    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                    SECURING THE SUPPLY CHAIN: THE DEFENSE
                           PRODUCTION ACT IN FOCUS

    =======================================================================

                                 FIELD HEARING

                                   before the

                   SUBCOMMITTEE ON NATIONAL SECURITY, ILLICIT
                           FINANCE, AND INTERNATIONAL
                             FINANCIAL INSTITUTIONS

                                     of the

                        COMMITTEE ON FINANCIAL SERVICES
                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                AUGUST 13, 2025
                                   __________

                               Serial No. 119-36

           Printed for the use of the Committee on Financial Services

                     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                www.govinfo.gov

                                   ______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    61-503 PDF                WASHINGTON : 2026

                     HOUSE COMMITTEE ON FINANCIAL SERVICES

                        FRENCH HILL, Arkansas, Chairman

    BILL HUIZENGA, Michigan, Vice        MAXINE WATERS, California, Ranking
        Chairman                             Member
    FRANK D. LUCAS, Oklahoma             SYLVIA R. GARCIA, Texas, Vice
    PETE SESSIONS, Texas                     Ranking Member
    ANN WAGNER, Missouri                 NYDIA M. VELAZQUEZ, New York
    ANDY BARR, Kentucky                  BRAD SHERMAN, California
    ROGER WILLIAMS, Texas                GREGORY W. MEEKS, New York
    TOM EMMER, Minnesota                 DAVID SCOTT, Georgia
    BARRY LOUDERMILK, Georgia            STEPHEN F. LYNCH, Massachusetts
    WARREN DAVIDSON, Ohio                AL GREEN, Texas
    JOHN W. ROSE, Tennessee              EMANUEL CLEAVER, Missouri
    BRYAN STEIL, Wisconsin               JAMES A. HIMES, Connecticut
    WILLIAM R. TIMMONS, IV, South        BILL FOSTER, Illinois
        Carolina                         JOYCE BEATTY, Ohio
    MARLIN STUTZMAN, Indiana             JUAN VARGAS, California
    RALPH NORMAN, South Carolina         JOSH GOTTHEIMER, New Jersey
    DANIEL MEUSER, Pennsylvania          VICENTE GONZALEZ, Texas
    YOUNG KIM, California                SEAN CASTEN, Illinois
    BYRON DONALDS, Florida               AYANNA PRESSLEY, Massachusetts
    ANDREW R. GARBARINO, New York        RASHIDA TLAIB, Michigan
    SCOTT FITZGERALD, Wisconsin          RITCHIE TORRES, New York
    MIKE FLOOD, Nebraska                 NIKEMA WILLIAMS, Georgia
    MICHAEL LAWLER, New York             BRITTANY PETTERSEN, Colorado
    MONICA DE LA CRUZ, Texas             CLEO FIELDS, Louisiana
    ANDREW OGLES, Tennessee              JANELLE BYNUM, Oregon
    ZACHARY NUNN, Iowa                   SAM LICCARDO, California
    LISA McCLAIN, Michigan
    MARIA SALAZAR, Florida
    TROY DOWNING, Montana
    MIKE HARIDOPOLOS, Florida
    TIM MOORE, North Carolina

                          Ben Johnson, Staff Director

                                     ------

     SUBCOMMITTEE ON NATIONAL SECURITY, ILLICIT FINANCE, AND INTERNATIONAL
                             FINANCIAL INSTITUTIONS

                        WARREN DAVIDSON, Ohio, Chairman

    ZACHARY NUNN, Iowa, Vice Chairman    JOYCE BEATTY, Ohio, Ranking Member
    FRANK D. LUCAS, Oklahoma             JOSH GOTTHEIMER, New Jersey
    PETE SESSIONS, Texas                 JUAN VARGAS, California
    ANDY BARR, Kentucky                  BILL FOSTER, Illinois
    ROGER WILLIAMS, Texas                VICENTE GONZALEZ, Texas
    YOUNG KIM, California                RITCHIE TORRES, New York
    ANDREW OGLES, Tennessee              SEAN CASTEN, Illinois
    LISA McCLAIN, Michigan               SAM LICCARDO, California
    MARIA SALAZAR, Florida

                             C  O  N  T  E  N  T  S

                                  ----------

                           Wednesday, August 13, 2025
                               OPENING STATEMENTS

                                                                       Page
    Hon. Warren Davidson, Chairman of the Subcommittee on National
      Security, Illicit Finance and International Financial
      Institutions, a U.S. Representative from Ohio..................     1

                                   STATEMENTS

    Hon. French Hill, Chairman of the Committee on Financial
      Services, a U.S. Representative from Arkansas..................     2

                                   WITNESSES

    PANEL ONE
    Mr. Jeffrey W. Frankston, Acting Deputy Assistant Secretary of
      Defense for Industrial Base Resilience, Office of Assistant
      Secretary of Defense for Industrial Base Policy, Department Of
      Defense (DOD)..................................................     3
        Prepared Statement...........................................     6
    Dr. Charles D. Ormsby, Acting Director, Materials and
      Manufacturing Directorate, Air Force Research Laboratory,
      Wright-Pattterson Air Force Base...............................     9
        Prepared Statement...........................................    11

    PANEL TWO
    Mr. Robert Faxon, Chairman of the Board, Consolidated Boring Inc.    27
        Prepared Statement...........................................    30
    Mr. Gordon Follin, Chief Product Officer, Beehive Industries.....    34
        Prepared Statement...........................................    36

                                    APPENDIX

                       MATERIALS SUBMITTED FOR THE RECORD

    President Trump's Critical Minerals Executive Order..............    56

                    SECURING THE SUPPLY CHAIN: THE DEFENSE
                           PRODUCTION ACT IN FOCUS

                                  ----------

                           Wednesday, August 13, 2025

                 U.S. House of Representatives,
    Subcommittee on National Security, Illicit Finance,
              and International Financial Institutions,
                               Committee on Financial Services,
                                                        Washington, DC.

        The subcommittee met, pursuant to notice, at 9:59 a.m., at
    the National Museum of the Air Force, Wright-Patterson Air
    Force Base, 1100 Spaatz Street, Dayton, Ohio 45433, Hon. Warren
    Davidson [chairman of the subcommittee] presiding.
        Present: Representatives Davidson, Hill, Huizenga, and
    Moore.
        Chairman Davidson. The Subcommittee on National Security,
    Illicit Finance, and International Finance 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 5 legislative days
    within which to submit extraneous materials for inclusion in
    the record.
        I now recognize myself for 4 minutes for an opening
    statement.

      OPENING STATEMENT OF HON. WARREN DAVIDSON, CHAIRMAN OF THE
        SUBCOMMITTEE ON NATIONAL SECURITY, ILLICIT FINANCE AND
      INTERNATIONAL FINANCIAL INSTITUTIONS, A U.S. REPRESENTATIVE
                               FROM OHIO

        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 a 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 capabilities are integrated into
    operational systems, affects the base's 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, the Department of
    Defense (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 minerals,
    pharmaceuticals--grows, the DPA's importance is undeniable.
    However, from 2018 to 2024, there has been a significant change
    in the pace of some of the Title III activity. The coronavirus
    disease 2019 (COVID-19) pandemic exposed a reactive posture,
    proving that waiting for a 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. 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 reconsider the Defense Production Act
    and the opportunity we have before us to modernize it.
        I will now yield my time, and I will recognize the chairman
    of the full committee, French Hill, for 1 minute.

      STATMENT OF HON. FRENCH HILL, CHAIRMAN OF THE COMMITTEE ON
        FINANCIAL SERVICES, A U.S. REPRESENTATIVE FROM ARKANSAS

        Chairman Hill. Thank you, Mr. Chairman. It is 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 is
    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 will
    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 Davidson. 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 the
    Air Force Research Laboratory. We thank you both for taking
    time to be here. You will 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. Frankston, you are now recognized for 5 minutes for
    your oral statement.

    STATEMENT OF MR. JEFFREY W. FRANKSTON, ACTING DEPUTY ASSISTANT
    SECRETARY OF DEFENSE FOR INDUSTRIAL BASE RESILIENCE, OFFICE OF
      ASSISTANT SECRETARY OF DEFENSE FOR INDUSTRIAL BASE POLICY,
                      DEPARTMENT OF DEFENSE (DOD)

        Mr. Frankston. Thank you, sir. Chairman Hill, Vice
    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 is 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 are 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 deterrents 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 are leveraging
    key authorities, like DPA Title III, to address fragile nodes
    across priority sectors, like munitions and strategic critical
    minerals. We have reduced barriers to entry to expand
    participation in the defense industrial base for small
    businesses and nontraditional vendors. 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 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
    ensure 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 authorize the President
    to require industry to accept and prioritize contracts and
    orders to promote the national defense. We leverage 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 Allocation System, including
    clearer onboarding guidance for new suppliers, rapid internal
    approval processes, and streamlined compliance mechanisms for
    small and mid-size 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 Fiscal Year 2025, 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. These investments, just a sample, go toward
    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
    6 percent of all Committee on Foreign Investment of 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 prevent adversarial 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 is 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.

        [The prepared statement of Mr. Frankston follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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

    STATEMENT OF DR. CHARLES D. ORMSBY, ACTING DIRECTOR, MATERIALS
     AND MANUFACTURING DIRECTORATE, AIR FORCE RESEARCH LABORATORY,
                    WRIGHT-PATTTERSON AIR FORCE BASE

        Mr. Ormsby. Subcommittee Chairman Davidson, Committee
    Chairman Hill, Vice Chairman Huizenga, and Representative
    Moore, good morning. Thank you for the opportunity to testify
    today. I am 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 Based Policy is responsible for the Title III
    program and its funding. This organizational structure
    indicates a clear division of labor, with Industrial Based
    Policy providing the strategic guidance and financial
    oversight, and Materials and Manufacturing Directorate that I
    represent serving as the primary technical and execution arm. I
    am 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 2019,
    which allows for both unsolicited input 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 agreements, agreement officer representative, and
    project management support for 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, Coronavirus Aid, Relief, and
    Economic Security Act (CARES) Act supplemental, Ukraine
    supplemental, Inflation Reduction Act supplemental, 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-based 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-percent cost reduction. Another project
    expanded domestic nickel production, identifying the purist
    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.

        [The prepared statement of Mr. Ormsby follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Davidson. Thank you, Dr. Ormsby. We will now turn
    to number of questions, and so I will recognize myself for 5
    minutes.
        Mr. Frankston, you highlighted, really, the three titles
    that are functional, and just by structure--Title I, Title III,
    and Title VII--that will tell you it has undergone some
    revisions. For the most part, it has been deletions and not
    additions over the years: Title I for simplicity and
    prioritization, Title III for investments, and Title VII for
    screening. I wonder if you could highlight, particularly, maybe
    a cost-share example, of how you are 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 are deploying in the market, maybe one of those
    projects that is addressing a critical shortage.
        Mr. Frankston. Sir, thank you very much for the question.
    The DPA gives us flexibility 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 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 need for
    their own investments, or to get outside banking help to
    sustain their critical mineral production.
        Chairman Davidson. Yes, thank you for that, and you
    highlight critical minerals, and, obviously, that is a shortage
    for the country. It is a crisis, not just for the defense
    supply chain, but maybe more broadly. Given that this is the
    first time we are 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 healthcare or pharmaceuticals,
    other sectors that maybe are on your radar screen.
        Mr. Frankston. 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 does not matter if we have 95 percent of all the other ones
    for a particular weapons system, we are 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, be it 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 Davidson. Yes, thank you. I mean, it is 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? Dr.
    Ormsby, you have 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
    we need to address.
        Mr. Ormsby. 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 I said, balance across
    microelectronics needs, hypersonics needs, you name it, really
    set by the priorities coming out of the Office of the Secretary
    of Defense (OSD). Then we go out and work with the industry
    partners to actually execute the programs.
        Chairman Davidson. Yes, thank you, and not only is Wright-
    Patt central to the capability to run procurement and the
    Materials Command, the cutting-edge procurement at Air Force
    Research Laboratory (AFRL), you also have capability at threat
    assessment, and so it was nice to bring some colleagues in and
    highlight the capabilities here at Wright-Patt. Again, thanks
    to the team for hosting. I will 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.
        Chairman Hill. Thanks to both of you for being with us
    today, and greetings from Little Rock Air Force Base and the
    19th Air Wing in Little Rock to everybody here at Wright-Patt.
    Mr. Frankston, let me start with you. Looking at Title I, just
    on the priority setting, I am a business guy, so I am going to
    ask a pretty obvious question, which is, if everything gets a
    priority rating, what is a priority?
        Mr. Frankston. It is a great question, sir. Thank you very
    much for the opportunity to answer. 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 is a conflict on a particular prioritization. That in and
    of itself, giving it a priority rating, does not solve the
    issue if there is still a challenge in the supply chain itself.
    That is 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.
        Chairman Hill. Does that mean that you really have a super
    priority system? Should the advisory council--for example, you
    set DOD priorities, but you have a different grade that is a
    step above that one, there is a bottleneck, and it is a DPA
    priority and make that distinction, so that instead of 2.5
    million priorities over the last 5 years, there are fewer that
    are directly related to the specific benefits of Title III, for
    example?
        Mr. Frankston. Sir, there are two ways we approach this.
    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 a handful of those, because to your
    point, there are 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,
    where we find that there is a bottleneck or a key widget or
    item that is a chokepoint 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.
        Chairman Hill. In Title III, if you look back over the past
    5 years, it has been very active. What is the civil service and
    contractor breakdown in your chain of command?
        Mr. Frankston. We have a very small, but highly skilled and
    empowered team. I only have a handful of people on our side,
    and it is 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 The Defense Priorities and Allocations
    System (DPAS), so our prioritization manager. We have several
    billets that we are 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 is necessary to manage the breadth and scope of
    both the program and then the challenge in front of us.
        Chairman Hill. Given the pressure on the supply chain from
    the current conflicts around the world you have talked about in
    your opening statements, and then this existential threat to
    reshore or friend shore our strategic needs that are so
    competitive, how many additional staff do you think you need
    that would accelerate the application processing? What is the
    right speed for the application processing?
        Mr. Frankston. 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 are 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. 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 investment
    is worthwhile.
        Chairman Hill. Good. Thank you, Mr. Chairman. I will yield
    back and look forward to the second round.
        Chairman Davidson. Thank you, Mr. Hill. I now recognize the
    vice chairman of the full committee, Mr. Huizenga, who
    represents Western Michigan.
        Mr. Huizenga. Thank you both, Chairman Davidson and
    Chairman Hill. I appreciate the opportunity to be down here. I
    actually represent the Battle Creek International 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 are talking about here. I want to try to
    touch on a couple of things. It might seem a little disjointed
    but based on some experience that we had previously going
    through reworking of CFIUS, I would like to know more about,
    specifically from Mr. Frankston, how your operations fit into
    that CFIUS operation and that review.
        Mr. Frankston. Thank you for the question, Vice Chairman.
    CFIUS is managed by one of our sister offices, so it is still
    within the umbrella of our Industrial Based 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 are 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.
        Mr. Huizenga. Typically, that had been in manufacturing
    space previously. Now we have sort of expanded it into
    strategic locations, correct?
        Mr. Frankston. Yes, sir.
        Mr. Huizenga. Which is literally the review of land and
    acquisitions. That might be outside of either a technical
    ability or some sort of manufacturing ability, correct?
        Mr. Frankston. That is correct, sir, yes.
        Mr. Huizenga. Okay, and is it appropriate, in your view?
        Mr. Frankston. 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----
        Mr. Huizenga. Probably not just sheer coincidence that the
    Chinese are interested in picking up land next to a facility,
    yes.
        Mr. Frankston. Correct. Yes.
        Mr. Huizenga. Okay. I am going to track over to Dr. Ormsby
    here a little bit because I think this is something that, as we
    have 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 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 is outside of the traditional
    role of DPA and certainly what you have been talking about with
    these core VI funds, the Title III dollars. I am more
    interested in how you see how the CARES Act supplemental funds,
    how the Inflation Reduction Act funds fit into that. Then we
    see the foreign policy side of this with Ukraine supplemental,
    the Indo-Pacific security supplemental, and the Israel security
    supplemental funds. Explain to everybody that might be watching
    this, and certainly for us up here, where you see these
    different funds and how they fit. You had mentioned there are
    expiration dates on those, if you could outline that.
        Mr. Ormsby. Yes. Thank you for the question, Vice Chairman.
    I think a lot of that really does go to Mr. Frankston where we
    are setting the priorities within the legal authorities 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. 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 do
    not want to 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 are working with, when
    we are working with them with our limited staff.
        Mr. Huizenga. My time has expired, but I look forward to
    exploring that a bit more in maybe a second round, so I yield
    back.
        Chairman Davidson. We will have a second round. I now
    recognize the gentleman from North Carolina, Mr. Moore, who is
    also the former speaker of the House of the State of North
    Carolina's House of Representatives.
        Mr. Moore. Thank you, Mr. Chairman, and thank you for
    hosting us here. This has been an incredible visit, and this is
    an absolutely amazing facility and amazing base. I will 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. 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. In 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 is
    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 percent of pure
    copper from copper scrap. The Department of Defense, of course,
    has identified high-purity copper as a strategic metal
    essential to our national security.
        Dr. Ormsby, with copper being DOD's second most utilized
    material, which China, though, currently controls, as I
    understand, 50 percent of the global smelting capacity, what
    are the national security consequences when our domestic
    smelting and refining capabilities lack behind those of our
    global competitors?
        Mr. Ormsby. Sir, thank you for the question. I think you
    are 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 cannot get that
    specific material that is necessary for our weapons systems.
    That is where the priority on the critical chemicals, minerals,
    materials really play into our strategy here and where we are
    investing because it is a big issue for the Department.
        Mr. Moore. How would export restrictions by other nations
    affect the ability to refine and produce copper in the United
    States?
        Mr. Ormsby. Sir, it is obviously a major issue for us, and
    to the point, it is not just about getting the materials that
    we need. It is also about being able to process them, right,
    and that is why we have such a priority on this investment.
        Mr. Moore. Let us say if another nation were to manipulate
    global prices, what actions could the DOD take to safeguard
    domestic manufacturing?
        Mr. Ormsby. Sir, thank you for the question. Would you like
    to take it, or would you like me to answer, sir?
        Mr. Frankston. Thank you very much. I am happy to help. Dr.
    Ormsby noted, as it is not just at the mine itself. It is not
    just at the processing itself. It is across the entire supply
    chain for our 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 have
    placed such a high priority. It is why one of the earliest
    executive orders from this administration was on critical
    minerals. It is 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. For the mines
    itself and where these minerals come out of the earth,
    geography matters. Some of this is just not always available in
    the United States, and so that is why it is 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 United States.
        Mr. Moore. To that point, even beyond metals, I think it is
    equally important that we be able to identify, for example, and
    be able to source textiles. You do not think of textiles a lot
    of time when you are just talking about national defense, but
    the ability to have the proper uniforms, the proper material
    for our fighting men and women is critical. Of course, the
    Berry Amendment requires the DOD to procure textile and
    clothing products made with nearly 100 percent U.S. content. It
    ensures a stable domestic supply chain that will protect us
    from other nations that seek to manipulate it. I guess this is
    kind of a softball question here, but how important is
    maintaining an independent domestic textile supply chain
    improving resiliency in the event of a near peer conflict?
    Either of you want to take it is fine.
        Mr. Frankston. Thank you for the question. It is absolutely
    critical. It is not just in clothing. Those textiles and
    materials go into our weapon systems themselves, too, so we
    need to have that domestic capability.
        Mr. Moore. We are very proud in North Carolina to have a
    significant production capacity of textiles. I will not start
    to fight about being the home of flight since we are in Ohio
    right now, but we do have some textiles.
        Chairman Davidson. I thank the gentleman. We will go ahead
    and start our second round for this panel, to be more precise,
    so I recognize myself for 5 minutes.
        Talking about flight, they do have some beautiful real
    estate in North Carolina, but we do have the engineers here in
    Ohio.
        [Laughter.]
        [Cross talking.]
        Mr. Moore. I knew it was going to go there, Mr. Chairman,
    but I did start it.
        Chairman Davidson. It is here in the birthplace of
    aviation. Now, the dialog with Mr. Huizenga really, I think,
    highlights the coordination necessary across multiple Federal
    agencies. Of course, on Article VII or Title VII, when you are
    looking at CFIUS, for example, threat assessments, things like
    that, it is important. In Title I, I think Chairman Hill
    highlighted that if you have 100 priorities, you really have
    zero priorities. Picking up with the dialog with Mr. Ormsby,
    how is the collaboration across agencies going within Title III
    and when you think about multiple Federal agencies, there are
    times where the Federal Emergency Management Agency (FEMA) is
    really the lead coordinator, so what is the overall office
    doing to kind of coordinate kind of across agencies? Mr.
    Frankston.
        Mr. Frankston. All right. Thank you very much for the
    question. There is a monthly working group that FEMA hosts for
    all of the Federal agencies that have DPA authorities. DOD
    happens to have the vast majority of actual DOD 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 are turning
    it back even quicker to us, so it is a really, really strong
    relationship.
        Chairman Davidson. Yes, thank you, and I guess it also
    highlights the importance of how Congress appropriates money,
    and Dr. Ormsby, you highlighted several buckets that you are
    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 are learning from DPA to look at the rest of
    the procurement process or be able to waive even our own
    procurement process? I think just to illustrate SpaceX out
    there gave us deep space launch capability that we were for a
    while depending on Russia. Atlas is still under development
    using status quo, traditional procurement operations. At a
    certain level, the supply chain arbitrage was really part of
    the success story there. How do we make this better?
        Mr. Ormsby. Yes, Chairman Davidson. Thank you for the
    question. I think you are hitting on a key issue 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, if
    you go to war with the supply chain you have, we need to be
    more proactive and looking forward, right, because we have
    already identified a number of strategic problems in our supply
    chain where we need to address those issues. These authorities
    have been very helpful to us in doing that. I think they are
    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
    in number of projects, number of dollars in invested, et
    cetera. 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 have organized now that we have 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 Davidson. Yes, thank you both. My time has
    expired, and I now recognize Chairman Hill for 5 minutes.
        Chairman Hill. 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 University of Michigan, their nautical engineering program
    was started by people who were connected with the Wrights. So,
    all the States here, we are all in good stead by being here at
    the birthplace of aviation.
        Mr. Frankston, the 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 chain supply constraints, so down at the
    Pentagon, what worries you the most about surge capacity?
        Mr. Frankston. Thank you for the question, sir. I am a
    naval historian and analyst by education and trade, and Navy
    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. 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 have been a number of investments in castings
    and forgings. We have workforce training programs to expand
    because that is something I will 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.
        Chairman Hill. 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.
        Mr. Ormsby. 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's office to actually make proposals, either through
    the other transactions or through our open funding opportunity
    announcement.
        Chairman Hill. That is 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 as a
    constant complaint in Congress is breaking into the supply
    chain, which the President is taking action on, which I am
    fully supportive of, but once in the supply chain, if you are
    an early stage development company, how you can scale up. Tell
    me about your bridging there.
        Mr. Ormsby. Yes, sir. Thank you for that question. That is
    a nice tie between our science and technology investments,
    which are a different appropriation that I also control, where
    we can invest with our industrial-based partners to develop
    manufacturing processes to either get faster production, lower
    cost, or to develop a domestic source for production if one
    does not exist, for things, in my case, that are important to
    the Department of Space and Air Force. There is a MANTECH
    program in every service so that you can take the cookie cutter
    to the other services. Once we can develop that initial
    manufacturing process, then frequently, we see a need to now
    scale it, and that is where the Title III authorities really
    come to play and help to now get you to the full scale that we
    need.
        Chairman Hill. You think those are working effectively? If
    you could change one thing, what would it be?
        Mr. Ormsby. 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----
        Chairman Hill. Yes, that would be helpful.
        Mr. Ormsby [continuing]. but I do not want to take your
    time.
        Chairman Hill. Thank you. That would be helpful.
        Chairman Hill. I yield back, Mr. Chairman.
        Chairman Davidson. Thank you, Mr. Hill. I now recognize the
    vice chairman, Mr. Huizenga, for 5 minutes.
        Mr. Huizenga. Thank you, Mr. Chairman. Let us go back and
    unpack the six sorts of funds that we have. 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 am not sure quite what
    category to put this in--CARES Act and the Individual
    Retirement Account (IRA). Dr. Ormsby had said there were some
    lessons learned from COVID. We can get into those, but I really
    want to know each one of those various buckets of funding, what
    do they cover? What are they being used for?
        Mr. Frankston. Thank you for the question. We have a number
    of similar but different funding priorities within each of
    those buckets of money. The Ukraine and Israel supplementals,
    much of that went toward our missiles and munitions productions
    where we found that when we tried to surge some of the key
    weapon systems that, in support of those conflicts, the dollars
    went to those, whether through solid rocket motors or castings
    and forgings----
        Mr. Huizenga. To expand capacity?
        Mr. Frankston. Yes, sir, but generally, to expand capacity,
    just when we knew that we were not able to ramp as much as we
    needed to base on the numbers that we needed for our own needs,
    and then what we were providing overseas.
        Mr. Huizenga. How about Indo-Pacific?
        Mr. Frankston. Same thing. Some different munitions,
    different types, but, generally, the same areas. We have
    shortfalls across munitions, which is where each of those funds
    were targeting.
        Mr. Huizenga. Okay. How about CARES and IRA? What was that
    money used for?
        Mr. Frankston. CARES. This was before my time----
        Mr. Huizenga. I understand.
        Mr. Frankston [continuing]. but a lot of it went toward----
        Mr. Huizenga. Not all of us up here supported necessarily
    all those expansions, so I am just trying to figure out what
    the expiration dates might be on that. Is there a need to be
    continuing parts or those programs at all?
        Mr. Frankston. I would 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 is going
    to, sir.
        Mr. Huizenga. Okay.
        Mr. Huizenga. Do you have any examples of what CARES or IRA
    was used for?
        Mr. Frankston. Sure. Some of it went to ventilators. Some
    of it went to needles, syringes, protective equipment, a lot of
    just medical----
        Mr. Huizenga. Basically, where we were seeing a shortfall
    in supply chain.
        Mr. Frankston. Correct. Yes, sir.
        Mr. Huizenga. Okay. Title III, I think, was self-
    explanatory. I want to touch on, remaining 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 do not have missiles and munitions if
    you do not have chips. You do not have chips unless you have
    critical minerals; so, explain to me how that might factor into
    what we are doing here.
        Mr. Frankston. Thank you for the question. Microelectronics
    and chips are essential to just about every weapon system that
    we have and make. There have been a number of investments
    within DPA, but then as Dr. Ormsby was mentioning, in some of
    the other funds that are out there and then some of the service
    investment themselves have made in this, there have 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 explicit weapon systems and
    some of the more exquisite capabilities that we have. There is
    still a lot of work to go so that we can continue to onshore--
    --
        Mr. Huizenga. Because we are not there yet, right, in our
    production capability. That was part of these various previous
    buckets that we were talking about. We were talking about
    shortfall because we had sent off a lot of our weapons systems,
    but then it also seems that we have some gaps that need to get
    filled, correct? Is DPA trying to fill those specifically when
    it comes to chips production vis-a-vis what we see production
    here in the United States versus what is produced overseas?
        Mr. Frankston. Yes, sir, and it ranges across the supply
    chain, too, just because, whether it is 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, there 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 the supply chain.
        Mr. Huizenga. Finally, you are part of any CFIUS review of
    that, correct?
        Mr. Frankston. I am not personally part of the CFIUS----
        Mr. Huizenga. But CFIUS is part of that review.
        Mr. Frankston. Yes, sir.
        Mr. Huizenga. Okay. I will maybe reserve my question about
    where we are currently on CFIUS review, the H20s and other chip
    capabilities and some recent announcements as to where those
    are being shipped. My time has expired, but we will continue
    this later. Thank you. I yield back.
        Chairman Davidson. Thank you. Mr. Moore from North Carolina
    is now recognized for 5 minutes.
        Mr. Moore. 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?
    Like, what is the short-term plan and what is the long-term
    plan to facilitate that?
        Mr. Frankston. I appreciate the question on shipbuilding.
    This is an area of deep concern and passion to me. The maritime
    dominance Executive Order (EO)--I do not 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 is looking across the board, not just for defense
    requirements, but then also on the commercial side. There are
    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 is 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 does not matter if that is going to be at a
    company that is supporting a commercial vendor right now. That
    valve or pump that is so far down the supply chain could easily
    turn to build capacity for U.S. shipbuilding. There are 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 with their own capacity.
        Mr. Moore. In terms of what Congress can do, obviously
    money in terms of appropriation, but in addition to that, are
    there regulatory matters? Are there other things that Congress
    can do that could help facilitate this process?
        Mr. Frankston. I would be happy to get back a formal
    response for the record on some of those recommendations, sir.
        Mr. Moore. All right.
        Mr. Moore. Mr. Huizenga asked you a question, I think,
    similarly along the same lines, but 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 the immediate
    timeframe?
        Mr. Frankston. 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. 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
    do not have the raw materials, the raw minerals nor, if you do
    not have the weapons to actually use from that platform.
        Mr. Moore. All right. Dr. Ormsby, would you like to respond
    to that same question as well, sir?
        Mr. Ormsby. Yes, sir. Thank you. I appreciate the question.
    I would simply add, not only reevaluating the priorities and
    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 does not agree to the
    terms, they change their business strategy, our priorities
    change, what have you. Then that gives us another opportunity
    as well to then redeploy those funds for a different priority.
        Mr. Moore. What I would ask is that, as you supply further
    responses as appropriate, provide advice for Congress in terms
    of ways to streamline the process or to improve efficiency. One
    thing this Congress has worked very hard on, as well as the
    administration, is improving government efficiency, getting rid
    of waste, just trying to cut through the bureaucracy. If there
    are things that would require congressional action that would,
    I do not know, get rid of some of the shackles 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 am certainly interested, and I think probably most of
    my colleagues are as well. With that, I yield back, Mr.
    Chairman.
        Chairman Davidson. I thank our witnesses. I really
    appreciate your testimony today, and we will pause for a bit as
    we switch to our second panel. Thank you very much.
        Mr. Ormsby. Thank you very much.
        Mr. Frankston. Thank you.
        [Pause.]
        Chairman Davidson. All right. The Committee on National
    Security, Illicit Finance, and International Finance
    Institutions will come to order.
        Thanks again to our first panel of witnesses, and so now I
    would 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 will 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 are now recognized for 5 minutes for your
    oral statement.

         STATEMENT OF MR. ROBERT FAXON, CHAIRMAN OF THE BOARD,
                        CONSOLIDATED BORING INC.

        Mr. Faxon. 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 industry and is totally of my
    own opinion. It may or may not represent the balance of the
    Consolidated Boring Inc. (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 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 7
    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-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, Applied Research
    Associates, Inc. (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
    manufacture of large-diameter steel rocket motor cases, many
    smaller rocket motor cases. Over 1 million rocket motor cases
    have been produced in this facility since its inception. The
    American Flowform and Machining (AFM) supplies parts for
    missile systems, including stage one 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 a system like
    the ground launch SDB-1 for Andrell. AFM also has been
    contacted to produce Mk 104 and GMT 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, Defense, Industrial-Based 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 GMT 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 supporting surge capacity during times of crisis. The new
    factory would create roughly 300 skilled manufacturing jobs in
    Massachusetts that generate significant cost savings for the
    government. Additionally, this factory would play a key role in
    supporting current 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 a
    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 a 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 high-skilled jobs
    and ensures a more resilient and competitive manufacturing
    ecosystem overall.
        Conclusion. The investment reforms I have described are
    vital to securing our Nation's defense and industrial-based
    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 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, design built, tested, run off,
    and installed, and, in some cases, will take well over 2 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.

        [The prepared statement of Mr. Faxon follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Davidson. Thank you, Mr. Faxon. Mr. Follin, you
    are now recognized for 5 minutes for your oral remarks.

    STATEMENT OF MR. GORDON FOLLIN, CHIEF PRODUCT OFFICER, BEEHIVE
                               INDUSTRIES

        Mr. Follin. 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 am Gordie Follin, and I am the chief product officer
    of Beehive Industries. At Beehive, we are 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 is great to be with you today.
    We specialize in additive manufacturing of jet engines for un-
    crewed weapon systems, counter-UAS platforms, and drones.
    Beehive's mission is powering American defense, and we are all
    in on helping the United States 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 bombardes Ukraine with over 700
    drones, launched in swarms of hundreds at a time, wreaking
    havoc across the country. The Ukraine, to defend itself, relies
    on advanced missile defense systems, like the Iron Dome and the
    Patriot systems provided by the United States and its allies.
    These systems work great, but there are two big problems. First
    of all, the Russian drones come from Iran, they cost about
    $50,000 a piece, 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 the problem one, is it currently
    costs the Ukraine about 50 times more to defend itself than it
    costs Russia to attack it. That is the opposite of deterrence.
    Problem number two is, even if Ukraine could afford it, Russia
    is able to send 3 times more things at it than they can shoot
    down, right? There are definitely disadvantage in this
    conflict.
        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 cannot 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 do not have, but additive
    manufacturing can help solve that challenge by designing
    engines in a new way to fully leverage the potential additive.
    We see engines that are 25 percent 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 3 years, at less than
    20 percent of the cost of scaling conventional supply chains.
    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 3-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 is 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's commitment, which encourages future private investment.
    That is 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 cost and risk. Our second
    recommendation is tailor Title III programs for agile, advanced
    manufacturers. Make it more accessible to nontraditional
    defense companies by streamlining contracts through Other
    Transaction Authorities (OTAs), adjusting cost-share
    requirements, things like that. Recommendation three is
    continuing to strengthen domestic supply chains for high-
    temperature alloys, nickel, super alloys, and titanium. I think
    we have 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.
    The final recommendation aligns Title III efforts with allied
    industrial-based initiatives, especially the North Atlantic
    Treaty Organization (NATO) and Australia, United Kingdom, and
    United States (AUKUS).
        One great thing about additive manufacturing is it allows
    flexible distributed manufacturing, but it can only happen if
    there are standardization and coordination across nations. 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 questions.

        [The prepared statement of Mr. Follin follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Davidson. Thank you both. We will now turn to
    member questions. I recognize myself for 5 minutes.
        You both highlighted the need to surge capacity, and, Mr.
    Faxon, you have certainly been part of that supply chain over
    the last few years as we have 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. 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. Faxon. That is 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 are
    focused very intensely on the industrial base, which is fine--I
    understand--on this committee, but if we were to invest in a
    facility to increase defense industrial base, if we added
    funding to increase commercial and 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 the current
    administration is pushing. It develops the commercial
    industrial base so that 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 are going to be the
    word ``sustainment.'' They are going to have their hands out
    for sustainment in these facilities. If we build a factory such
    as the artillery factory that we propose, it will serve as a
    model for 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 is 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 deforge, 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 is how DPA funding could set a
    tone for a commercial base.
        Chairman Davidson. Yes, thank you for highlighting that.
    You look at the capability, 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 is possible, and if we can incorporate that with our
    approach here, I really think we can respond to the times we
    are 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 is
    banks or venture or other sources of capital, to have the
    confidence that this has got scalability?
        Mr. Follin. Yes. Banks and other investors are trying to
    evaluate companies for risk in order to make investments, and
    the cost of that investment depends on the perceived risk of
    the company. I would say, when there is government investment
    in projects, it has a double benefit. One is it reduces the
    amount of capital you need to raise, and second of all, it
    shows alignment with government priorities and pull from the
    government for the products that you are manufacturing, and so
    it reduces the perceived risk of the company. Therefore, you
    are able to raise capital more quickly at a lower interest rate
    and have better runway for the company in the future.
        Chairman Davidson. Yes. It is one thing, though, to send a
    demand signal. I mean, clearly the government wants these
    things, so why is not demand enough? Why do taxpayers need to
    provide seed capital to certain sectors, and then how do you
    strike the balance between that and just turn it into a planned
    economy where you have some central planner picking winners and
    losers? How do you get that right?
        Mr. Follin. Yes. I think the defense industrial base has
    been through cycles, and we hear about forecasted ramps in
    production demand, but these are very, very expensive systems
    to ramp up for, right? You are talking about 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 are borrowing that money
    until the demand arrives, and sometimes it does not arrive. I
    think, basically, this allows us to go out, 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 Davidson. Yes, Thank you. We will have a second
    panel, but I will yield my time and recognize the chairman of
    the full committee, Mr. Hill.
        Chairman Hill. Thanks, Chairman Davidson. Mr. Faxon, just
    continuing that same theme, you made some comments in your
    prepared statement about multiyear 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 Wyoming
    where that topic came up with some Silicon Valley presenters,
    that they were very impressed with the Trump Administration's
    approach to this issue, which is, we are going to start
    working. We are not going to talk about it. We are going to
    take action and being a much more action-oriented
    administration, but you have to balance that with the comments
    Mr. Davidson just made about things that we need in the supply
    chain ramp-up so that it is not government directing things
    that maybe do not have long-term viability.
        How do you balance all that? I just want to let you
    continue your conversation you were having with Mr. Davidson.
    You have 47 years of manufacturing experience, so what does DPA
    need to have changed in either the statute or its policy to
    balance that?
        Mr. Faxon. Thank you for the question. The components of
    that are actually built by several of the questions that
    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? Quite honestly, if you look at
    normal business growth, if you are double digit on a compound
    annual growth rate (CAGR), you are doing really well at 10
    percent. We are asked to quadruple in a year, so these ramp-up
    cycles are not conducive to your typical business growth. As a
    matter of fact, if you tried to do that in a normal
    manufacturing business, and I am 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 am going to
    quadruple in a year, I think they would 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 do not really have that, and we do not make
    this back in a year or two. In fact, our investment in the
    factory, because of vertical integration and cost savings,
    offers approximately a 10-percent per-unit cost reduction. If
    you really looked at a business cycle of ROI for what we are
    asking for of 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
    am leaving. It is, I am going to give it back to you.
        Now, if the government does not require that quantity over
    that period of time, you do not get your return on investment,
    that is true, but you are the one asking for it. I do not go
    broke because the bank wants me to answer for it when I am not
    really the one who is demanding the product; so, that circle of
    debt, longevity, and flexibility with the commercial viability,
    I cannot emphasize that enough. Leading-edge technology,
    whether it is software, hardware, physical presses, or
    technology, is, in most cases, transferable, and when we are
    going to reshore things, we are not going to do it at twice the
    cost. We are going to have to be competitive to make that
    successful no matter what anybody says. They say buy American,
    but there is 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 does not pan out, we still lead
    engineering and manufacturing to a higher level and a higher
    capability level.
        Chairman Hill. 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. Faxon. Yes.
        Chairman Hill. 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. Faxon. 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 do not want to put a band-aid on something you currently
    have.
        Chairman Hill. Yes. Yes.
        Mr. Faxon. You go ground up. The facilitation in the first
    year is pretty much non-return on quantity. There are minor
    input improvements. In years 1 to 2, certain pieces of
    equipment can be acquired. We 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. Year zero to one is not really a high
    return. Year 3 is where you really see your highest return, and
    that is where you consolidate all the equipment. These
    machines, in some cases, will take weeks and months to move and
    years to get, so what you do not want to do is incrementally
    fund four 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 am familiar with them, great
    company. We are offering a national asset. We are 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 are not going to win if we keep doing what we
    have done. If we buy what we had 10 years ago and it lasted 20
    more, this world does not stay still for 30 years.
        Chairman Hill. Thank you. We will continue this discussion.
    I yield back.
        Chairman Davidson. Thank you, Chairman. I now recognize the
    vice chairman of the full committee, Mr. Huizenga, for 5
    minutes.
        Mr. Huizenga. Thank you, Mr. Chairman. You are going to
    hear a central theme on this, and I leaned over to Chairman
    Davidson when he finished, and I said that is 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 a lot of the question/concern/feedback
    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 is not needed? You cannot predict war,
    right? You cannot predict mass war or a conflict like what is
    happening in Russia and Ukraine. Mr. Faxon, you did a
    phenomenal job explaining it from your perspective on what was
    sort of the ramp-up and the need. Mr. Follin, I would like you
    to maybe expand on that or give us your take as well. I mean,
    you talked about perceived risk, that, really, in a way, the
    government funding might be that bell cow, as some might say,
    right? Others are going to follow that. They are 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.
        I am really curious, do you believe that the programs that
    we have, one, allow you to build the capacity for not just for
    an immediate, but for long term. How do we maintain that? Two,
    do you have the flexibility to innovate and explore within
    those programs? You know, one of sort of the central themes of
    a truly free market is the ability to fail and learn from that
    failure. We do not like that when we are sending taxpayer
    dollars, we do not 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. Follin. Yes, thank you for that question. It is a great
    question. I will 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 are developing the product as we
    are understanding what are the risks and challenges that it
    takes to bring that product into full production and then we
    can kind of navigate that together as we learn and come up with
    solutions to solve problems that invariably come up through the
    development phase. I think DPA allows us to partner in that
    phase versus if we were doing it on our own dollars, we would
    be trying to figure it out on our own, and sometimes the
    government can have solutions or resources they can bring to
    bear to also help in those situations.
        Mr. Huizenga. Yes. Let me interrupt you super quickly on
    that. I mean, this is called the Defense Production Act, so I
    think that makes a lot of sense to people when it is defense
    related. Are we focused enough on the DPA right now? Is it
    really into that defense mode, or have we wandered away from
    that from that core objective?
        Mr. Follin. Yes. My personal experience is primarily with
    DPA for defense, so I cannot 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. In our case,
    like, we are working on these critical munitions that I think
    we have heard talked about as a priority from the other folks
    in their earlier testimony. I feel like it is focused on areas
    that are important. Could it be improved? I am sure it could.
        What I would say is in terms of--does the funding support
    ramping up to actually support the rates, what happens if
    volume changes, how fast can you change. I will say one of the
    advantages of additive is it can ramp up very quickly. It does
    not require, like, big, mega foundries in order to scale it up.
    You are basically buying things that look like inkjet printers,
    right? They are bigger, they are more industrial, but they look
    kind of like that. In terms of timing, in 15 months we can
    double production. Right now, we have the ability to make about
    2,000 engines a year, and in 15 months, we will 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
    have been given by the DOD as a target. Again, you compare that
    to 100 years of manufacturing things conventionally, and we can
    make 2,000 a year, right? It is really promising, I think, what
    it can offer.
        The other advantage of additive is it is easy to
    distribute. What that means is, once you have a design and once
    you have kind of validated how to manufacture it, there are 3D
    printers all over the world, right? 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 on their printer.
    It is a pretty automated process. You do not need a lot of
    specialized labor to do that, so it is pretty easily scalable.
    The other big advantage is that a lot of conventional
    manufacturing requires very bespoke, expensive, long-lead
    tooling, right, in order to make a part. The 3D printer does
    not care what it is printing. It can print keychains 1 day and
    print gen engines the next day. It does not care, right? It
    does not have a memory. It is 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? Beehive has picked this mission because this is a big
    priority for the DOD, and we think it is probably the area
    where additive manufacturing is most fertile, but as priorities
    change the capacity could change with the priorities to support
    what is being needed. Thank you.
        Chairman Davidson. Yes. Thank you. I would like to
    recognize Mr. Moore from North Carolina for 5 minutes.
        Mr. Moore. Thank you, Mr. Chairman. One of the things that
    I have heard from folks is that they feel like the way the
    procurement process is set up, and you all alluded to this in
    your comments, really is geared toward large companies as
    opposed to small-and medium-sized businesses. If I think about
    it, 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 is
    the story of American ingenuity. If you look at how small-and
    medium-sized businesses can be more nimble, and agile, and
    dealing with market changes and other things, obviously
    capitalization and financing is the challenge, and, Mr. Faxon,
    you mentioned it earlier.
        I just wonder, any suggestions, as guys who are in the
    trenches, of ways 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 is one
    of the advantages we have over China and other places. Any
    suggestions on how we change that to fully utilize that, and
    you both are welcome to respond.
        Mr. Follin. Yes. Thank you for that. I think a couple of
    things. 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 has been the case, but it is not always the case, so I
    would say continue to do that. The other big one is, if there
    is a way to reduce cost share, I think it absolutely makes
    sense. You want companies to have skin in the game as well,
    right? We do not 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 percent, right, and
    so, again, these are still large investments. I mean, Beehive
    has invested over $300 million to date. There are 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 are
    in. 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. Thank you.
        Mr. Moore. Mr. Faxon.
        Mr. Faxon. I think from a bureaucratic standpoint, I would
    not have any really strong input. What I would think is there
    are a lot of people out there that, if the DPA committee did a
    search for key capabilities and targeted the mid-to small-size
    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 is not a meeting that we would 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 are many Americans out there today that are
    highly talented that will work 12-, 15-hour days if given the
    chance and the avenue. I think going out to see them, eye to
    eye, that would be my suggestion.
        Mr. Moore. 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 is working along those lines right now, and where
    do you see where there are still the shortcomings, specifically
    at that level?
        Mr. Follin. Yes. In our specific case, I think DPA and OSD,
    we are very creative in finding a way to support what we are
    trying to do. Typically, Title III dollars really for capacity
    expansion, so it is infrastructure. In our case, you would buy
    printers. You would buy computer numerical control (CNC)
    machines or whatever. One of the things that I thought was a
    really great innovation was looking at, hey, current suppliers
    cannot meet capacity, so part of expanding capacity is we have
    to develop a new option, right? It included dollars for actual
    R&D so we can develop an option that then we can scale. In our
    case, about 70 percent of the funds were for actually working
    on the innovation and getting it ready to take to production.
    The other 30 percent was for capacity, right? I think that is a
    nice change from the status quo and something that should
    continue, I think.
        Mr. Moore. I yield back.
        Mr. Davidson. 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?"
    It 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
    percent of it. Mr. Follin, you highlight the amount of capital
    raise you have been able to do. It is a lot easier to raise
    capital for something new and sexy that could turn into a giant
    market someday than for old technology. As promising as
    additive manufacturing is and capability, it still cannot do
    everything that you can do with a cast part, and certainly,
    getting the hardness and capability out of forgings, that is
    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 do not have surge capacity in our
    country. Maybe if you guys could highlight and touch on that.
        Mr. Follin. Sure. I mean, in a missile, only a small part
    of it is printable, right? I think to the point made earlier,
    if you are missing one part from a system, then you do not have
    the system, right? I think it is not a one-size-fits-all
    approach. I think you have to look at kind of holistically
    across the whole system where the bottlenecks are and how can
    you address those bottlenecks. Our view is, like, additive
    manufacturing does play a key role, but it is not the only one,
    and there are other areas that are going to need support as
    well. Businesses like Mr. Faxon's, right, make a part of the
    weapon as well, and it is not additively manufactured, for the
    most part. It has got conventional manufacturing, but those
    things also have to be ramped up in order to support the
    ultimate final demand.
        Chairman Davidson. Thank you.
        Mr. Faxon. I think something I would add is, when we talk
    about the defense industrial base, there is really a broad
    variety of technologies. I am incredibly impressed with the
    capability of additives. We are not going to make a 30,000-
    pound bunker buster bomb through additive. That is 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, do not talk to me, but
    if you talk about subcomponent and component level, and it is
    block and tackle, needs to be done, takes a lot of hours,
    equipment, it is just work, then you can go to these other
    places. I think if you really want to increase the capacity,
    you have to define where the requirements of the work scope
    are. We do not make satellites, we do not 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 will bleed for you. They will 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 it is important to differentiate what
    the work scope is. It is not all the same.
        Chairman Davidson. Thank you both. I recognize Chairman
    Hill.
        Chairman Hill. 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. Follin. Yes. I think the primary comment is OTA
    contracts, other transactional authorities, give more
    flexibility in terms of terms and conditions, and also like----
        Chairman Hill. Can you give us an example? Just compare
    one, non-using that to using it.
        Mr. Follin. Yes. For example, there are two primary ways to
    do contracting for defense. One would be, like, 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 is not in production yet, being able to provide, like,
    validated cost for something that is not invented yet becomes
    extremely difficult, right? OTAs allow you to use, like,
    engineering estimates, best judgment. You still have to
    substantiate it. I mean, it is still competitively bid, so,
    nobody is taking advantage of the government, but it gives more
    flexibility when you do not have that background or you are
    making something that has not been made before.
        Chairman Hill. Another piece of your testimony I thought
    was interesting, I do think we have to have critical elements
    made here, particularly in the defense arena. I have also been
    someone who if it is made in other places that are allies of
    the United States, I think that is good. It might be a risk.
    For example, no one questions the extraordinary manufacturing
    capability and 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. This idea of
    friendshoring, I think, is important to collaborate and spread
    that out, benefits the entire allied nations in case of a
    global conflict, whether it is in Europe or Canada or the
    United States or in Asia.
        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. Follin. Yes. I think what I am referring to in my
    testimony is really around, like, having, like, common
    standards so that if you are trying to offshore a design, if we
    are going to take our design and send it to Australia, as an
    example, for them to manufacture. I mean, 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 transferrable. If they are using a different kind of
    printer, then there is a lot more development.
        Chairman Hill. Do you think Mr. Frankston is doing that? Is
    he doing a good job of that over at DOD? You think that, inside
    particularly the Five Eyes countries but our principal
    partners, is that the standard that we try to do that, or not?
        Mr. Follin. It is hard for me to say from my seat. I do not
    have full visibility of it. I would say that my experience so
    far, it is not obvious that it is true.
        Chairman Hill. Okay, but it is an area we could collaborate
    on, ask questions about how to improve.
        Mr. Follin. Absolutely, yes. That is right.
        Chairman Hill. I thank you. I yield back, Mr. Chairman.
        Chairman Davidson. Thank you, Chairman. I recognize the
    vice chairman of the full committee, Mr. Huizenga.
        Mr. Huizenga. Thank you, and I am 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 have seen some
    pushback on that because of a capability--or, I am sorry, not
    capability--a capacity issue. I think it was Mr. Follin who had
    talked about sort of the four recommendations that you and
    Beehive had. We have kind of gone over the support, the
    reauthorization of Title III. We talked a little bit about more
    agile non-defense 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. I also want to go
    visit what I think was your number three recommendation talking
    about high-temp alloys being needed and so, touch on number
    four with our allies, but then how do we then address this need
    for the high-temp alloys?
        Mr. Follin. Yes. Thank you. Yes, I think the places where
    the alignment makes sense are; Do we have the same materials
    available at the partner nations, right? The process for how
    you manufacture these things does require some commonality, so
    if the alloys are a 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 when you actually need to flip
    the switch, you get there a whole lot faster. That is really
    what I am referring to.
        Mr. Huizenga. Do we have current alignment?
        Mr. Follin. I think it is yet to be determined, from my
    perspective. I think----
        Mr. Huizenga. How come? What needs to happen for you to
    determine that we have----
        Mr. Follin. Yes. Again, my experience is limited just to
    Beehive's experience, I would say, but I think we are pre-
    production, and so maybe we are 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 are going to take our design
    and send it to a third party and have them manufacture it. So,
    that would be a U.S. party to start, so I think that is the
    first step in that direction. Ultimately, I think it would be,
    hey, if we want to really take advantage of this, I will not
    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 have not done
    it because the process is not there yet. We are probably a year
    away from being there, right, so it is something to think about
    for the future.
        Mr. Huizenga. How do we address this need for high-temp
    alloys?
        Mr. Faxon. Yes. I would say the number one problem we see
    is 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 is pretty high-
    temperature capable. It is 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. Also,
    Canada has sources of titanium. There are other friendly
    nations. I think in the past they have not been developed
    because there was a global supply and it was not needed, but I
    think it is one of the big challenges we face.
        I think Representative Moore, he talked about how in North
    Carolina, there is, like, one of the only copper smelting
    plants left in the country. There is an element called rhenium,
    which does not exist in nature. The only way you can get it is
    from the smelting of copper. Rhenium is really what is, like,
    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. I think some of the politics change. Some of
    the countries that we are competitive with now, we were not as
    competitive with 20 years ago and it was not a problem, but we
    have backed ourselves into a corner on a couple of these
    materials like titanium and rhenium.
        Mr. Huizenga. We have maybe over 10?
        Mr. Follin. Yes, maybe so.
        Mr. Huizenga. Mr. Faxon, you have 10 seconds.
        Mr. Faxon. 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 propose in the DPA
    funding is not only for the equipment, but for buffer stock of
    material because the lead time is months in some cases. If we
    put a beautiful factory together and do not have material, we
    are going to twiddle our thumbs; so, our issue was, DPA
    funding, no business wants to hold 6 months of inventory, but
    if we are 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 do not
    have the versatility of some of the things, but we would build
    buffer stock, and DPA funding would be key for that. Thank you.
        Mr. Huizenga. I yield back.
        Chairman Davidson. Good stuff. Thank you. I now recognize
    for the final set of questions, Mr. Moore from North Carolina.
        Mr. Moore. Thank you, Mr. Chairman. Actually, I do not 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 there was something you
    wanted to say in response to any questions you did not get a
    chance to do, I am going to allow either of you to use my time
    to do so.
        Mr. Follin. Honestly, I do not have any questions back for
    you. This is my first experience doing a congressional hearing.
    It was an honor to be able to be with you guys today and
    understand a little bit of how the process works. Like I said,
    I mean, our experience at Beehive is relatively limited, to
    date. We have not had a Title III contract yet. We are actually
    in the process of negotiating it now, but I would say, overall,
    our experience with the process has been great. AFRL has been
    helpful, the Air Force has been helpful, OSD has been helpful,
    so just glad to contribute and help where we can. Thank you.
        Mr. Moore. Mr. Faxon?
        Mr. Faxon. I would second that. It is a pleasure to be
    here. It is 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. I would
    say if there was one word I could use, it is urgency. Do not
    overestimate capability because you open a checkbook. It may
    not buy time, so urgency is my message today. Thank you.
        Chairman Hill. Would the gentleman yield?
        Mr. Moore. Absolutely.
        Chairman Hill. Just curious about the stockpile comment you
    raised; I thought it was quite a good one and have your own
    micro-parochial interests on stockpiles. I think it would be
    good, Mr. Chairman, if we got DOD to send us, if it is
    classified or unclassified, an analysis of U.S. stockpiles and
    these critical minerals. Mr. Faxon, you want to comment on
    stockpiles a little further, and I will yield back to my friend
    after your answer.
        Mr. Faxon. Yes, because we speak about materials, and that
    could go from the base alloys. It could be a titanium sponge to
    make titanium. It could be nickel-based alloys for high-
    temperature alloys. We can talk about the micro elements of
    mining, but we can also talk about stockpiles of raw material.
    Before we can machine it, we may have to go through processes,
    such as forging, rolling mills, et cetera. When we talk about
    lead time, there is a wide variety of saying, hey, we have
    material, but that does not mean it is 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. The reality and our push is to be
    vertically integrated so we were not dependent on outside
    services to be able to meet your needs, and that material in
    that stockpile is really counterintuitive to typical business
    practice. We do not want material sitting too much.
        In this case, because of urgency of timing, I think it is a
    smart use of funds to buy that time and feed out of it. Once
    you do it one time, you do not have to do it twice. The buffer
    remains. It is first in/first out. You have to buy it once,
    though, and that is where the DPA funds could be very handy.
        Chairman Davidson. 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 is 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 is great to see that we are talking about a
    whole-of-Nation approach to it and also with our allies.
        Without objection, all members will have 5 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 17.

        [The information referred to can be found in the appendix.]

        Chairman Davidson. The hearing now is adjourned.

        [Whereupon, at 11:52 a.m., the subcommittee was adjourned.]

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