the question, sir. I'm a naval historian and analyst by education and trade, and Navy capacity, shipbuilding and ship repair capacity, we made some very interesting decisions from the peace dividend at the end of the Cold War, and we have a much-reduced capacity for ship repair and ship construction. And this has been a priority of this administration through the Maritime Dominance EO and other critical areas that our office is supporting. As Dr. Ormsby mentioned, there's been a number of investments in castings and forgings. We have workforce training programs to expand, because that is something I'll also emphasize. For as much as we have the actual facilities and the equipment challenges and we need to expand capacity, we need the people that need to be hired and retained in these industries and have good, high-paying, quality, high-skilled jobs and be there when we need to surge.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Proud to be on a very, very cold winter day at Newport News last year to see the USS Arkansas christened, our newest fast attack sub. Proud to have her name back on a ship in the fleet. Dr. Ormsby, Title III grants, as someone responsible for executing that big-picture strategy, do you receive feedback from businesses about how well mass production is working under Title III? Just a practical feedback question.

Dr. Charles D. OrmsbySPEAKER_01

Yes, Chairman Hill, thank you for the question. We do. What we really get from industry a lot, because they do recognize that we execute a lot of the projects, is those white papers and those recommendations of places where they see need for investment, where they are having issues in their supply chains. And we facilitate them getting in touch with Mr. Frankston office to actually make proposals either through the other transactions or through our open funding opportunity announcement.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

That's good. How does the research lab's ManTech program sort of bridge the gap between early-stage innovation and scalable industrial capacity? I see this is a constant complaint in Congress, is breaking into the supply chain, which the president's taking action on, which I'm fully supportive of. But once in the supply chain, if you're an early-stage development company, how you can scale up—tell me about your bridging there.

Dr. Charles D. OrmsbySPEAKER_01

Yes, sir. Thank you for that question. That that's a nice tie between our science and technology investments, which are a different appropriation that that I also control, where where we can invest with our industrial base partners to develop manufacturing processes to either get faster production, lower cost, or to develop a domestic source for production if one doesn't exist, for things in my case that are important to the Department of the Air Force, Space and Air Force. There is a ManTech program in every service, so that you can can take the cookie cutter to the other services. Once we can can develop that initial manufacturing process, then frequently we see a need to now scale it, and that's where the Title III authorities really come to play and and help to now get you to the full scale that we need.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

And you think those are working effectively? Is there one thing, if you could change one thing, what would it be?

Dr. Charles D. OrmsbySPEAKER_01

I believe those are working effectively, yes. I could give you a couple of anecdotal examples where I see them working if you would like, but I don't want to take your time.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Okay. Thank you. That'd be helpful. I yield back, Mr.

Chairman Warren Davidson (R-OH)SPEAKER_06

Thank you, Mr. Hill. I'll now recognize the Vice Chairman, Mr. Huizenga, for 5 minutes.

Rep. Bill Huizenga (R-MI)SPEAKER_05

Thank you, Mr. Chairman. So let's go back and unpack the six sort of funds that we have. And we have Title III, which I think is self-explanatory. We then have what I would say maybe are conflict-related supplementals, Indo-Pacific, Israel, and Ukraine. And then we have—I'm not sure quite what category to put this in—CARES Act and the IRA. So Dr. Ormsby had said there are some lessons learned from COVID. We can get into those, but I really want to know what do each one of those various buckets of funding, what do they cover? What are they being used for?

Mr. Jeffrey W. FrankstonSPEAKER_00

Thank you for the question. So, we have a number of different, similar but different funding priorities within each of those buckets of money. And the Ukraine and Israel supplementals, much of that went towards our missiles and munitions productions, where we found that when we tried to surge some of the key weapon systems that we're supporting and providing in support of those conflicts, the dollars went to those, whether through solid rocket motors or castings and forgings.

Rep. Bill Huizenga (R-MI)SPEAKER_05

To expand capacity?

Mr. Jeffrey W. FrankstonSPEAKER_00

Yes, sir. Okay. But generally to expand capacity just when we knew that we weren't able ramp as much as we needed to based on the numbers that we needed for our own needs and then what we were providing overseas.

Rep. Bill Huizenga (R-MI)SPEAKER_05

How about Indo-Pacific?

Mr. Jeffrey W. FrankstonSPEAKER_00

Same thing. So it's some different munitions, different types, but generally the same areas. We have shortfalls across munitions, which is where each of those funds were targeting.

Rep. Bill Huizenga (R-MI)SPEAKER_05

Okay. How about CARES and IRA? What was that money used for?

Mr. Jeffrey W. FrankstonSPEAKER_00

CARES. And so this was before my time, they but a lot of it went towards

Rep. Bill Huizenga (R-MI)SPEAKER_05

not all of us up here supported necessarily all those expansions. So I'm just trying to figure out, as you know, what the expiration dates might be on that. Is there a need to be continuing parts or, or those, those programs at all?

Mr. Jeffrey W. FrankstonSPEAKER_00

I'd be happy to get you some additional details for the record on the specifics on the timeline for the rest of the money and the expirations and where it's going to, sir.

Rep. Bill Huizenga (R-MI)SPEAKER_05

Okay. Do you have any examples of what CARES or IRA was used

Mr. Jeffrey W. FrankstonSPEAKER_00

for? Sure. So Some of it went to ventilators, some of it went to needles, syringes, protective equipment, a lot of just medical—

Rep. Bill Huizenga (R-MI)SPEAKER_05

basically where we were seeing a shortfall in supply chain.

Mr. Jeffrey W. FrankstonSPEAKER_00

Yes, sir.

Rep. Bill Huizenga (R-MI)SPEAKER_05

Okay, Title III I think was self-explanatory. I want to touch on this remaining little couple of minutes here on chips and production. Obviously, as you were saying, the critical minerals and then the missiles and munitions were sort of the focus. You don't have missiles and munitions if you don't have chips. You don't have chips unless you have critical minerals. So, explain to me what how that might factor into into what we're doing here.

Mr. Jeffrey W. FrankstonSPEAKER_00

Thank you for the question. Microelectronics and chips are essential to just about every weapon system that we have and make. And so, there's been a number of investments within DPA, but then as Dr. Ormsby was mentioning, some of the other funds that are out there, and then some of the service investments themselves have made in this. There's been several programs that were being used to resource both large-scale chip production, and then some of the more niche microchips for some of the more exquisite weapon systems and some of the more exquisite capabilities that we have. There's still a lot of work to go so that we can continue to on-

Rep. Bill Huizenga (R-MI)SPEAKER_05

we're not there yet, right, in our production capability. I mean, that was part of these various previous buckets that we were talking about. We were talking about shortfall because we'd sent off a lot of our weapon systems, but then it also seems that we have some gaps that need to get filled, correct? And is DPA trying to fill build those specifically when it comes to chips, chips production vis-à-vis what, what we see production here in the United States versus what, what is produced overseas?

Mr. Jeffrey W. FrankstonSPEAKER_00

Yes, sir. And it ranges across the supply chain, too, just because whether it's the actual foundry or the production of the wafer itself or the mineral, as you mentioned, that goes into it, we need to secure both the supply, not just of the raw material, but the processing, much of which went to China over the last 30 years. And so it is a concerted effort to bring back not just the material, the mineral itself, but where that chip is being manufactured in all aspects of its supply.

Rep. Bill Huizenga (R-MI)SPEAKER_05

And finally, you are part of any CFIUS review of that, correct?

Mr. Jeffrey W. FrankstonSPEAKER_00

I am not personally part of it, but,

Rep. Bill Huizenga (R-MI)SPEAKER_05

but CFIUS is part of that review. Okay. And I'll maybe reserve my question about where we are currently on CFIUS review of the H20s and other chip capabilities and some of recent announcements as to where those are being shipped. Time's expired, but we'll continue this later. Thank you. Yield back.

Chairman Warren Davidson (R-OH)SPEAKER_06

Thank you. Mr. Moore from North Carolina is now recognized for 5 minutes.

Rep. Tim Moore (R-NC)SPEAKER_07

Thank you, Mr. Chairman. I wanted to follow up with Mr. Frankston about the discussion about the shipbuilding. One of our colleagues, Representative Jen Kiggans from Virginia, was one of the members that frankly brought me up to speed on the fact of how far behind we are, particularly China, in terms of the production of ships between the two nations. What is the administration looking at to ramp that up? What is the short-term plan and what is the long-term plan to facilitate that?

Mr. Jeffrey W. FrankstonSPEAKER_00

I appreciate the question on shipbuilding. This is an area of deep concern and passion to me. The Maritime Dominance EO, I don't recall the date that it came out, was one of the longest ones ever written due to where we are on shipbuilding and the state of shipbuilding. So it's looking across the board at both, not just for defense requirements, but then also on the commercial side. There is weekly meetings across each of the aspects of that executive order working for commercial shipbuilding, working for U.S. military shipbuilding, the Military Sealift Command, the Maritime Administration through the Department of Transportation. All of that is critical because it's the same limited industrial base supporting each of those components, so that when we work together to go target a pump or a valve manufacturer, it doesn't matter if that's going to be at a company that's supporting a commercial vendor right now. That valve or pump that's so far down the supply chain could easily be turned to build capacity for U.S. shipbuilding. So there is a number of different efforts, both within our presidential budget and what we build into our process, looking to expand our shipbuilding capability and capacity because this administration recognizes that we have a particular challenge to match what China has ramped up their own capacity.

Rep. Tim Moore (R-NC)SPEAKER_07

So in terms of what Congress can do, obviously money in terms of appropriations, but are there other— in addition to that, are there regulatory matters? Are there other things that Congress can do that could help facilitate this process?

Mr. Jeffrey W. FrankstonSPEAKER_00

I'd be happy to get back a formal response for the record on some of those recommendations, sir.

Rep. Tim Moore (R-NC)SPEAKER_07

And then in terms of Mr. Huizenga asked you a question, I think, similarly on the same lines, the question had to do with IRA and CARES. Have you been able to go through and look at some of the procurement and find some areas where funds can be repurposed? Perhaps funds are going to areas that are not as critical. Were you able to repurpose that in some of the other areas where we do see some shortfall, at least in an immediate on the immediate timeframe?

Mr. Jeffrey W. FrankstonSPEAKER_00

We continue to look for opportunities on where our funding has been aligned, whether from a previous priority that may have changed based on real-world events. We are always looking at our portfolio to support not just where we see things, but where our leadership is directing us. So we have some very strong internal guidance from our Department of Defense leadership on their key priorities. So critical minerals and missiles and munitions are two at the top. And so we are looking across our resourcing areas because again, you cannot build a missile, a fighter plane, a jet, a tank, a ship if you don't have the raw materials, the raw minerals, nor if you have the weapons to actually use from that platform.

Rep. Tim Moore (R-NC)SPEAKER_07

Dr. Ormsby, would you like to respond to that same question as well?

Dr. Charles D. OrmsbySPEAKER_01

Yes, sir. Thank you. I appreciate the question. I would simply add not only reevaluating the priorities continually looking at the portfolio. But then there are also times when, for various reasons, we start down a path of making an award, and in the end, the company doesn't agree to the, the terms, they change their business strategy, our priorities change, what have you. And then that gives us another opportunity as well to then redeploy those funds for different priority.

Rep. Tim Moore (R-NC)SPEAKER_07

What I would ask is that as you, as you supply further response as appropriate, provide advice for Congress in terms of ways to streamline the process or to improve efficiencies. One thing this Congress has worked very, very hard on, as well as the administration, is improving government efficiency, getting rid of waste, getting rid— just trying to cut through the bureaucracy. If there are things that would require congressional congressional action that would, that would, I don't know, get rid of some of the shackles that are, that are slowing the ability to be more nimble and respond, particularly as other nations take very rapid actions. Please let us know that because I, I'm certainly interested. I think probably most of my colleagues are as well. With that, I yield back, Mr. Chairman.

Chairman Warren Davidson (R-OH)SPEAKER_06

Uh, I think our witnesses, uh, really appreciate your testimony today, and we'll pause for a bit as we switch to our second panel. Thank you very much. Thank you very much.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Thank you.

Chairman Warren Davidson (R-OH)SPEAKER_06

Institutions will come to order. I'd like to thank our Thanks again to our first panel of witnesses. And so now I'd like to welcome our second panel of witnesses. First, Mr. Robert Faxon is the chairman of the board at Consolidated Boring Inc. And Mr. Gordon Follin is the Chief Product Officer at Beehive Industries. We thank you both for taking time to be here, and you'll each be recognized for 5 minutes to give an oral presentation of your testimony. Without objection, your written statements will be made part of the record. Mr. Faxon, you're now recognized for 5 minutes for your oral statement.

Mr. Robert FaxonSPEAKER_04

Thank you, Chairman Hill, Chairman Davidson, and members of the subcommittee. Thank you for the opportunity to testify today. My name is Robert Faxon, Chairman of the Board for Consolidated Boring, Incorporated, a company formed in 2021 from the acquisition of Faxon Machining in Cincinnati, Ohio, and a division of ATI now called American FlowForm Machining in Billerica, Massachusetts. These two companies represent almost 100 years of combined manufacturing. My testimony represents the most accurate and truthful representation of the current situation that I can offer based on my personal interactions with both government and industry. It is totally of my own opinion and may or may not represent the balance of the CBI team. I bring over 47 years of hands-on manufacturing experience, including over 25 years specifically in the defense industry, starting at the age of 13 working part-time in a family business in Cincinnati. Faxon Machining, located in Cincinnati, Ohio, operates a 185,000-square-foot facility manufacturing warheads and precision components for critical defense programs such as the GBU-57 Massive Ordnance Penetrator, for which we produced seven of the 14 30,000-pound bunker buster bombs used in the Iranian nuclear facility strike; BLU-137 2,000-pound bunker busters; the GMLRS unitary warhead. Faxon Machining played a key role in the BLU-136 Next Generation Area Attack Weapon program from concept and development all the way through full-rate production as a prime contractor for the U.S. Air Force. The company is also advancing modernization efforts in artillery production with plans for a state-of-the-art facility capable of vertically integrated manufacturing, producing up to 450,000 modular artillery shells annually to support evolving military requirements. Faxon Machining supports major defense contractors including General Dynamics, ARA, Lockheed Martin, Northrop Grumman, U.S. government, and many others. American FlowForm Machining, based in Billerica, Massachusetts, operates a 65,000-foot facility focused on the manufacture of large-diameter steel rocket motor cases and many smaller rocket motor cases. Over 1 million rocket motor cases have been produced in this facility since its inception. AFM supplies parts for missile systems including Stage 1 MK 72 rocket motor case for the SM-3 and SM-6 missiles, Stinger, TOW rocket motors, and is launching production of rocket motor cases for systems like the Ground-Launched SDB-1 for Anduril. AFM also has been contracted to produce MK 104 and GEM-T Patriot rocket motor cases. Additionally, AFM supports programs such as Zuni, MK 22 mine clearing systems, just to name a few. We are actively engaged in innovative companies to support projects like Golden Dome and Iron Dome. National security and defense industrial base challenges: The demand for large steel rocket motors, especially those 13 inches and larger in diameter, is growing rapidly due to today's evolving geopolitical environment. For example, the combined demand for the MK 72, MK 104, and GEM-T Patriot cases is approximately 3,000 units annually, far exceeding current AFM capacity of 350 to 400 large rocket motor cases. AFM is uniquely positioned to address this shortage with a proposed vertically integrated rocket motor case factory capable of producing 3,000 cases per year. The facility will strengthen supply chain resilience by internalizing all manufacturing processes and steps, reducing dependence on external suppliers, and support surge capacity during times of crisis. The new factory would create roughly 300 skilled manufacturing jobs in Massachusetts and generate significant cost savings for the government. Additionally, this factory would play a key role in supporting current and future defense programs, including the administration's proposed Golden Dome initiative. Experience with Title III funding and recommendations: AFM has worked closely with the Defense Production Act Title III office during its efforts to secure funding for this factory expansion and has submitted a Title III funding request for the new facility. While the potential impact is significant, the process from application to award has proven lengthy and complex, which can be discouraging for smaller companies to pursue these opportunities. This delay risks leaving critical defense manufacturing capacity unmet amid urgent national security needs. To address this, I recommend multiyear, predictable funding and streamlined application process to reduce uncertainty and incentivize timely project starts. If industry is being asked to move at the speed of war, then our partners, being the U.S. government, will also have to move at the speed of war. While the primary focus of this funding is the defense industrial base, it is equally important to support and strengthen the broader industrial base, including commercial and non-DOD manufacturers, so that these companies remain financially viable in the marketplace and can rapidly pivot to defense production if needed. This approach not only enhances national security, but also promotes reshoring, supports high-skilled jobs, and ensures a more resilient and competitive manufacturing ecosystem overall. Conclusion: The investment and reforms I have described are vital to securing our nation's defense industrial base manufacturing future. With the right support, Consolidated Boring, Incorporated, through its operating companies Faxon Machining and AFM, stands ready to deliver the critical capabilities our military requires and respectfully requests that the Title III submission, already accepted but not yet funded, be funded not only for the original amount, but also for the additional amount necessary to meet current demands. This is not only important for our company, but the entire defense industrial base. These efforts can take years to complete under normal circumstances. Several of the key pieces of equipment necessary for the rocket motor factory will need to be manufactured from the ground up: designed, built, tested, run off, and installed, and in some cases, will take well over two years to complete before additional production can begin. If anything were to occur that impedes a normal operating environment, these timelines could stretch even further, potentially delaying completion by several years. The stakes are too high to risk such delays. Failure to act now could leave the United States without sufficient rocket motor production capacity to sustain a prolonged or high-intensity conflict, placing both our national security and our warfighters at unacceptable risk. We must act now to be responsible stewards in meeting the known and immediate needs our military leaders have clearly challenged us with in order to properly support our warfighters and our allies. Thank you for your time. I look forward to your questions.

Chairman Warren Davidson (R-OH)SPEAKER_06

Thank you, Mr. Faxon. Mr. Follin, you're now recognized for 5 minutes for your oral remarks.

Mr. Gordon FollinSPEAKER_03

All right. Thank you, Chairman Davidson, Chairman Hill, and distinguished members of the committee, including Representatives Huizenga and Moore. I appreciate the opportunity to speak with you today on the critical role that the Defense Production Act has in strengthening our nation's defense. I'm Gordy Follin. I'm the Chief Product Officer of Beehive Industries. At Beehive, we're a U.S.-based manufacturing company with over 300 employees at locations in Denver, Knoxville, and also in Cincinnati. In fact, we just opened an expanded facility down in Loveland, about 30 miles south of here, last week. So it's great to be with you today. We specialize in additive manufacturing of jet engines for uncrewed weapons systems, counter-UAS platforms, and drones. Beehive's mission is powering American defense, and we're all in on helping the U.S. and allied weapons U.S. and allied nations replenish their weapons stockpiles, which have been depleted over the last decades by global conflicts. Let me provide just a little example to put this challenge in context. Every month, Russia bombards Ukraine with over 700 drones launched in swarms of hundreds at a time, wreaking havoc across the country. Ukraine, to defend itself, relies on advanced missile defense systems like the Iron Dome and the Patriot systems provided by the U.S. and its allies. These systems work great, but there's two big problems. First of all, the Russian drones come from Iran. They cost about $50,000 apiece, and they can make 6,000-plus a year. The projectiles used in the Ukraine systems to shoot them down cost between $1 and $4 million apiece, and right now we can only make about 2,000 a year. So problem one is it currently costs Ukraine about 50 times more to defend itself than it costs Russia to attack it. That's the opposite of deterrence. Problem number two is, even if Ukraine could afford it, Russia is able to send three times more things at it than they can shoot down, right? So they're definitely disadvantaged in this conflict. And this is just one example. Future examples could include, in the not-so-distant future, a U.S. conflict with China, which would face a similar challenge. And traditional manufacturing processes can't solve these problems. The Department of Defense estimates that to rebuild stockpiles with existing systems would take more than 13 years and $430 billion, which is time and money we just don't have. But additive manufacturing can help solve that challenge. By designing engines in a new way to fully leverage the potential of additive, we see engines that are 25% more efficient, less than half the cost. They can be developed, tested, and fielded in one-quarter of the time. They can be scaled up to produce more than 10,000 engines a year in less than three years at less than 20% of the cost of scaling conventional supply chains. And by printing jet engines domestically from raw powder, we eliminate the risk of foreign-sourced components disrupting supply of these critical systems. The Defense Production Act, and especially Title III, is essential in making this possible. Without it, scaling complex, capital-intensive manufacturing processes like ours is extremely risky. Beehive has benefited or will benefit in four ways from DPA Title III. First of all, it allows us to respond rapidly to new threats. The traditional acquisition process can take three-plus years to go from a good idea that we know we need to do to actually starting. With DPA, you can start in less than a year. So it's a great tool for that. It also provides preemptive investment, which allows us to invest in developing new products and scaling production capacity ahead of demand. Like you said, when you go to war, you go to war with the supply chain you have, not the supply chain you want. It gives you a way to build that supply chain in advance. It also creates capital security for companies like ours that are privately funded by extending our financial runway. And also it signals DOD commitment, which encourages future private investment. That's really key for companies like ours. It also secures access to critical materials, like high-temperature metals, which Beehive relies on to make its products. To maximize the benefit and effectiveness of Title III, Beehive, we have four recommendations for the committee. One, preserve and clarify Title III authority to support innovation that delivers capability at scale, also called prototype-to-production transitions. This is how we get capabilities to the field faster with lower costs and risk. Our second recommendation is tailored Title III programs for agile advanced manufacturers. Make it more accessible to non-traditional defense companies by streamlining contracts through OTAs, adjusting cost-share requirements, things like that. Recommendation three is continue to strengthen domestic supply chains for high-temperature alloys, nickel superalloys, and titanium. I think we've talked about that quite a bit today. Good progress, just need to continue. Those inputs are vulnerable to geopolitical risk, yet essential to products like propulsion. And the final recommendation, align Title III efforts with allied industrial base initiatives, especially NATO and AUKUS. One great thing about additive manufacturing is it allows flexible, distributed manufacturing, but it can only happen if there's standardization and coordination across nations. So in summary, the Defense Production Act is the government's most important tool for rapidly responding to defense needs in times of crisis to protect our country and secure our future. Beehive urges the committee to act decisively in reauthorizing and modernizing this essential law. Beehive Industries stands ready to partner with the Department of Defense, our allies, and this committee to confront these new challenges and ensure our warfighters have the tools and technologies they need when they need them. Thank you, and I welcome your

Chairman Warren Davidson (R-OH)SPEAKER_06

Thank you both. So we'll now turn to member questions. I recognize myself for 5 minutes. You both highlighted the need to surge and surge capacity. And, Mr. Faxon, you've certainly been part of that supply chain over the last few years as we've surged things to various areas, Ukraine in particular with munitions. I wonder if you could highlight how you could use capabilities that are in DPA to possibly refine and provide a bridge for capabilities with the existing, kind of status quo acquisition programs. So if you look at arsenals or other programs, how do you use the private sector to provide surge capacity, and how can DPA help us do that?

Mr. Robert FaxonSPEAKER_04

That's a good question. Thank you. One of the concepts that we had is really, if you look at the defense industrial base, it was undermined by the commercial industrial base. All of our factories that made sewing machines made .45s in World War II. So, there was a conversion of the commercial industrial base to the defense industrial base. Now we're focused very intensely on the industrial base, which is fine, I understand this committee, but if we were to invest in a facility to increase defense industrial base, if we added funding to increase commercial in a modern, technology-driven, cost-effective factory of the future, that commercial aspect not only offsets financial requirements for that facility to maintain its solvency, but it also can be converted back to defense if necessary. And if the defense gets good and everything gets better, then you take the defense and you convert it back over into the commercial industry. This supports our reshoring efforts that the tariffs and the current administration is pushing. It develops the commercial industrial base. So, this is the seed for private investment to grow that commercial sector. I think focusing strictly on defense has limitations, and I think that the financial obligations later is going to be the word sustainment. They're going to have their hand out for sustainment of these facilities. If we build a factory such as the artillery factory that we proposed, it would serve as a model to any other component. It could be aircraft, it could be automotive, it could go in a washing machine, but the automation necessary takes funding to develop. It's a bleeding edge; following it will be a leading edge. So, DPA funding to support a known requirement, such as modular artillery components, not your standard 795 deep forge, but your modular artillery rounds, that manufacturing technology, we would open our doors and have competitors and other industries come in and view it and duplicate that mentality and put that into other commercial applications. That's how DPA funding could set a tone for a commercial base. Yeah,

Chairman Warren Davidson (R-OH)SPEAKER_06

Thank you for highlighting that. And you look at the capability of flexible factories and the adaptive nature of some of the technology you guys are employing on your factory floors really is the tip of the iceberg in terms of what's possible. And if we can incorporate that with with our approach here, I really think we can respond to the to the times we're in. Mr. Follin, you highlighted how Title III helps you turn around a project faster. Instead of 3 years, you can do it in the first year. How does that cost-sharing approach not just attract companies like Beehive or other private sector operators, but also the suppliers of capital, whether that's banks or venture or other sources of capital, to have the confidence that this has got scalability?

Mr. Gordon FollinSPEAKER_03

Yeah, so banks— I mean, banks and other investors, they're trying to evaluate companies for risk. Order to make investments, and the cost of that investment depends on the perceived risk of the company. So I would say when there is— when there's government investment in projects, it has a double benefit. One is it reduces the amount of capital you need to go raise, and second of all, it shows alignment with government priorities and pull from the government for the products that you're manufacturing. And so it reduces the perceived risk of the company, and so therefore you're able to raise capital more quickly at a lower interest rate and, and have better runway for the company in the future.

Chairman Warren Davidson (R-OH)SPEAKER_06

Yeah, so it's one thing though to send a demand signal. I mean, clearly the government wants these things, so why isn't demand enough? Why does the— why do taxpayers need to provide seed capital to certain sectors? And how do you— how do you strike the balance between that and just turn it into a planned economy where you've got some central planner picking winners and losers? How do you— how do you get that right?

Mr. Gordon FollinSPEAKER_03

Yeah, I think the defense industrial base has been through cycles. And, you know, we hear about, you know, forecasted ramps in production demand. And but these are very, very expensive systems to ramp up for. Right. You're talking tens or hundreds of millions of dollars of investment. So private industry will naturally want to wait until the signal is here to start investing because essentially they're borrowing that money until the demand arrives. And sometimes it, it doesn't arrive. So I think You know, basically this allows us to go out and secure, make those investments, secure that, and not have to carry the risk of those investments actually getting put into full production at the timing expected.

Chairman Warren Davidson (R-OH)SPEAKER_06

We'll have a second panel, but I'll yield my time and recognize the chairman of the full committee, Mr. Hill.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Thanks, Chairman Davidson. Mr. Faxon, just continuing that same theme, you made some comments in your prepared statement about multi-year and sustained funding. Those were comments that you made. And then the speed of war. Mr. Moore and I were at a meeting earlier this week out in in Wyoming where that topic came up with some Silicon Silicon Valley presenters that they were very impressed with the Trump administration's approach to this issue, which is we're going to start working, we're not going to talk about it, we're going to take action, and being a much more action-oriented administration. But you got to balance that with the comments Mr. Davidson just made about things that we need in the supply chain ramp up so that it's not government directing things that maybe don't have long-term viability. So, how do you balance all that? I just want to let you continue your conversation you were having with Mr. Davidson. You got 47 years of manufacturing experience. So, what does DPA need to have changed in either the statute or its policy to balance that?

Mr. Robert FaxonSPEAKER_04

I think components of that— and thank you for the question— the components of that are actually built by several of the questions already came up. What is the requirement of private investment versus DPA funding. How do those go together? What is the longevity? What is the risk? And quite honestly, if you look at normal business growth, if you're double-digit on a CAGR, you're doing really well at 10%. We're asked to quadruple in a year. So these ramp-up cycles aren't conducive to your typical business growth. As a matter of fact, if you tried to do that in a normal manufacturing business— and I'm not talking about a high-tech or something like that, but in hardcore manufacturing, high capital businesses. If you go to the bank and say, I'm gonna quadruple in a year, I think they'd rip up your application and throw you out. So these ramp-up rates are a key component. The industrial base of it, when we look at what the longevity is, how long will you commit to how many rockets you want to buy? We don't really have that, and we don't make this back in a year or 2. In fact, our investment in the factory, because of vertical integration and cost savings, offers approximately a 10% per unit cost reduction. So if you really look looked at a business cycle of ROI for what we're asking for, the government at that pace would be paid back in 10 years on cost reductions of purchased products. So financial feasibility is not just welfare— give me money and I'm leaving. It's I'm going to give back to you. Now, if the government doesn't require that quantity over that period of time, you don't get your return on investment. That's true. But you're the one asking for it. I don't go broke because the bank wants me to answer for it when I'm not the one who's demanding the product. So that circle of debt, longevity, and flexibility with the commercial viability— I can't emphasize that enough. Leading-edge technology, whether it's software, hardware, physical presses, or technology, is in most cases transferable. And when we're going to reshore things, we're not going to do it at twice the cost. We're going to be competitive to make that successful, no matter what anybody says. They, they say buy American, but there's a price tag associated We have to be more competitive. We can take these specific demands, put them in a true ROI, and if it does or doesn't pan out, we still led engineering and manufacturing to a higher level and a higher capability level.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Can I get you to break that down and use a practical example? You cited in your testimony, for example, that normal production of motor cases was 350 to 400 or something like that, but the demand was 3,000.

Mr. Robert FaxonSPEAKER_04

Yes.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

So talk practicality here. To get up to a 3,000 motor case run rate, what kind of investment had to be made and over how many months did it take to achieve that? Just to use that practical example you referenced in your testimony.

Mr. Robert FaxonSPEAKER_04

High level, our original was around the $80 million investment for 1,300, which is roughly 110 per month. When you look at the scalability for that, you want to start with a greenfield for the efficiency and the long-term return. You You don't want to put a band-aid on something you currently have. You go ground up. So the facilitation in the first year is pretty much non-return on quantity. There's minor input improvements in year 1 to 2. Certain pieces of equipment can be acquired, take our original capacity and supplement that within year 1 to 2. That helps significantly. In year 2, most equipment is on the floor and gets evaluated and run off in year 2 to 3. So you have a small incremental step in year 1 to 2

SPEAKER_UNKNOWN

and

Mr. Robert FaxonSPEAKER_04

Year 0 to 1 is not really a high return. Year 3 is where you really see your highest return, and that's where you consolidate all the equipment. These machines, some— in some cases will take weeks and months to move and years to get. So what you don't want to do is incrementally fund 4 small steps and not get to where you want to be. What we are offering and what I think needs to happen with companies like ours, because I'm familiar with them, great company, we're offering a national asset. We're offering something for the next 30 years, not 4. This is not a 5-year investment. This is setting a tone and a departure from typical manufacturing. We, we're not going to win if we keep doing what we've done. If we buy what we've had 10 years ago and it lasts 20 more, this world doesn't stay still for 30 years.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Thank you. We'll continue this discussion. I yield back.

Chairman Warren Davidson (R-OH)SPEAKER_06

Thank you, Chairman. I now recognize the Vice Chairman of the full committee, Mr. Huizenga, for 5 minutes.

Rep. Bill Huizenga (R-MI)SPEAKER_05

Thank you, Mr. Chairman. You're going to hear a central theme on this. I leaned over to Chairman Davidson when he finished, and I said that's virtually exactly what I had written down as my question. I was just going to use slightly less pejorative language when it comes to central planning. But I think that's a lot of the question, concern, feedback that that I think not just from colleagues, but from taxpayers that we hear, which is: why are we making these investments into an industry that isn't needed? Well, you can't predict war, right? Well, you can't predict mass war or something, a conflict like what was happening in Russia and Ukraine. And I I want Mr. Faxon, you did a phenomenal job explaining it from your perspective on what was what was sort of the ramp-up and the need. Mr. Follin, I'd like you to maybe expand on that or give us your take as well. You talked about perceived risk, that really this is sort of, in a way, the government funding might be that bell cow, as some might say, right? Others are going to follow that. They're going to view that as a lead. Oftentimes, though, when we are doing our appropriations, we want to see end-of-fiscal-year production. We have a much different timeline than you might have. And I'm really curious: do you believe that the programs that we have, one, allow you to build the capacity for not just an immediate, but for long-term? How do we maintain that? Two, do you have the flexibility to innovate and explore within those programs? One of the sort of the central themes of a truly free market is the ability to fail and learn from that failure. We don't like that when we're sending taxpayer dollars. We don't want to see failures. But are there enough places where you can take lessons learned and apply it so that we do have a stabilized production base?

Mr. Gordon FollinSPEAKER_03

Yeah, thank you for that question. It's a great question. I'll start with the last piece first in terms of the ability to fail. I think when you use DPA Title III dollars to support development, then it allows the government to partner with industry as they're developing the product, as we're understanding what are the risks and challenges that it takes to bring that product into full production, and then we can we can kind of navigate that together as we learn and come up with solutions to solve problems that invariably come up through the through the development phase. So I think DPA allows us to partner in that phase versus if we were doing it on our own dollars, we'd be trying to figure out on our own. And sometimes the government can have solutions or resources they can bring to bear to also help in those situations.

Rep. Bill Huizenga (R-MI)SPEAKER_05

Let me interrupt you super quick on that. I mean, this is called the Defense Production Act, so I think that makes a lot of sense to people when it's defense-related. Are we focused enough with the DPA right now? Is it really into that defense mode, or have we wandered away from that, from that core objective?

Mr. Gordon FollinSPEAKER_03

Yeah, so my personal experience is primarily with DPA for defense, so I can't comment necessarily on the percentage of funding that they make outside of defense. I would say that my experience so far is that it is focused on the priorities of the administration of the DOD. So in our case, like we're working on these critical munitions that I think we've heard talked about as a priority from from the other folks in their earlier testimony. So I feel like it is focused in areas that are important. I think it could be improved; I'm sure it could. What I would say is in terms of, you know, does the funding support ramping up to actually support the rates, what happens if volume changes, how fast can you change? I would say one of the advantages of additive is it can ramp up very quickly. It doesn't require like big mega-foundries in order to scale it up. You're basically buying things that look like inkjet printers, right? They're bigger, they're more industrial, but they look kind of like that. In terms of timing, in 15 months, so in 15 months we can double production. So right now we have the ability to make about 2,000 engines a year. In 15 months, we'll ramp that up to be close to 5,000, and then another 15 months after that, we could be ready to support close to 10,000, which is what we've been given by the DOD as a target. So again, you compare that to 100 years of manufacturing things conventionally and we can make 2,000 a year, right? So it's really promising, I think, what it can what it can offer. The other advantage of additive is it's easy to distribute. What that means is once you have a design and once you've kind of validated how to manufacture it, there's 3D printers all over the world, right? So in a time where you need a surge, we can take the design, we could export it to a DOD facility or another industrial facility, and they could make the design from our design just by putting it in their printer. It's a pretty automated process. You don't need a lot of specialized labor to do that. So it's pretty easily scalable. And the other big advantage is, you know, a lot of conventional manufacturing requires very bespoke, expensive, long-lead tooling, right, in order to make a part. The 3D printer doesn't care what it's printing. It can print keychains one day and print jet engines the next day. It doesn't care, right? It doesn't have a memory. It's not targeted for anything specifically. The other advantage of that is as priorities for the DOD change, we can change what that capacity is being used for. Right. So Beehive has picked this mission because this is a big priority for the DOD, and we think it's it's probably the area where additive manufacturing is most fertile. But as priorities change, the capacity could change with the priorities to support what's what's being needed. Thank you.

Chairman Warren Davidson (R-OH)SPEAKER_06

Yeah, thank you. I'd like to recognize Mr. Moore from North Carolina for 5 minutes.

Rep. Tim Moore (R-NC)SPEAKER_07

Thank you, Mr. Chairman. One of the things that that I've heard from folks is that they feel like the way the procurement process is set up, and you get— and you all alluded to this in your comments, really is geared toward large companies as opposed to small and medium-sized businesses. And if I think about there probably no better example than really here in Dayton when I think of a small business. I mean, two guys in a bicycle shop are what led to the birth of aviation. I mean, and that's the story of American ingenuity. And if you look at how small and medium-sized businesses can be more nimble and agile and and dealing with market change and other things, obviously capitalization and financing the challenge, Mr. Faxon, you you mentioned earlier. I just wonder, any suggestions as guys who are in the trenches of ways that that the process can be improved in terms of the procurement and ways to really take advantage of this amazing, uniquely American thing that we have in terms of the small and medium-sized business? I think, frankly, that's one of the advantages we have over China and other places. Any suggestions on how we change that to to fully utilize that? And you both are welcome to respond.

Mr. Gordon FollinSPEAKER_03

Yeah, thank you for that. I think a couple of things, and I referred to this in my testimony as well. I think the first is FAR 15 contracts can be very complex, lots of flow-down requirements. It requires, in some places, a lot of systems to be put in place before you can start. It can really slow down the process. I think using OTAs wherever possible is much more small-business-friendly. I think in our experience so far, that's been the case, but it's not always the case. So I'd say continue to do that. The other big one is if there's a way to reduce cost-share, I think it absolutely makes sense. You want companies to have skin in the game as well, right? You don't want them just to be gambling with government dollars. But right now, I think on average Beehive's cost-share on its programs is between 50% and 80%, right? And so again, these are still large investments. I mean, Beehive's invested over $300 million to date. There's not a lot of companies that can do that, not a lot of small businesses that can raise $300 million to put ourselves in the position we're in. So I think from my perspective, those are the two big ones. Also, I think for a new small business, the process is pretty complex. And so maybe a little more support navigating the process early on would be good as well, just to make sure that the flow-down of the requirements and the expectations are clear. Those would be my suggestions.

Mr. Robert FaxonSPEAKER_04

Okay,

Mr. Gordon FollinSPEAKER_03

thank you.

Mr. Robert FaxonSPEAKER_04

Mr. Faxon,

Mr. Gordon FollinSPEAKER_03

I think

Mr. Robert FaxonSPEAKER_04

From a bureaucratic standpoint, I wouldn't have any really strong input. What I would think is there are a lot of people out there that if if the DPA committee did a search for key capabilities and targeted the mid- to small-sized businesses, get out and go see them. Take people with enough authority and understanding to make an evaluation on the spot. Give them a checkbook. Give them authority. Get in front of the people. Have a discussion. Evaluate them quickly face-to-face. Size up the companies. See what they can do. Ask them. Bring them into the fold. Go see them. I think that would be my encouragement to it. It's not a meeting that we'd all leave here and go to our different worlds. Go see them. Solicit them. Bring them in. Show them the path to be able to do what they want. There's many Americans out there today that are highly talented, will work 12-, 15-hour days if given the chance and the avenue. I think I think going out to see them eye-to-eye, that would be my suggestion.

Rep. Tim Moore (R-NC)SPEAKER_07

And then in terms of doing that, so a small company develops, for example, the prototype, Mr. Follin, you mentioned about the 3D printing that can be done, but it sounds like maybe the capitalization to take that prototype, which is needed, into full ramp production. All right, what are you seeing that's working along those lines right now, and where do you see where there's still the shortcomings specifically at that at that level?

Mr. Gordon FollinSPEAKER_03

Yeah, I think in in our specific case, I think DPA and OSD were very creative in finding a way to to support what we're trying to do. So typically, Title III dollars are really for capacity expansion, so it's infrastructure you're buying. In our case, you'd buy printers, you'd buy CNC machines or whatever. One of the things that I thought was a really great innovation was looking at, hey, current suppliers can't meet capacity. So part of expanding capacity is we have to develop a new option, right? So it included dollars for actual R&D so we can develop an option that then we can scale. So in our case, about 70% of the funds were for actually working on the innovation and getting it ready to take to production. The other 30% was for capacity, right? So I think that's that's a nice change from the status quo and something that should continue, I think.

Rep. Tim Moore (R-NC)SPEAKER_07

Anything on

Chairman Warren Davidson (R-OH)SPEAKER_06

Yes. Thank you, Mr. Moore. Look, Mr. Faxon, when you were speaking earlier, I recalled a conversation with my banker at one point who said, Did you ever think about growing more slowly and maybe playing more golf or whatever? I was growing a little too fast for the taste of the bankers, and frankly for the taste of the bank regulators who wanted to start treating my line of credit as if I was using 100% of it. And when I think, Mr. Follin, you highlight the amount of capital raise you've been able to do, it's a lot easier to raise capital for something new and sexy that could turn into a giant market someday than for old technology. And, as promising as additive manufacturing is and capability, it still can't do everything that you can do with a cast part. And certainly getting the hardness and capability out of forgings, that's old, not so sexy tech. How do you raise the capital for things like that, and how important is it that DPA or other means do it? Because the private sector market has plenty of demand for castings, forgings, injection-molded parts, or metal-stamped parts. But if we lose that capability, which largely at scale we have already, we don't have surge capacity in our country. So maybe if you guys could highlight and touch on that.

Mr. Gordon FollinSPEAKER_03

Sure. In a missile, only a small part of it is printable, right? So I think to the point made earlier, if you're missing one part from a system, then you don't have the system, right? So I think it's not a one-size-fits-all approach. I think you have to look at kind of holistically across the whole system, where are the bottlenecks and how can you address those bottlenecks. So our view is additive manufacturing does play a key role, but it's not the only one, and there are other areas that are going to need support as well. So businesses like Mr. Faxon, right, they make a part of the weapon as well, and it's not additively manufactured for the most part. It's got conventional manufacturing, but those things also have to be ramped up in order to support the ultimate final demand. Thank you.

Mr. Robert FaxonSPEAKER_04

I think something I would add is when we talk about the defense industrial base, there's really a broad variety of technologies. I'm incredibly impressed with the capability of additive. We're not going to make a 30,000-pound bunker buster bomb through additive. That's, that's not on next week's agenda. But what is important is to say what companies can fit what roles. There are companies like Boeing and Northrop. If you want a fighter plane, don't talk to me. But if you talk about subcomponent and component levels, and it's block and tackle, needs to be done, takes a lot of hours, equipment, it's just, it's just work, then you can go to these other places. And I think if you really want to increase the capacity, you've got to define where the requirements of the work scope is. We don't make satellites. We don't communicate with laser beams. But what we do is we make metal parts. If you can allocate some of that capacity to this mid-level small business, they'll bleed for you. They'll be dying to get that business. Now, that leaves capacity and other things for the more technical things that the larger companies really are good at. So I think that's important to differentiate what the work scope is. It's not all the same.

Chairman Warren Davidson (R-OH)SPEAKER_06

Thank you both. I recognize Chairman Hill.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Thank you, Chairman. I wanted to follow up, Mr. Follin, on some of your testimony. You made reference to accelerating contracting tools. Could you elaborate on that?

Mr. Gordon FollinSPEAKER_03

Yeah, I think the primary comment is, you know, OTA contracts, other transactional authorities, give more flexibility in terms of terms and conditions. And also, like,

Full Committee Chairman French Hill (R-AR)SPEAKER_02

can you give us an example? Just compare one, you know, non-using that to using it.

Mr. Gordon FollinSPEAKER_03

Yeah. So, for example, there's two primary ways to do contracting. One for defense would be through a FAR 15 contract, which requires much more detail in how you plan to allocate costs, much more detail in how you roll up costs. You have to have cost accounting audits performed on various components. For a small business, especially a small business that isn't in production yet, being able to provide validated costs for something that's not invented yet becomes extremely difficult, right? And so OTAs allow you to use engineering estimates, best judgment. You still have to substantiate it. It's still competitively bid. So, nobody's taking advantage of the government, but it gives more flexibility when you don't have that background, or you're making something that hasn't been made before.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Another piece of your testimony I thought was interesting. I do think we have to have critical elements made here, whether it's, particularly, in the defense arena. But I've also been someone who, if it's made in other places that are allies of the United States, I think that's good. It might be at risk. For example, no one questions the extraordinary manufacturing capability, invention, hard work, dynamism in South Korea or Japan, but as a supply chain, if we were in a Pacific conflict, that would be not the ideal location. So this idea of friendshoring, I think, is important to collaborate and spread that out benefits the entire allied nation in case of a global conflict, whether it's in Europe or Canada or the U.S. or in Asia. So tell me a little bit about alignment. You make your point about the allied industrial base. So the work your two companies are doing and the designs you take, those would be, as you say, duplicable in your particular case at Beehive in those other industrial bases. Is that right? And what do we need to be doing differently in DPA to reflect that?

Mr. Gordon FollinSPEAKER_03

Yeah, I think what I'm referring to in my testimony is really around having common standards so that when you're going to—if you're trying to offshore a design, if we're going to take our design and send it to Australia as an example for them to manufacture, the closer the systems are together, like we use a certain kind of printer, if they use the same kind of printer, then the design is directly transferable. If they're using a different kind of printer, then there's a lot more—

Full Committee Chairman French Hill (R-AR)SPEAKER_02

think Mr. Frankston doing that? Is he doing a good job of that over at DOD? Is that— you think that is inside, particularly the Five Eyes countries, but our principal partners, is that is that the standard, that we try to do that or no?

Mr. Gordon FollinSPEAKER_03

It's hard for me to say from my seat. I don't have full visibility of it. I would say that my experience so far is not obvious that it's true.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Okay. But that's an area we could collaborate on, ask questions about, and improve.

Mr. Gordon FollinSPEAKER_03

Yeah, that's right.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

I think I yield back, Mr. Chairman.

Chairman Warren Davidson (R-OH)SPEAKER_06

Thank you, Chairman. I recognize the Vice Chairman of the full committee, Mr. Huizenga.

Rep. Bill Huizenga (R-MI)SPEAKER_05

Thank you. And I'm going to actually kind of continue where the chair was going with this a little bit. Three of us up here have a side gig of being on the Foreign Affairs Committee as well. And I had actually been the author of the AUKUS submarine authorization. And we've seen some pushback on that because of a capability—or I'm sorry, not capability, but capacity issue. And I think it was Mr. Follin, you had talked about sort of the four recommendations that you and Beehive had. We've kind of gone over the support, the reauthorization of Title III. We talked a little bit about the more agile nondefense manufacturers being able to qualify. It seems like we are heading down that road of number four, the allied initiatives, how we align with those. And if you need to expand, either one of you expand on that. But I also want to go visit what I think was your number three recommendation, talking about high-temp alloys being needed. And, and, and so touch on number four with our allies, but then how do we then address this need for the high-temp alloys?

Mr. Gordon FollinSPEAKER_03

Thank you. So yeah, I think the places where the alignment makes sense is, you know, do we have the same materials available at the partner nations, right? So, you know, the process for how you manufacture things does require some commonality. So if the alloys are similar composition or preferably the same composition, meet the same specs, that helps the process a lot. Also, like I said before, the infrastructure— like different machines will require different programming, different interfaces. And so having some understanding of what that looks like at each location would enable you to be able to distribute the manufacturing much, much faster. And then there is still some specialized labor at the end of the day. You have to assemble these bits and pieces into an engine, and that takes some time. So if you can plan these things in advance and kind of manage it as a program, then you will— when you actually need to flip the switch, you get there a whole lot faster. So that's really what I'm

Rep. Bill Huizenga (R-MI)SPEAKER_05

referring to. Do we have current alignment?

Mr. Gordon FollinSPEAKER_03

I think it's yet to be determined from my perspective. I think—

Rep. Bill Huizenga (R-MI)SPEAKER_05

how come? What needs to happen for you to Yeah, I

Mr. Gordon FollinSPEAKER_03

think again, my experience is limited just to Beehive's experience, I would say, but I think we're we're kind of pre-production, and so maybe we're not at the point yet where that would start to happen. I will say we have a contract with the Air Force. Part of that contract is to do an external production demonstration where we're going to take our design and send it to a third party and have them manufacture it. So I think that's a that will be a US party to start. So I think that's the first step in that direction. And then ultimately, I think it would be, hey, if we want to really take advantage of this forward—I won't call it forward deployment, but like distributed logistics, distributed manufacturing—then the next step would be to pull in these friendly nations and do a similar process, right, just to anticipate the problems in advance. I think we haven't done it because the process isn't there yet. We're probably a year away from being there, right? So something to think about for the future.

Rep. Bill Huizenga (R-MI)SPEAKER_05

How do we address this need for high-temp alloys?

Mr. Gordon FollinSPEAKER_03

Yeah, so I would say the number one problem we see are things like titanium. Most of the world's titanium comes from Russia and China, unfortunately, and titanium is a really common alloy in aerospace products. It's pretty high-temperature capable, it's lightweight, and so there are North American titanium suppliers that are able to grow. I think investing more in those North American suppliers to scale up and be able to provide those materials is essential. There's also Canada has has sources of titanium, there's other friendly nations. I think in the past they haven't been developed because there was a global supply and it wasn't needed, but I think it's one of the big challenges we face. I think Representative Moore, he talked about how in North Carolina there's like one of the only copper smelting plants left in the country. There's an element called rhenium, which isn't doesn't exist in nature. The only way you can get it is from the smelting of copper, and that rhenium is really what is the secret ingredient in a turbine blade, which is the most critical component of a jet engine. So I think things like that, like how do we invest in those sources so that we can do it independently? In the past, I think, you know, some of the, you know, politics change. Like some of the countries that we're competitive with now, we weren't as competitive with 20 years ago and it wasn't a problem. But we've kind of backed ourselves into a corner on a couple of these materials like titanium and rhenium. Yeah, maybe so.

Rep. Bill Huizenga (R-MI)SPEAKER_05

Mr. Faxon, you have 10 seconds.

Mr. Robert FaxonSPEAKER_04

Okay. If I could add one thing, our solution for this is not nearly as sexy, and everyone who says just-in-time is going to hate this. What we proposed in the DPA funding is not only for the equipment, but for buffer stock of material, because the lead time is months, months in some cases. So if we put a beautiful factory together and don't have material, we're going to twiddle our thumbs. So our issue was DPA funding. No business wants to hold 6 months of inventory, but if we're going to build a factory in a crisis mode, we better have material on the floor. So that one-time buffer to feed out of and feed into would be my suggestion, because we don't have the versatility of some things, but we would build buffer stock, and DPA funding would be key for that. Thank you.

Chairman Warren Davidson (R-OH)SPEAKER_06

Good stuff. Thank you. Now recognize for the final set of questions Mr. Moore from North Carolina.

Rep. Tim Moore (R-NC)SPEAKER_07

Thank you, Mr. Chairman. Actually, I don't have any questions. These two witnesses have done an amazing job addressing, I think, the questions of the members. I just would offer up to either of the gentlemen, if you— if there was something you wanted to say in response to any questions you didn't get a chance to do, I'm going to allow either of you to use my time to do so.

Mr. Gordon FollinSPEAKER_03

Honestly, I don't have any questions back for you. This is my first experience doing a congressional hearing. I think it's been—it was an honor to be able to be with you guys today and understand a little bit how the process works. Like I said, I mean, our experience at Beehive is relatively limited to date. We haven't had a Title III contract yet. We're actually in the process of negotiating it now. But I would say overall our experience with the process has been great. AFRL's been helpful, the Air Force has been helpful, OSD's been helpful. So just glad to contribute and help where we can. Thank you.

Rep. Tim Moore (R-NC)SPEAKER_07

I

Mr. Robert FaxonSPEAKER_04

would second that. It's, it's a pleasure to be here. It's an honor to be here today. Thank you for the invitation. I appreciate the chance to verbalize and share some of the thoughts that we have every day in our factory, and I appreciate your time and your commitment to hear that. And I would say if there was one word I could use, it's urgency. Don't overestimate capability because you open a checkbook. It may not buy time. So urgency is my message today. Thank you.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Would the gentleman yield?

Rep. Tim Moore (R-NC)SPEAKER_07

Absolutely.

Full Committee Chairman French Hill (R-AR)SPEAKER_02

Just curious on the stockpile comment you raised. I thought it was quite a good one. And you all have your own micro-parochial interests on stockpiles, but I think it would be good, Mr. Chairman, if we got DOD to send us, if it's classified or unclassified, an analysis of US stockpiles and these critical minerals. But Mr. Frankston, do you want to comment on stockpiles a little further? And I'll yield back to my friend after your answer.

Mr. Robert FaxonSPEAKER_04

Yes, because we speak about materials, and that could go from the base alloys. It could be these titanium sponge to make titanium. It could be nickel-based alloys for high-temperature alloys. We can talk about the microelements of mining, but we can also talk about stockpiles of raw material. But before we can machine it, we may have to go through processes such as forging, rolling mills, etc. So when we talk about lead time, there is a wide variety of saying, Hey, we have material, but that doesn't mean it's ready to go into a factory. So these multi-month lead times and some of these constraints like a forging house or a casting facility, these all have to be considered. So the reality—and our push is to be vertically integrated so we weren't dependent on outside services to be able to meet your needs, and that material and that stockpile is really counterintuitive to typical business practice. We don't want material sitting too much. But in this case, because urgency of timing, I think it's a smart use of funds to buy that time and feed out of it. Once you do it one time, you don't have to do it twice. The buffer remains. It's first in, first out. You have to buy it once, though, and that's where the DPA funds could be very handy.

Chairman Warren Davidson (R-OH)SPEAKER_06

I want to thank my colleagues. I want to thank our witnesses. I thank the staff that did all the work both in the House, but here at Wright-Patterson Air Force Base and out at the DOD. Really nice to do a field hearing and bring this out in the community. I think it's a great way to highlight the capabilities really from around the country, but in particular, again, right here in the heart of it all in Ohio, and the great capabilities at Wright-Patterson Air Force Base and our own supply chain. But we have a huge challenge. It's great to see that we're talking about a whole-of-nation approach to it and and also with our allies. And so, without objection, all members will have five legislative days to submit additional written questions to the chairman. The questions will be forwarded to the witnesses for their response. Witnesses, if you get them, please respond no later than September 17th. The hearing now is adjourned.