More Than Just ‘Piles of Rocks’
 
  By Dianne Ryder
     The Defense Logistics Agency received an early Christmas present of sorts Dec. 23 last year, when President Obama signed the 2017 National Defense Authorization Act, allowing DLA to acquire seven new strategic materials and dispose of several legacy materials in the “national stockpile.”
Revenue from the sale of the legacy items will go toward new purchases and funding for future operations, said Thomas Rasmussen, director of strategic planning and market research in DLA’s Strategic Materials office.
“The law requires that we get specific legislation before we sell materials,” he said. “Some of the materials we’ve had since the Cold War.”
The latest NDAA allows DLA to dispose of the large stores of chrome-steel alloy, as well as several metals used in alloys to add strength or corrosion resistance: beryllium, chromium and tungsten (in powder and ore form). In addition, DLA can now dispose of nearly 575 pounds of pure platinum, used for its heat tolerance and corrosion resistance — currently worth about $10 million.
The new law also lets DLA acquire new materials: high-strength, high-stiffness carbon fiber; tantalum, a corrosion-resistant metal used in place of much more expensive platinum in alloys and capacitors; germanium, a semiconductor used in infrared systems; tungsten-rhenium, used in electronic wiring and in radar systems; europium, a rare element used in superconductors, color video monitors and memory chips; and boron carbide powder and silicon carbide fiber, both used in personal protective and vehicle armor.
The Strategic and Critical Materials Stock Piling Act provides for the acquisition and retention of stocks of certain strategic and critical materials. It also encourages the conservation and development of sources for these materials within the United States. Such materials, when acquired and stored, constitute the National Defense Stockpile — known simply as the stockpile.
In the late 1980s, the secretary of defense delegated the operation of the stockpile to DLA. DLA Strategic Materials is responsible for the acquisition, storage, management and disposal of materials.
“There’s a whole section in Title 50 of the U.S. Code that tells us what we can do, when we can do it and how to do it,” said Michele Pavlak, a DLA associate general counsel. “There’s a market impact committee that Strategic Materials personnel have to meet with annually, before they can get approval to buy or sell anything, so they don’t disrupt the U.S. markets.”
Rasmussen explained that the purpose of the Stock Piling Act is to ensure raw materials are available for reconstituting military capability after a military conflict.
“During World War II, it was a logistical war,” he said. “A lot of times, enemies went out of commission because they ran out of critical supplies.”
The government expanded its stockpiling effort shortly after the war to protect the U.S. against material shortages as the United States pursued an arms race and a “space race” with the Soviet Union, and as the possibility of another war was ever-present.
“We have to keep certain materials that [the Department of Defense] deems strategic and critical to the national defense, so we’re not dependent on foreign sources or a single point of failure,” Pavlak said. “It’s an insurance policy, basically.”
“Every other year, the secretary of defense is required to report to Congress the department’s recommendations with respect to stockpile requirements,” Pavlak said. “These recommendations are based upon emergency planning assumptions that are in turn based upon the military conflict scenario used by DoD for budgeting and planning purposes.”
Pavlak explained that based on military-conflict scenarios, DoD develops a list of stockpile requirements to replenish or replace munitions, combat-support items and weapons systems required for the conflict. All these elements go into a report to Congress, which determines what materials DLA buys.
Rasmussen said the stockpile increased in size, particularly in the 1950s and 1960s, due to fears of a conflict with the Soviet Union.
“There was a really gigantic stockpile — over $3 billion worth of raw materials,” he said. “And billions of dollars go a lot further when you’re buying raw materials than when you’re buying airplanes.”
In the 1990s, after the Soviet Union fragmented and the threat diminished, so did the need for such a large inventory of raw materials.
“The Soviet Union was a pretty good source of raw materials. They needed to generate hard currency, and they sold a lot of commodities into the market,” Rasmussen said. “It became very clear that we didn’t need these mountains of material anymore.”
During the 1990s, the stockpile started selling many legacy materials quite aggressively. However, as nations like China became more economically powerful and people became concerned about external threats, the pendulum swung back and there was a renewed interest in reconstituting the stockpile.
“We’re also modernizing,” Rasmussen said. “Rather than getting very simple, more basic industrial materials, we’re getting a lot more technical materials.”
Acquisition and sales planning for these materials has already begun, with initial awards expected this year, but getting the authority to buy new materials is a recent development, Rasmussen said. Because decades often elapse between congressional approval of such changes, the changes permitted in the latest NDAA are particularly significant.
“We have to have a review by Cabinet-level groups such as the State Department, Commerce Department and the Department of the Interior to avoid undue disruption,” he said. For example, the stockpile at one time had “enough ferrochrome to supply the entire world for five years.”
If the stockpile had tried to sell the entire stock of the metal additive, used in stainless steel and other alloys, it could have put private industry out of business.
Congress directs where the money from material sales goes, and it hasn’t always been funneled back into stockpile. Although the Stock Piling Act established a transaction fund to pay for the stockpile and its activities, Congress has sometimes diverted money from the T Fund to other programs and redirected the proceeds from the sale of excess materials to unrelated projects.
“For several years, we automatically sent $50 million to the Air Force, Navy and the Army,” Rasmussen said. “Whatever revenues we had, they got $50 million each.”
“Even after the NDAA-specific legislation to acquire/dispose materials is enacted ... each planned acquisition and disposal of materials must be included in the Annual Materials Plan,” Pavlak said. “The stockpile manager includes in the AMP the proposed acquisitions for the stockpile for the upcoming fiscal year and the following four years.”
Rasmussen said the proposals have helped ensure the stockpile’s solvency, for now.
“Sales will continue to support acquisitions and operations for a few more years,” he said. “Eventually, we’re going to need appropriations to continue operations, but we will continue to fund ourselves by selling off material.”
And current stockpile operations are not dependent on new taxpayer money, Rasmussen said.
“We have a separate account, the stockpile transaction fund,” he said.
What might appear to the naked eye as piles of rocks are actually materials critical to DLA’s mission of supporting the warfighter, Rasmussen said. For example, boron carbide may look like a piece of dark ceramic, but when arranged correctly in a vest, it can stop bullets.
“The things that materials do are just incredible. It’s exciting to us, and we enjoy it, but it’s not always easy to share with other people,” he said. “Our program doesn’t have completed rockets, but we hold a reserve of the things that help make the rocket light and fast.”