Senate panel looks for supply chain options

NOTE: This story first appeared on FCW.com.

Lawmakers asked a panel of supply chain experts about alternative approaches to avoid future shortages and work around sourcing critical goods from China.

In March 12 Senate Commerce Committee hearing on the coronavirus pandemic's impact on small business supply chains, Sen. Cory Booker (D-N.J.) said supply chain vulnerabilities are "a national security issue that could cripple the health, well-being and safety" of the country.

He and other federal lawmakers said they want to blunt what has become an overreliance on foreign, particularly Chinese, sources for critical goods from drugs and face masks to telecommunications gear. He asked panel witness Rosemary Gibson, senior advisor at The Hastings Center, a bioethics research center, if U.S. small businesses could spin up U.S. production of critical drugs to counter Chinese dominance in the area.

Gibson told the panel that 90% of pharmaceutical drugs critical to fighting coronavirus are sourced or made in China. She said U.S. companies could take up the slack if there were incentives to do so.

The inquiry echoed questions in a March 4 Senate Commerce Committee hearing about the lack of U.S. wireless 5G technology equipment companies, in the face of Chinese manufacturer Huawei's dominance of that critical telecommunications market. Lawmakers want U.S. makers to enter the market.

"There's a reason that we've effectively lost the race to 5G," Tim Morrison, a senior fellow at the Hudson Institute, said in response to a question from Small Business Committee Chairman Sen. Marco Rubio (R-Fla.). "It's because we've relied on the market, and now there are no American companies left that do this work. The Chinese had a plan" to develop technologies 20 years out, he said. "They have determined the strategic sectors they want to dominate in the future economy." He urged lawmakers to support forward-looking policies for planning and support that allow American companies to level up against Chinese companies.

The Small Business Administration, said Wynne Briscoe, acting director of the Maryland Small Business Development Center, can help develop a list of U.S.-based alternative suppliers. Wynne suggested SBA collect initial data for a "voluntary, opt-in list" as part of a larger "made-in-America master list" of U.S. small business sorted by what they make.

The list, she said, would use NAICS codes, which are category codes used by federal agencies, including the General Services Administration, to classify goods and services associated with companies.

"The SBA would produce the list by contacting all the companies it now works with, or has worked with over the past decade or so, through SBDCs (small business development centers) and other SBA related organizations," she said. The list, she said, would be compiled by having the SBA, as it reaches out to each company, ask each to list any prospective supply chain products or services for which it would like to have additional suppliers. SBDCs and local small-business organizations could help gather and maintain the data, she said.

"That's an excellent idea," said Sen. Ben Cardin, (D-Md.), committee ranking member. "It points to the fact that we need to be better prepared" for the next crises.