Introduction

For more than a century, national security policymakers have approached physical stockpiling of industrial raw materials as one policy option for mitigating national defense supply chain risks, deterring aggression, and anticipating "actions or events outside the control of the Government of the United States."¹ Finding the natural resources of the United States "deficient or insufficiently developed to supply the military, industrial, and essential civilian needs of the United States for national defense," Congress since 1939 has utilized the Strategic and Critical Materials Stock Piling Act (50 U.S.C. §98, et. seq., as amended) to develop and oversee a national stockpile of certain "strategic and critical materials."

This report provides background on this National Defense Stockpile (NDS) and analyzes selected issues that Congress may face related to its management, including

• Assessing NDS funding tradeoffs
• Determining which national emergency scenarios should be used to generate NDS requirements
• Assessing market impacts of rapid stockpile acquisition strategies
• Adapting stockpiles to anticipate and incorporate technological innovation
• Private sector stockpiles of strategic and critical materials
• Nondisclosure agreements with industry for robust NDS planning
• Addressing material weaknesses in NDS financial audits

The NDS's statutory purpose is

to provide for the acquisition and retention of stocks of certain strategic and critical materials and to encourage the conservation and development of sources of such materials within the United States and thereby to decrease and to preclude, when possible, a dangerous and costly dependence by the United States upon foreign sources or a single point of failure for supplies of such materials in times of national emergency.²

The Department of Defense (DOD) manages the NDS and has delegated authority as the National Defense Stockpile Manager to release stockpiled materials to eligible domestic manufacturers in the defense industrial base and other critical infrastructure sectors under certain conditions.³

Defining "Strategic and Critical Materials"

50 U.S.C. §98h-3 provides an overarching definition of strategic and critical materials. They are "materials that (a) would be needed to supply the military, industrial, and essential civilian needs of the United States during a national emergency, and (b) are not found or produced in the United States in sufficient quantities to meet such need." (See Appendix B for a list of these materials.)

50 U.S.C. §98b gives the President authority to determine which materials are strategic and critical.⁴ Since 1939, various agencies have used delegated authority and interagency coordination to make definitive lists of strategic and critical materials.⁵ Currently, the Department of Energy (DOE) makes a definitive list of "critical materials"; the Department of the Interior's (DOI's) U.S. Geological Survey (USGS) makes a definitive list of "critical minerals" (a subset of critical materials); and the Defense Logistics Agency, utilizing delegated Secretary of Defense authority, incorporates these lists into its own assessment of National Defense Stockpile requirements, generating a definitive list of strategic and critical materials for purposes of the Stock Piling Act.⁶

Defining "National Emergency"

50 U.S.C. §98f authorizes the President to release stockpiled materials "in time of war declared by Congress or during a national emergency."⁷ 50 U.S.C. §98h-3 defines a national emergency as "a general declaration of emergency with respect to the national defense made by the President or by the Congress." Throughout the stockpile's history, several proclamations, executive orders, joint resolutions and treaties respecting war, neutrality, and peace have declared (or terminated) states of war or national emergencies, affecting national stockpile strategy.⁸

A network of laws and administrative policy situates NDS management within whole-of-government approaches to "national security emergency preparedness" and critical infrastructure protection.⁹ U.S. policy currently designates 16 critical infrastructure sectors, including the defense industrial base (DIB); critical manufacturing; and nuclear reactors, materials, and waste. The Stock Piling Act requires the President to prioritize stockpile allocations toward "military, industrial, and essential civilian needs" in a national emergency, which may entail allocating stockpiles to ensure functionality of critical infrastructure sectors.¹⁰

The Stock Piling Act itself does not provide details about the administrative and contractual mechanisms used to allocate stockpiled materials under a declared war or national emergency. These mechanisms are set forth in other locations in the U.S. Code or Code of Federal Regulations (C.F.R.) and are implemented by allocation policies established by executive branch policy guidance, individual agency procedures, emergency acquisition, and contingency contracting.¹¹

Strategic Context

Strategic stockpiling reflects and responds to a basic tension in U.S. public policy. On one hand, "Congress finds that the security of the United States is dependent on the ability of the domestic industrial base to supply materials and services for the national defense and to prepare for and respond to military conflicts, natural or man-caused disaster, or acts of terrorism within the United States;" on the other, "Congress finds that the natural resources of the United States in certain strategic and critical materials are deficient or insufficiently developed to supply the military, industrial, and essential civilian needs of the United States for national defense."¹²

Since passage of the Strategic and Critical Materials Stock Piling Act in 1939, executive branch officials have wielded increasingly sophisticated analytical tools for assessing national defense requirements. Using economic modeling, cost estimates, intelligence forecasts, and regularly revised combat scenarios, these analytic assessments reflect current strategic threat perceptions and in turn drive DOD's annual budget requests.¹³

During testimony before the House Armed Services Committee on March 29, 2023, the then-chairman of the Joint Chiefs of Staff General Mark Milley stated, "If there was a war on the Korean peninsula or great power war between the United States and Russia or the United States and China, the consumption rates [of conventional munitions such as rockets and guided missiles] would be off the charts."¹⁴ The chairman added that DOD has reassessed the quantity of munitions it would likely expend during such a war, adding: "[I]t's those estimates that then form the basis of the munitions request in the budget." He concluded by saying "We've got a ways to go to make sure our stockpiles are prepared for the real contingencies."¹⁵

The chairman's remarks emphasize War Reserve Materiel but may implicate the NDS.¹⁶ If the United States entered a large-scale conventional war (or armed conflict national emergency) with a major naval power, supply-and-demand networks for industrial raw materials could be disrupted, affecting critical infrastructure sectors including the defense industrial base.¹⁷ Export controls or boycotts implemented by an adversary country or other economic actors might constrain U.S. Government and domestic industry access to certain raw materials markets. It might become difficult for government agencies and domestic industries to trade with some countries, or obtain industrial raw materials from certain foreign locations through ocean, air, rail, or ground transportation. An adversary might attack, attempt to blockade, or facilitate sabotage along trade routes at critical chokepoints, directly or through proxies.¹⁸

In the early stages of conflict, Armed Forces would generally be reliant on redistribution of current equipment stocks, transportation of War Reserve Materiel under contested logistics, accelerated depot-level maintenance output, diverted security assistance production, and purchase of dual-use, commercial-off-the-shelf products.¹⁹ In a prolonged conflict depleting reserve inventories of key weapon systems, munitions, and combat support equipment, DOD might leverage its global defense posture of forces, facilities, and international agreements but might also, under certain conditions, face constraints that jeopardize the achievement of operational and strategic objectives.²⁰

In prolonged conventional armed conflict scenarios, the risk to national security arising from inadequate domestic raw material inventories depends to a great degree on assumptions about successful homeland defense; weapon and munition usage rates; equipment losses; control of sea lanes of trade; air superiority; enduring access to key foreign suppliers; durability of international agreements and domestic critical infrastructure; private sector emergency stockpiling initiatives; and the efficacy of the domestic industrial base in surging production or transitioning to full or total mobilization of the Armed Forces and national economy.²¹

"Realistic Stockpiling" for Great Power Conflict

In meeting the actual needs of "real contingencies" related to large-scale armed conflict, the National Defense Stockpile has been seen as inadequately stocked at the moment conflict arose, as former President Dwight Eisenhower reflected in 1963:

You will recall that, when we became involved in World War II, our lack of an adequate stockpile of strategic and critical materials gravely impeded our military operations. We were therefore forced into costly and disruptive expansion programs. The nation was compelled to divert, at a most critical time, scarce equipment and machinery and manpower to obtain the necessary materials.... But even after this experience we had not fully learned our lesson.… After we became involved in hostilities in Korea, we went through experiences almost identical with those of World War II—only then did realistic stockpiling begin.²²

During WWII, the Metals Reserve Company (MRC), a subsidiary of the government-owned Reconstruction Finance Corporation, spent $2.75 billion (approximately $42.9 billion in FY2024 constant dollars) on the direct purchase of 50 "strategic and critical metals and minerals" from "51 countries, 39 states, and the Philippines" to meet the immediate requirements of wartime production in the domestic industrial base.²³ The United States used MRC for procurement of strategic and critical materials in lieu of NDS inventories for those requirements. The NDS was used as a "last ditch" supply of strategic and critical materials during WWII, due in large part to its inadequate size upon formal declaration of war.²⁴ The first stockpile report to Congress, covering the period from June 7, 1939, to December 31, 1946, states: "Had that Act [i.e., the Stock Piling Act passed June 7, 1939] been passed in the early 1930s, and adequately implemented by appropriations, most if not all of the highly expensive procurement activity which took place during the war could have been obviated."²⁵

Post-Cold War vs. Post-post-Cold War Stockpile Strategy

Compared to high-intensity, long-duration great power armed conflicts, post-Cold War and counterinsurgency-centered armed conflict scenarios have tended to imply less supply chain risk.²⁶ In the post-Cold War era, stockpile planners incorporating assumptions from the National Military Strategy reportedly assumed a seven- to nine-year period of "early strategic warning," during which time emerging strategic threats could be identified and stockpiles of strategic and critical materials acquired to prepare for and deter large-scale armed conflict.²⁷ Stockpiles accumulated since the Korean War were largely liquidated as part of a post-Cold War "peace dividend" reflecting broad access to foreign sources of supply under contemporary combat scenarios.²⁸

For decades, "realistic stockpiling," to use President Eisenhower's phrase, led to disposal [sale] of stockpiled materials no longer estimated to be in material shortfall under anticipated emergency conditions. According to DOD, "Beginning with the early 1990s, the Department of Defense determined that over 99% of the [NDS] inventory was excess to the Department's needs and Congress authorized its disposal."²⁹ Today, DOD reports $1.3 billion in total NDS assets—comparable to pre-WWII levels—including $912.3 million in material inventories.³⁰

The October 2022 National Security Strategy announces that "the post-Cold War era is definitively over and a competition is underway between the major powers to shape what comes next."³¹ After 20 years of counterinsurgency focus, recent national strategy documents and DOD budgets reflect great power armed conflict scenarios and strategic threat perceptions.³²

January 1, 2035: Statement of Policy

Section 848 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (P.L. 116-283) directs the Secretary of Defense to utilize the National Defense Stockpile, among other tools, to ensure "access to secure sources of supply for strategic and critical materials" that "fully meet the demands of the defense industrial base" and "eliminate the dependence of the United States on potentially vulnerable sources of supply" not later than January 1, 2035.³³ These policy aims involve the U.S. military's full global defense posture and imply prolonged whole-of-government coordination across military, informational, diplomatic, financial, intelligence, economic, legal, and developmental (MIDFIELD) instruments of national power.³⁴ Their achievement may depend on efforts beyond DOD's control, including congressional appropriations over the coming decade.

Current Stockpile Requirements

Currently, DOD selects strategic and critical materials for inclusion in the National Defense Stockpile that are expected to be in "material shortfall" in a national emergency scenario "consisting of a military conflict combined with an attack on the Homeland."³⁵ This "base case" scenario lasts a total of four years, the first year of which involves active combat followed by three subsequent years of post-conflict industrial recovery and replenishment.³⁶ Shortall materials generally include nonfuel mineral commodities like cobalt and tin, along with semi-processed or processed materials such as TNT and high-purity carbon fiber that function as common production inputs for national defense applications.³⁷ While details of some shortfalls are classified, a 2023 unclassified NDS inventory list is provided in Appendix B.³⁸

DOD's Defense Logistics Agency (DLA) reportedly monitored 283 candidate materials for its 2021 and 2023 stockpile assessments, with 148 incorporated into formal NDS planning models.³⁹

Results of 2021 Stockpile Requirements Assessment

In the 2021 stockpile requirements assessment, 53 materials were determined to be in shortfall and therefore "strategic and critical" in a congressionally mandated, classified armed conflict scenario involving China.⁴⁰ Of these 53 materials, according to the assessment, 37 have supply chains controlled by a "foreign market dominator" (i.e., more than half of global production occurs in a single foreign country). Twenty-nine of 53 materials have one domestic provider qualified to meet military or essential civilian requirements (as of June 2021), according to the assessment, and an additional 18 materials "have no domestic production at all."⁴¹ According to a review of strategic and critical materials supply chains published by The White House in June 2021, U.S. import dependence for these 53 materials extends to 84 countries:

• 27 countries each produce exactly 1 shortfall material;
• 20 countries each produce 2 shortfall materials;
• 16 countries each produce between 3 and 5 shortfall materials;
• 11 countries each produce between 6 and 10 shortfall materials;
• 7 countries each produce between 11 and 20 shortfall materials; and
• and 3 countries each produce more than 20 shortfall materials.⁴²

The People's Republic of China (China, or PRC) is the primary global producer and/or primary U.S. supplier of 20 or more shortfall materials.⁴³ This is potentially significant in part because the "base case" armed conflict scenario grounding current stockpile requirements involves a conventional armed conflict with China.⁴⁴

Results of 2023 Stockpile Requirements Assessment

The FY2023 stockpile assessment discovered net shortfalls in 88 materials valued at $14.83 billion.⁴⁵ Of this total, $12.21 billion worth of shortfalls would cover essential civilian demand for 24 materials and $2.41 billion would cover military requirements associated with 69 materials.⁴⁶ Given March 2023 reported stockpile inventories of $912.3 million, the FY2023 stockpile assessment suggests current NDS inventories cover 37.9% of projected military shortfalls, 7.5% of essential civilian demand shortfalls, and 6.2% of total net shortfalls in base case national emergency scenarios.⁴⁷ As of April 2023, the gap between total NDS assets ($1.3 billion) and total net shortfalls is $13.5 billion.⁴⁸

Congressional NDS Appropriations

Congress appropriated a total of $218.5 million for new NDS acquisitions in FY2022 and FY2023.⁴⁹ Since 1969, however, NDS acquisitions have typically been funded with revenue generated from sales of excess inventory in the stockpile.

From the inception of the stockpile in 1939 through 1969, Congress appropriated over $94 billion in constant FY2024 dollars for the acquisition, storage, maintenance, and upgrade of strategic and critical materials in the National Defense Stockpile. Table 1 lists congressional appropriations for the stockpile prior to establishment of the NDS Transaction Fund in 1979, which Congress established to allow revenues from stockpile disposals to fund the acquisition of new materials and other necessary NDS expenses.⁵⁰

Since 2022, Congress has expressed renewed interest in providing budget authority for new stockpile acquisitions, in part because DOD has expressed concern that annual stockpile operations cannot be sustained in the long term with current NDS assets.⁵¹

NDS Organizational Structure⁵²

This section surveys key features of stockpile strategic planning, management, acquisition and disposal, resource management, research and development, and congressional reporting under 50 U.S.C. Chapter 5, Subchapter III: Acquisition and Development of Strategic Raw Materials.

Strategic and Critical Materials Board of Directors⁵³

Section 1411(b) of the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, (P.L. 117-263) established a board of directors to develop and assess NDS strategic plans and operations. The board must at minimum include 13 members:

• The Assistant Secretary of Defense for Industrial Base Policy is the chair
• Four additional members are chosen by the chair of the board, with relevant expertise (e.g., one member each specialized in "military affairs, defense procurement, production of strategic and critical materials, and finance")⁵⁴
• Four members total designated by each of the Secretaries of Commerce, State, Energy, and the Interior
• Four members total designated by House and Senate Armed Services Committees (i.e., the chairman and ranking member of the Readiness Subcommittee in each chamber choose one board member each)

Congress has tasked this board with developing stockpile strategy for submission to the Secretary of Defense; approving an annual budget plan; reviewing planned stockpile acquisitions or sales against "projected domestic and foreign economic effects;" and establishing performance metrics for evaluating whether the National Defense Stockpile Manager is adequately implementing stockpile strategy.⁵⁵

National Defense Stockpile Manager

P.L. 100-180 Division C, Title II, the "National Defense Stockpile Amendments of 1987" amended the Stock Piling Act, requiring the President to designate "a single Federal office to perform the functions of the President under this Act."⁵⁶ To implement the requirement, President Ronald Reagan issued Executive Order 12626 designating the Secretary of Defense to perform this role of "National Defense Stockpile Manager."⁵⁷ The executive order also authorized the Secretary to delegate responsibilities under the act as needed to perform these functions.

The Stockpile Manager has a variety of responsibilities under the act, including

• Use appropriated funds to acquire shortfall materials, even doing so without explicit authorization in law under certain circumstances.⁵⁸
• Receive advice from the Strategic and Critical Materials Board of Directors.⁵⁹
• Submit financial statements and an Annual Materials and Operations Plan to the Board of Directors.⁶⁰
• Submit an annual report to the congressional defense committees on foreign and domestic stockpile purchases, disposals, barter transactions, research and development efforts, and planned expenditures over the next five years.⁶¹

Within DOD, the Secretary delegates these functions to the Under Secretary of Defense for Acquisition and Sustainment (USD(A&S)), who further delegates responsibilities to the Director of the Defense Logistics Agency (DLA), the nation's combat logistics support agency.⁶² DLA manages day-to-day NDS operations with oversight from the Strategic and Critical Materials Board of Directors.

Day-to-Day NDS Operations and Material Assessment: DLA-SM

To consolidate NDS operational activities under one entity, DOD has delegated day-to-day stockpile management responsibilities specifically to the Defense Logistics Agency's Strategic Materials field activity (DLA-SM). DLA-SM maintains the specialized facilities, personnel, equipment and software required to execute NDS material acquisition, storage, management, disposal, and recovery activities. It also assesses stockpile composition and quality and provides NDS contract oversight and resource management.⁶³

The field activity reports NDS inventories at six locations in Indiana, Ohio, West Virginia, New York, and Arizona.⁶⁴ For a list of NDS materials at these facilities as of the end of FY2022, see Appendix B. In FY2022, DLA-SM reported employing 72 civilian personnel, led by an Administrator and Deputy Administrator headquartered at Fort Belvoir, Virginia and organized into two directorates: one for strategic planning and market research, and a second for materiel management.⁶⁵

As the National Defense Stockpile Manager, DLA-SM tasks include

• Purchase strategic and critical materials of domestic origin (and prioritize purchases from the national technology and industrial base above other foreign sources if not available domestically).⁶⁶
• Contract with domestic facilities to process and refine stockpile materials.
• Qualify domestic facilities to receive NDS materials under a declared national emergency and fulfill specific military and essential civilian requirements.
• Contract with domestic facilities to recycle strategic and critical materials.⁶⁷

Recovering Strategic and Critical Materials from Recycling Operations

Section 1411 of the National Defense Authorization Act for Fiscal Year 2014 (P.L. 113-66) requires the Stockpile Manager to recover strategic and critical minerals from "excess materials made available for recovery purposes by other Federal agencies." Recycling programs are now an increasingly important DLA-SM contracting activity and an area of significant innovation. The most recent FY2022 stockpile report to Congress details some of these initiatives under the Strategic Materials Recovery and Reuse Program (SMRRP).

In FY2022, germanium recovery from military branch "end-of-life scrap" turned discarded night vision lenses and Bradley Fighting Vehicle turret windows into "3,000 kilograms of 99.999 percent pure germanium ingots."⁶⁸ For context, this represents "approximately 10 percent of U.S. demand for purified germanium."⁶⁹ This recovered germanium is to be stored in the NDS for emergency use.⁷⁰

Also reported in FY2022, DLA-SM's boron carbide recovery program is to turn demilitarized body armor plates "that would have been landfilled" into a processed powder stored in the NDS. In an emergency, this powder could be recast into new hard armor plates. DOD reportedly disposes of approximately 120,000 body armor plates each year, with 30% of these plates reportedly containing high concentrations (up to 90%) of boron carbide.⁷¹

To the extent that recovery operations reliably yield large quantities of certain strategic and critical materials, these operations may be assessed as potential complements or alternatives to other domestic or foreign sources of supply in emergency scenarios.⁷²

Analytic Support to DLA-SM: Institute for Defense Analyses

DLA-SM also plays a central role in the interagency effort to analyze alternative sources of supply through stockpile planning. To assess stockpile requirements DLA-SM contracts with a federally funded research and development center (FFRDC), the Systems and Analyses Center (SAC), run by the Institute for Defense Analyses (IDA). Since June 1988, SAC has constructed the interagency analytic backbone of the National Defense Stockpile, known as the Risk Assessment and Mitigation Framework for Strategic Materials (RAMF-SM).⁷³

RAMF-SM is "a set of models, procedures, and databases" designed to recommend which strategic and critical materials should be stockpiled, and in what quantities.⁷⁴ The framework incorporates a combat scenario provided by the Office of the Under Secretary of Defense for Policy; data on equipment losses, weapons platform requirements, and consumables provided by the Joint Staff in coordination with the military departments; and data from interagency partners (including the intelligence community) and industry stakeholders to estimate what may happen to supply chains for candidate materials under certain conditions.⁷⁵

The baseline scenario for these calculations is termed the "base case" and by law must be "a military conflict scenario consistent with the scenario used by the Secretary [of Defense] in budgeting and defense planning."⁷⁶ Stockpile models must also encompass "those strategic and critical materials necessary for the United States to replenish or replace, within three years of the end of the military conflict scenario…all munitions, combat support items, and weapons systems that would be required after such a military conflict."⁷⁷

Ultimately, outputs from RAMF-SM provide decision support to the National Defense Stockpile Manager and Strategic and Critical Materials Board of Directors.⁷⁸ In the event that DOD leadership uses model outputs to justify acquiring or selling stockpile materials, the NDS has built-in bureaucratic mechanisms for anticipating the market impacts of these actions via the board and the NDS Market Impact Committee.

NDS Market Impact Committee⁷⁹

Section 3314 of the National Defense Authorization Act for Fiscal Year 1993 (P.L. 102-484) established an interagency Market Impact Committee (MIC) to advise the National Defense Stockpile Manager on "the projected domestic and foreign economic effects of all acquisitions and disposals of materials from the stockpile." Co-chaired by the Departments of Commerce and State, the MIC includes additional representatives from the Departments of Agriculture, Defense, Energy, Homeland Security, the Interior, and the Treasury.⁸⁰

The MIC facilitates outreach to industry and public stakeholders by periodically publishing a notice of inquiry and request for public comments in the Federal Register. Such a notice was published on September 5, 2023, for the NDS FY2025 Annual Materials Plan.⁸¹ These notices provide a list of materials being considered for "acquisition, disposal, upgrade, conversion, recovery, reprocessing, or sales" along with a "maximum quantity" of each material that might be affected over the course of the fiscal year in question.

These public notices emphasize an important and historically contentious feature of the Stock Piling Act: "The NDS is a strategic stockpile, not an economic stockpile. It is not intended to influence prices in the market or insulate private industry from supply shocks."⁸² The Stock Piling Act states: "The purpose of the National Defense Stockpile is to serve the interest of national defense only. The National Defense Stockpile is not to be used for economic or budgetary purposes."⁸³ This congressional declaration followed decades of politically contentious stockpile acquisition and disposal decisions, which some analysts, industry associations, and Members of Congress argued unduly shaped market prices or implemented economic and foreign policy.⁸⁴

To the extent that NDS acquisitions or sales play a role in U.S. supply chain resilience policies in coming years, the MIC and Board of Directors may face potential ambiguity between future stockpile transactions intended "for national defense only" and those intended (or projected) to have economic impacts favoring nascent domestic industries, insulating the national technology and industrial base from supply shocks, or engaging in strategic competition with foreign sources of supply.⁸⁵

NDS Transaction Fund (Resource Management)

The National Defense Stockpile Transaction Fund (NDSTF) was established by the Strategic and Critical Materials Stock Piling Revision Act of 1979 (P.L. 96-41) to finance authorized NDS operations without requiring annual congressional appropriations. The NDSTF houses "all moneys received from the sale of materials in the stockpile," including any strategic and critical materials resulting from "excess materials made available for recovery purposes by other Federal agencies."⁸⁶ 50 U.S.C. §98h sets out a number of lawful uses of NDSTF funds "(subject to such limitations as may be provided in appropriations Acts)," from acquisition, maintenance, and disposal of materials to quality control testing, facility and infrastructure improvement, pay of employees, research and development, and environmental remediation.

During the post-Cold War era, sales of excess materials from the stockpile generated billions of dollars in revenue. Rather than maintain large cash reserves in the NDS Transaction Fund, Congress from 2002 to 2022 "transferred more than $6 billion from the Transaction Fund to the General Fund and other mandatory programs unrelated to the NDS mission."⁸⁷ As a result, DOD has stated that current stockpile inventories and unobligated balances in the fund may not cover anticipated program requirements.⁸⁸ One method of increasing the Transaction Fund balance is through appropriations.⁸⁹

In general, "Moneys in the fund shall remain available until expended."⁹⁰ However, the FY2022 and FY2023 appropriations acts added a total of $218.5 million to the NDSTF with a two-year period of availability, meaning that these funds must be placed on a contract or otherwise obligated within two fiscal years of legislative enactment and fully disbursed within seven fiscal years.⁹¹ NDSTF resource managers apply internal controls to appropriated funds to facilitate contracting actions and obligation planning within this period of availability.

NDS Research and Development Activities

Title 50 U.S.C. §98g requires the National Defense Stockpile Manager (as the President's designee) to "make scientific, technologic, and economic investigations" to develop new domestic sources of supply and new production methods for strategic and critical materials, along with substitutes for "essential ores and mineral products."

DLA-SM provides grants to universities and sign contracts with federal research and development (R&D) agencies and private companies to perform R&D-type activities:⁹²

• Development, mining, preparation, treatment, and utilization of ores and other mineral substances.
• Development of sources of supplies of agricultural materials; use of agricultural commodities for manufacture of materials.
• Development of sources of supply of other materials; development or use of alternative methods for refining or processing materials in the stockpile.
• Grants and contracts to encourage conservation of strategic and critical materials.

Historically, the U.S. Department of the Interior's U.S. Geological Survey (USGS) has performed many of the R&D activities related to domestic development and mining.⁹³ The U.S. Department of Agriculture similarly performed investigations into various agricultural commodities once deemed strategic and critical materials, such as wool, vegetable tannins, and opium.⁹⁴

As DOD weapons systems have increased in technological sophistication, a wider array of R&D performers, including universities, have obtained DLA-SM contracts and grants.⁹⁵ In FY2022, DLA-SM reported seven R&D projects totaling $3.7 million, including a contract with the Department of Energy's Oak Ridge National Laboratory (ORNL) to test a new process for recovering critical rare earth elements from discarded electronics hardware (i.e., e-waste).⁹⁶

In addition, DLA-SM seeks to qualify (i.e., certify) industrial operations to provide reliable alternative sources of supply for strategic and critical materials. To that end, in FY2022 DLA reported "a qualification program of antimony trisulfide from Mexico to replace the only qualified source located in China."⁹⁷

Current NDS Transaction Fund unobligated cash balances ($326 million projected for end of year FY2024) may provide ample resources for the National Defense Stockpile Manager to accelerate R&D efforts and qualify additional industrial operations.⁹⁸ In addition, 50 U.S.C. §98g may authorize DOD to leverage advances in biomining and biomanufacturing of strategic and critical materials to acquire NDS inventories.⁹⁹

NDS Congressional Reporting Requirements

Congress exercises oversight of DOD programs by requiring various analytic reports and briefings. The NDS is subject to a variety of congressional reporting requirements.¹⁰⁰

Special Presidential Disposal Authority

50 U.S.C. §98f requires the President or USD(A&S) to notify the House and Senate Armed Services Committees any time they utilize special presidential authority to release stockpile materials for use, sale, or other disposition.

Reports by the National Defense Stockpile Manager and Board of Directors¹⁰¹

Following the end of each fiscal year, DLA-SM must submit a report to the House and Senate Armed Services and Appropriations Committees including

• information with respect to foreign and domestic purchases of materials for the stockpile during the preceding fiscal year;
• information with respect to the acquisition and disposal of materials under this subchapter by barter, during such fiscal year;
• information with respect to the activities by the National Defense Stockpile Manager to encourage the conservation, substitution, and development of strategic and critical materials;
• information with respect to the research and development activities conducted under section 98g of this title;
• audited annual financial statements for the Strategic and Critical Materials Fund;¹⁰²
• other pertinent information on the administration of this subchapter as will enable Congress to evaluate the effectiveness of the program;
• details of all planned expenditures from the Strategic and Critical Materials Fund over the Future Years' Defense Program and anticipated receipts from proposed disposals of stockpile materials; and
• a report prepared by the Strategic and Critical Materials Board of Directors detailing the activities of the Board to carry out their duties; and the most recent NDS Annual Materials and Operations Plan.

Biennial Report on Stockpile Requirements¹⁰³

DOD delivers recommendations every other year to Congress on stockpile requirements, disclosing the "national emergency planning assumptions" underlying its analytic process. DOD is required to disclose

• The length and intensity of the assumed military conflict.
• The military force structure to be mobilized.
• The losses anticipated from enemy action.
• The military, industrial, and essential civilian requirements to support the national emergency.
• The availability of supplies of strategic and critical materials from foreign sources during the mobilization period, the military conflict, and the subsequent period of replenishment, taking into consideration possible shipping losses.
• The domestic production of strategic and critical materials during the mobilization period, the military conflict, and the subsequent period of replenishment, taking into consideration possible shipping losses.
• Civilian austerity measures required during the mobilization period and military conflict.

The biennial report must also include "an examination of the effect that alternative mobilization periods…as well as a range of other military conflict scenarios addressing potentially more serious threats to national security, would have on the Secretary's recommendations."¹⁰⁴ The FY2023 NDAA (P.L. 117-263) §1415 further required DOD to submit with its 2023 biennial report a classified report on the strategic materials required to sustain a one-year-long armed conflict with the pacing threat identified in the National Defense Strategy (i.e., China).¹⁰⁵ The provision requires DOD to acquire the highest priority strategic and critical materials identified in this scenario "subject to the availability of appropriations."¹⁰⁶

The Stock Piling Act does not establish requirements for ensuring this biennial assessment integrates armed conflict scenario data emerging from other congressional reporting requirements. For example, by February 2024 DOD is required by law (10 U.S.C. §118b) to submit to Congress a classified National Defense Sustainment and Logistics Review containing long-term strategic assessments (5-, 10-, and 25-years out) of global defense posture elements, defense industrial base capabilities, supply chain risks, and logistics assets in realistic armed conflict scenarios. Inasmuch as these assessments contain the highest quality, most comprehensive data integration DOD can deploy for strategic analysis, these data may be available for integration into future biennial NDS requirements assessments.

Issues Facing Congress

The following section considers issues that Congress may face involving National Defense Stockpile legislation and oversight.

Assessing NDS Funding Tradeoffs

Since 2022, executive branch budget requests and legislative activity related to NDS acquisitions have displayed considerable variability. DOD requested $253.5 million in new budget authority for NDS acquisitions in FY2023 (and $7.6 million for FY2024).¹⁰⁷ The enacted FY2023 NDAA (P.L. 117-263) authorized $1.0 billion, while the Consolidated Appropriations Act, 2023 (P.L. 117-328) appropriated $93.5 million.¹⁰⁸ Congress may wish to assess the extent to which resource allocation tradeoffs are currently affecting national stockpile strategy.

There is currently no statutory requirement for the President's Budget Request to include plans for stockpiling 100% of estimated material shortfalls of strategic and critical materials. The Risk Assessment and Mitigation Framework for Strategic Materials (RAMF-SM) generates estimated requirements and provides these estimates to senior leaders as decision support in budget planning. Executive branch officials may elect not to request funds to fill estimated shortfalls. DOD budget decisions may consider that most shortfalls cover nondefense demand.

The executive branch may face tradeoffs in assessing whether to request new budget authority for NDS acquisitions. To the extent that budget toplines for discretionary defense spending are fixed, dollars spent storing raw materials for nondefense critical infrastructure demand in a national emergency may be viewed as competing with requirements for present-day military operations and equipment maintenance, procurement of weapons, or research and development of next-generation military platforms.

Congress may also face resource allocation tradeoffs in considering further NDS appropriations, with budget authority for emergency stockpile acquisitions competing with other national priorities.

Both the executive branch and Congress may face variation among expert opinions in assessing the comparative value of the National Defense Stockpile. To the extent that emergency raw material stockpiles provide deterrence value, investments in strategic weapons, additional war reserve materiel, enhanced warfighter training, or diplomatic engagement may be assessed as providing greater or lesser deterrence value. Similarly, to the extent that emergency raw material stockpiles increase supply chain resilience, other investments that increase near-, mid-, or long-term domestic industrial base capacity, incentivize friend-shoring of value chains, or strengthen global maritime logistics may be viewed as providing greater or lesser supply chain resilience. And to the extent that emergency raw material stockpiles facilitate whole-of-government emergency preparedness, other investments in non-DOD federal agencies, nondefense national stockpiles, or partnerships with nondefense critical infrastructure industries may be viewed as providing greater or lesser whole-of-government emergency preparedness.

DOD's 2021 biennial stockpile assessment stated that "stockpiling is only a temporary stopgap mitigation strategy" for some materials.¹⁰⁹ Comprehensive risk mitigation, according to the assessment, may require alternative resource allocations to "implement a permanent solution," including Title III Defense Production Act and Industrial Base and Sustainment (IBAS) investments.¹¹⁰

Given budget constraints, techniques for assessing these tradeoffs and improving resource allocation may become important tools for national security policymaking.

Determining Which National Emergency Scenarios Should be Used to Generate NDS Requirements

The National Defense Stockpile Manager currently establishes biennial stockpile requirements using a base case armed conflict scenario consisting of one year of active combat and three years of post-conflict industrial replenishment. Congress may wish to consider whether current strategic threat assessments justify modification of base case scenarios.

For example, Section 1411 of the House-passed FY2024 NDAA (H.R. 2670) would triple the assumed length of active combat in the scenario to three years while maintaining a three-year industrial replenishment period. In addition, this provision would require stockpile planners to model the "total mobilization of the economy of the United States" and encourage DOD to obtain stockpiles sufficient to meet these new requirements "on or after" January 1, 2028.¹¹¹

A historical perspective may assist policymakers in anticipating the general effect of this modified planning scenario and acquisition schedule on biennial stockpile requirements.¹¹²

In December 1987, the National Defense Authorization Act for Fiscal Years 1988 and 1989 (P.L. 100-180) established a three-year active conflict scenario (modeled on sustained conventional global war with a contemporary adversary). The three-year industrial replenishment period was only established as a stockpile requirement in 1996 (P.L. 104-201 §3311) alongside a reduction in the active conflict period. In March 1988, DOD reported that the shift to a three-year active combat period "(at 31 March 1988 prices) would require acquisition of additional materials valued at approximately $12.3 billion" in addition to the $7.1 billion in non-excess inventory the NDS already had on hand.¹¹³

In other words, DOD reported to Congress in 1988 that strategic and critical materials shortfalls for a contemporary three-year, high-intensity active combat scenario would amount to $19.4 billion, without providing stockpiles for a three-year industrial replenishment period.

Strategic and critical materials shortfalls in the 2024 to 2028 timeframe may differ in many respects from requirements in 1988. Nevertheless, NDS requirements would increase significantly if Congress required stockpile planners to model a three-year sustained global conventional war featuring total mobilization of the U.S. economy while maintaining a three-year post-conflict industrial replenishment requirement.¹¹⁴ As previously noted, a gap of $13.5 billion already exists between current NDS assets and estimated shortfalls in a base case national emergency scenario modeling one year of active conflict.

Given a desire to strategically balance national defense stockpiling and national security preparedness with all other national priorities, Congress may wish to assess several alternative base case scenarios to decide its resource allocation preferences.

Assessing market impacts of rapid stockpile acquisition strategies

The current gap between National Defense Stockpile assets and estimated material shortfalls is $13.5 billion, primarily for nondefense critical infrastructure demand rather than defense industrial base requirements.¹¹⁵ The 118^th Congress is currently considering a legislative proposal in the House-passed version of an FY2024 NDAA (H.R. 2670 §1411) that historical precedent suggests could triple estimated shortfalls, while adding a requirement for DOD to acquire materials to mitigate these shortfalls on or after January 1, 2028.¹¹⁶ Current shortfalls and pending legislative proposals therefore raise questions about the potential market impacts of rapid stockpile acquisitions.

There are several ways to obtain NDS inventories:

• Market exchange: Historically, the primary method of obtaining stockpile materials has been purchasing nonfuel mineral commodities at market prices from foreign sources, adhering to standard federal procurement practices.¹¹⁷
• Barter.: 50 U.S.C. §98e also authorizes the use of barter when practical; for example, "To the extent otherwise authorized by law, property owned by the United States may be bartered for materials needed for the stockpile."¹¹⁸
• Recycling and Recovery. Since FY2014, Congress has authorized NDS operations to recover strategic and critical materials from federal agency end-of-life scrap and excess equipment such as night vision goggles and Bradley Fighting Vehicle turret windows.¹¹⁹

In the absence of multi-billion-dollar appropriations, barter and recycling and recovery operations may present alternative pathways for bridging NDS material shortfalls.

Congress could assess a range of barter options. These options would typically obtain strategic and critical materials from international markets at negotiated prices in exchange for goods or services rather than cash payment. As a result, the Strategic and Critical Materials Board of Directors and NDS Market Impact Committee may assess the market impacts of rapid acquisition via barter in a manner similar to acquisition via appropriations. In both cases, assessing market impacts involves estimating whether stockpile acquisitions would unduly affect commodity prices over time.

NDS recycling and recovery operations may provide a way to acquire shortfall materials while developing new sources of supply. To the extent that recycling and recovery operations could provide reliable domestic sources of supply under wartime conditions, these operations may contribute to reducing NDS biennial shortfalls.

Section 1512 of the Senate-passed version of an FY2024 NDAA would amend the Stock Piling Act to authorize DOD to co-fund new recycling and recovery business model designs (i.e., "bankable feasibility studies").¹²⁰ The White House's 100-day strategic and critical materials supply chain review recommended a "government-wide" recycling and recovery program to obtain strategic and critical materials from federal data warehouse e-waste.¹²¹ The Strategic and Critical Materials Board of Directors, NDS Market Impact Committee, and Congress may wish to assess the potential market impacts of rapidly scaling up such operations.

Adapting stockpiles to anticipate and incorporate technological innovation

In a June 1946 address to the Army Ordnance Association, Army Chief of Staff and future President Dwight Eisenhower pointed out a potential weakness of a national stockpiling strategy. He stated "Security is not static. Military stockpiles can become junk because of a single scientific development and the security they lend can be wiped out by a single laboratory experiment."¹²² This remark calls attention to the limitations of stockpiling strategies that fail to anticipate or rapidly adapt to emerging technologies and technological innovation.

The current statutory framework for the NDS combines short-term stockpile planning with a mid- and long-term vision, authorizing the use of NDS funds for "scientific, technologic, and economic investigations" that generate "more efficient methods of production" and "develop new materials for the stockpile."¹²³ Thus, apart from policy proposals that may increase or decrease stockpile quantities, what Eisenhower later called "realistic stockpiling" might take the form of enhanced coordination of such scientific, technological, and economic investigations.

DOD Chief Technology Officer / Under Secretary of Defense for Research & Engineering

There is currently no strategic planning, operations management, or research and development (R&D) role stipulated in the Stock Piling Act for the DOD Chief Technology Officer (CTO)/Under Secretary of Defense for Research and Engineering (USD(R&E)).¹²⁴ The Defense Logistics Agency and Under Secretary of Defense for Acquisition and Sustainment (USD(A&S)) currently play central roles in NDS strategic planning and management of operations, including development of R&D projects pursuing alternative materials and domestic sources of supply. As part of these R&D efforts, DLA-SM currently contracts, for example, with the Army Research Laboratory to develop new refinement and production processes. The NDS Board of Directors is chaired by the Assistant Secretary of Defense for Industrial Base Policy within USD(A&S).

Congress could assess the costs and benefits of authorizing, encouraging, or requiring participation from the DOD CTO/USD(R&E) in aspects of NDS strategic planning, operations, or R&D efforts. Offices within the DOD CTO/USD(R&E) hierarchy generate insight into emerging trends in critical technology areas;¹²⁵ innovation in industrial processes;¹²⁶ trends in strategic and critical material composition in DOD weapons systems and munitions; strategic intelligence and analysis related to emerging adversaries;¹²⁷ cutting-edge supply chain mapping methodologies;¹²⁸ digital repositories of technical information; and access to "strategic capital," engaging vendors and bringing external investors into direct conversation with engineers developing possible new technical solutions to existing operational challenges.¹²⁹

Congress may consider to what extent CTO/USD(R&E) areas of specialization may add value to NDS strategic planning, operations, and R&D such as

• Current efforts to obtain strategic and critical materials from recycling and recovery operations.¹³⁰
• "Transportation, processing, refining, storage, security, maintenance, rotation, and disposal of materials."¹³¹
• Materials development and research, including alternative methods to convert stockpile materials into more suitable forms.¹³²
• Development of sources of supplies of agricultural materials; use of agricultural commodities (e.g., biotechnology or synthetic biology approaches).¹³³
• Approaches to grantmaking at academic institutions for purposes of assessing potential material substitutes or "more efficient methods of production" and material usage.¹³⁴

Congressional action is not necessarily required for increased CTO/USD R&E involvement in NDS planning and operations. The Stock Piling Act provides the Strategic and Critical Materials Board of Directors considerable flexibility in expanding Board membership, adopting by-laws, and considering matters assigned to it by the Board chair.¹³⁵ The Board itself may thus consider the costs and benefits of integrating DOD CTO/USD(R&E) into Board membership, initiatives, or execution of duties established in 50 U.S.C. §98h-1(c). Since the Board was established recently with the FY2023 NDAA (P.L. 117-263 §1411), Congress could consider periodically reviewing Board action to assess the extent of CTO/USD R&E involvement in NDS planning and operations.

Private sector stockpiles of strategic and critical materials

The Biden Administration has stated that increasing inventories in the National Defense Stockpile could "provide a model for the private sector" to increase inventories of raw materials for enhanced supply chain resilience, "while recognizing that private sector stockpiles and reserves can differ from government ones."¹³⁶ Congress may consider assessing incentive structures in the private sector that affect industry behavior vis-à-vis stockpiling strategic and critical materials.

Public policies and industry behaviors that reliably increase the domestic availability of strategic and critical materials during a national emergency may tend to reduce NDS requirements.¹³⁷ However, peacetime conditions may disincentivize emergency stockpiles of strategic and critical materials among competitive firms. Having too much raw material on hand at any given time may negatively affect a company's balance sheet and overall financial performance, imposing costs that could otherwise be redirected to more productive activity.

Supply chain volatility associated with the COVID-19 pandemic has triggered a rethinking of inventory management principles and supply chain risk management throughout the private sector.¹³⁸ To the extent that companies expect supply chain volatility in the future, they may opt for increased inventories of certain raw materials in anticipation of future supply shortages. However, as expected volatility decreases, safety stocks and emergency inventory levels may tend to decrease. ¹³⁹ When NDS planners generate stockpile requirements, they factor in an expectation that domestic private sector companies will likely procure additional stocks of strategic and critical materials during a national emergency "without government intervention."¹⁴⁰

Congress from 1984 to 2020 expressed its finding that "establishing critical materials reserves, both by the public and private sectors…represents one means of responding to the genuine risks to our economy and national defense from dependency on foreign sources."¹⁴¹ Since the 1980s, the Executive Office of the President has developed and maintained interagency organizations to pursue policies rooted in similar findings.¹⁴²

Congress may wish to assess the extent to which current federal policies incentivize increased domestic availability of strategic and critical materials prior to, during, or following a national emergency.

Nondisclosure agreements with industry for robust NDS planning

Congress could also consider assessing DOD's current practices for soliciting and utilizing microeconomic, firm-level data in generating National Defense Stockpile requirements.

In practice, NDS planning involves two levels of industry data, referred to as Study List 1 (SL1) and Study List 2 (SL2).¹⁴³ SL1 data are macroeconomic data from the U.S. Department of Commerce and U.S. Geological Survey, describing flows of natural resources, goods, and finances for approximately 150 materials affecting 350 economic sectors and industry classifications.¹⁴⁴ SL2 data are microeconomic, individual firm-level data provided by domestic companies that mine, process, or use strategic and critical materials. SL2 data typically include open source and proprietary information related to the supply chains of individual companies in critical infrastructure sectors.¹⁴⁵ To obtain SL2 data, the Institute for Defense Analyses (IDA) routinely signs nondisclosure agreements (NDAs) with such companies. In practice, many companies are hesitant to provide proprietary SL2 data to stockpile planners.¹⁴⁶

Congress may wish to assess to what extent relevant companies provide SL2 data for NDS planning, and whether there is currently a robust mechanism, either in statute or in current organizational practice, to solicit, obtain, secure, and fully utilize large quantities of SL2 data in biennial assessments of stockpile requirements. Congress could also assess incentive structures among individual firms to provide or not provide DOD with SL2 data.

Addressing material weaknesses in NDS financial audits

Ernst & Young's independent audit of DLA's FY2022 financial operations disclosed material weaknesses and significant deficiencies in several aspects of NDS resource management.¹⁴⁷

Auditors reported inadequate policies, procedures, and internal controls for: managing physical inventory counts; maintaining NDS Transaction Fund account balances with the Treasury; tracking amounts owed to third parties for contracted work; preparing official financial reports; and operating information systems containing NDS financial data.¹⁴⁸

Auditors provided a list of corrective actions to mitigate these material weaknesses, including design and implementation of controls over physical inventory counts and design and implementation of policies and procedures for the processing and posting of transactions to the correct fiscal period in the general ledger.¹⁴⁹

Congress could assess DLA's progress in implementing corrective actions to ensure ongoing operations and future NDS inventory decisions accurately reflect the value of assets and liabilities.

Appendix A. Title 50 U.S. Code §98, et. seq., Strategic and Critical Materials Stock Piling Act (as of October 13, 2023)

Active Executive Documents

Executive Order 12626 of February 25, 1988, designated the Secretary of Defense as National Defense Stockpile Manager and authorized the Secretary to "delegate such functions as he may deem appropriate, subject to his direction."

Executive Order 15051 of October 31, 2021, designated the Under Secretary of Defense for Acquisition and Sustainment "to have authority to release strategic and critical materials from the National Defense Stockpile" for "use, sale, or other disposition only when required for use, manufacture, or production for purpose of national defense." Prior to ordering any release, relevant executive departments and agencies must be consulted.

50 U.S.C. 98a. Congressional findings and declaration of purpose

(a) The Congress finds that the natural resources of the United States in certain strategic and critical materials are deficient or insufficiently developed to supply the military, industrial, and essential civilian needs of the United States for national defense.

(b) It is the purpose of this subchapter to provide for the acquisition and retention of stocks of certain strategic and critical materials and to encourage the conservation and development of sources of such materials within the United States and thereby to decrease and to preclude, when possible, a dangerous and costly dependence by the United States on foreign sources or a single point of failure for supplies of such materials in times of national emergency.

(c) The purpose of the National Defense Stockpile is to serve the interest of national defense only. The National Defense Stockpile is not to be used for economic or budgetary purposes

50 U.S.C. 98b. National Defense Stockpile

(a) Determination of materials; quantities

Subject to subsection (c), the President shall determine from time to time (1) which materials are strategic and critical materials for the purposes of this subchapter, and (2) the quality and quantity of each such material to be acquired for the purposes of this subchapter and the form in which each such material shall be acquired and stored. Such materials when acquired, together with the other materials described in section 98c of this title, shall constitute and be collectively known as the National Defense Stockpile (hereinafter in this subchapter referred to as the "stockpile").

(b) Guidelines for exercise of Presidential authority

The President shall make the determinations required to be made under subsection (a) on the basis of the principles stated in section 98a(c) of this title.

(c) Quantity change; notification to Congress

(1) The quantity of any material to be stockpiled under this subchapter, as in effect on September 30, 1987, may be changed only as provided in this subsection or as otherwise provided by law enacted after December 4, 1987.

(2) The President shall notify Congress in writing of any increase proposed to be made in the quantity of any material to be stockpiled that involves the acquisition of additional materials for the stockpile. The President may make the increase after the end of the 30-day period beginning on the date of the notification. The President shall include a full explanation and justification for the proposed increase with the notification.

50 U.S.C. 98c. Materials constituting the National Defense Stockpile

(a) Contents

The stockpile consists of the following materials:

(1) Materials acquired under this subchapter and contained in the national stockpile on July 29, 1979.

(2) Materials acquired under this subchapter after July 29, 1979.

(3) Materials in the supplemental stockpile established by section 1704(b) of Title 7 (as in effect from September 21, 1959, through December 31, 1966) on July 29, 1979.

(4) Materials acquired by the United States under the provisions of Section 4533 of this title and transferred to the stockpile by the President pursuant to subsection (f) of such section.

(5) Materials transferred to the United States under Section 2423 of Title 22 that have been determined to be strategic and critical materials for the purposes of this subchapter and that are allocated by the President under subsection (b) of such section for stockpiling in the stockpile.

(6) Materials acquired by the Commodity Credit Corporation and transferred to the stockpile under section 714b(h) of Title 15.

(7) Materials acquired by the Commodity Credit Corporation under paragraph (2) of Section 1743(a) of Title 7, and transferred to the stockpile under the third sentence of such section.

(8) Materials transferred to the stockpile by the President under paragraph (4) of Section 1743(a) of Title 7.

(9) Materials transferred to the stockpile under subsection (b).

(10) Materials transferred to the stockpile under subsection (c).

(b) Transfer and reimbursement

Notwithstanding any other provision of law, any material that (1) is under the control of any department or agency of the United States, (2) is determined by the head of such department or agency to be excess to its needs and responsibilities, and (3) is suitable for transfer or disposal through the stockpile shall be transferred to the stockpile. Any such transfer shall be made without reimbursement to such department or agency, but all costs required to effect such transfer shall be paid or reimbursed from funds appropriated to carry out this subchapter.

(c) Transfer and disposal

The Secretary of Defense shall determine whether materials are suitable for transfer to the stockpile under subsection (b), are suitable for disposal through the stockpile, and are uncontaminated.

50 U.S.C. 98d. Authority for stockpile operations

(a) Funds appropriated for acquisitions; proposed stockpile transactions; significant changes therein

(1) Except for acquisitions made under the authority of paragraph (3) of this section 1 or under the authority of paragraph (3) or (4) of Section 98e(a) of this title, no funds may be obligated or appropriated for acquisition of any material under this subchapter unless funds for such acquisition have been authorized by law. Funds appropriated for any acquisition of materials under this subchapter (and for transportation and other incidental expenses related to such acquisition) shall remain available until expended, unless otherwise provided in appropriation Acts.

(2) If for any fiscal year the President proposes (or Congress requires) a significant change in any stockpile transactions proposed in the Annual Materials and Operations Plan for such fiscal year after the Board submits the report under Section 98h–2(b)(2) of this title containing such plan, or a significant transaction not included in such plan, no amount may be obligated or expended for such transaction during such year until the President has submitted a full statement of the proposed transaction to the appropriate committees of Congress and a period of 45 days has passed from the date of the receipt of such statement by such committees.

(3) Using funds appropriated for acquisition of materials under this subchapter, the National Defense Stockpile Manager may acquire materials determined to be strategic and critical under Section 98b(a) of this title without regard to the requirement of the first sentence of paragraph (1) if the Stockpile Manager determines there is a shortfall of such materials in the stockpile.

(b) Disposal

Except for disposals made under the authority of paragraph (3), (4), or (5) 2 of Section 98e(a) of this title or under Section 98f(a) of this title, no disposal may be made from the stockpile unless such disposal, including the quantity of the material to be disposed of, has been specifically authorized by law.

(c) Authorization of appropriations

There is authorized to be appropriated such sums as may be necessary to provide for the transportation, processing, refining, storage, security, maintenance, rotation, and disposal of materials contained in or acquired for the stockpile. Funds appropriated for such purposes shall remain available until expended, unless otherwise provided in appropriations acts.

Department of Defense Readiness to Support Prolonged Conflict

P.L. 117-263, div. A, Title XIV, §1415, Dec. 23, 2022, 136 Stat. 2873, provided that

"(a) Studies Required.-

"(1) In general.-For each report required by Section 14(a) of the Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98h–5(a)), the National Defense Stockpile Manager shall-

"(A) conduct a study on the strategic materials required by the Department of Defense to sustain combat operations for not less than one year against the pacing threat identified in the National Defense Strategy; and

"(B) not later than January 15, 2024, submit to the congressional defense committees [Committees on Armed Services and Appropriations of the Senate and the House of Representatives] a report on such study in a classified form with an unclassified summary.

"(2) Energy storage and electronic components.-

"(A) In general.-The Under Secretary of Defense for Acquisition and Sustainment shall conduct a study of the energy storage and electronic components necessary to sustain combat operations for not less than one year against the pacing threat identified in the National Defense Strategy.

"(B) Report.-

"(i) In general.-Not later than January 15, 2024, the Under Secretary of Defense for Acquisition and Sustainment shall submit to the congressional defense committees a report on the study required under subparagraph (A).

"(ii) Form.-The report required by clause (i) shall be submitted in an unclassified form but may contain a classified annex.

"(iii) Elements.-The report required by clause (i) shall include the following:

"(I) A description of the specific number and type of energy storage and electronic components that the Department of Defense requires for the manufacture of munitions, combat support items, and weapon systems to sustain combat operations.

"(II) A description of the specific number and type of energy storage and electronic components that the Department of Defense requires to replenish or replace munitions, combat support items, and weapon systems that are lost or expended during the execution and sustainment of the relevant operational plan.

"(III) A description of supply chain vulnerabilities during the sustainment and execution period, such as sole sources of supply, war damage, and shipping interdiction.

"(IV) A description of supply chain vulnerabilities prior to the sustainment and execution period and the replenishment and replacement period, such as reliance on sole sources of supply, geographic proximity to strategic competitors, and diminishing manufacturing sources.

"(V) An identification of alternative sources of supply for energy and electronics components that are domestic or are from allies or partners of the United States.

"(VI) An assessment of the technical and economic feasibility of the preparedness and response programs of the Department of Defense, such as the National Defense Stockpile, the Warstopper program, war reserves and pre-positioned stocks, contract options, or other methods to mitigate postulated shortfalls to Department of Defense requirements.

"(VII) Any other such elements deemed appropriate by the Under Secretary of Defense for Acquisition and Sustainment.

"(C) Energy storage and electronic component defined.-In this paragraph, the term 'energy storage and electronic component' includes-

"(i) an item that operates by controlling the flow of electrons or other electrically charged particles in circuits, using interconnections of electrical devices such as resistors, inductors, capacitors, diodes, switches, transistors, or integrated circuits; and

"(ii) battery cells, battery modules, battery packs, and other related components related to batteries.

"(b) Acquisition Priority. -Consistent with the authority in Section 5 of the Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98d) and subject to the availability of appropriations, the National Defense Stockpile Manager shall acquire the highest priority strategic and critical materials identified in the report submitted under subsection (a)(1).

"(c) Strategic and Critical Materials Defined.-In this section, the term 'strategic and critical materials' has the meaning given such term in Section 12 of the Strategic and Critical Materials Stock Piling Act (50 U.S.C. 98h–3)."

50 U.S.C. 98e Stockpile management

(a) Presidential powers

The President shall-

(1) acquire the materials determined under Section 98b(a) of this title to be strategic and critical materials;

(2) provide for the proper storage, security, and maintenance of materials in the stockpile;

(3) provide for the upgrading, refining, or processing of any material in the stockpile (notwithstanding any intermediate stockpile quantity established for such material) when necessary to convert such material into a form more suitable for storage, subsequent disposition, and immediate use in a national emergency;

(4) provide for the rotation of any material in the stockpile when necessary to prevent deterioration or technological obsolescence of such material by replacement of such material with an equivalent quantity of substantially the same material or better material;

(5) provide for the appropriate recovery of any strategic and critical materials under Section 98b(a) of this title that may be available from excess materials made available for recovery purposes by other Federal agencies;

(6) subject to the notification required by subsection (d)(2), provide for the timely disposal of materials in the stockpile that (A) are excess to stockpile requirements, and (B) may cause a loss to the Government if allowed to deteriorate; and

(7) subject to the provisions of Section 98d(b) of this title, dispose of materials in the stockpile the disposal of which is specifically authorized by law.

(b) Federal procurement practices

Except as provided in subsections (c) and (d), acquisition of strategic and critical materials under this subchapter shall be made in accordance with established Federal procurement practices, and, except as provided in subsections (c) and (d) and in Section 98f(a) of this title, disposal of strategic and critical materials from the stockpile shall be made in accordance with the next sentence. To the maximum extent feasible-

(1) competitive procedures shall be used in the acquisition and disposal of such materials; and

(2) efforts shall be made in the acquisition and disposal of such materials to consult with producers and processors of such materials to avoid undue disruption of the usual markets of producers, processors, and consumers of such materials and to protect the United States against avoidable loss.

(c) Barter; use of stockpile materials as payment for expenses of acquiring, refining, processing, or rotating materials

(1) The President shall encourage the use of barter in the acquisition under subsection (a)(1) of strategic and critical materials for, and the disposal under subsection (a)(5) or (a)(6) of materials from, the stockpile when acquisition or disposal by barter is authorized by law and is practical and in the best interest of the United States.

(2) Materials in the stockpile (the disposition of which is authorized by paragraph (3) to finance the upgrading, refining, or processing of a material in the stockpile, or is otherwise authorized by law) shall be available for transfer at fair market value as payment for expenses (including transportation and other incidental expenses) of acquisition of materials, or of upgrading, refining, processing, or rotating materials, under this subchapter.

(3) Notwithstanding Section 98b(c) of this title or any other provision of law, whenever the President provides under subsection (a)(3) for the upgrading, refining, or processing of a material in the stockpile to convert that material into a form more suitable for storage, subsequent disposition, and immediate use in a national emergency, the President may barter a portion of the same material (or any other material in the stockpile that is authorized for disposal) to finance that upgrading, refining, or processing.

(4) To the extent otherwise authorized by law, property owned by the United States may be bartered for materials needed for the stockpile.

(d) Waiver; notification of proposed disposal of materials

(1) The President may waive the applicability of any provision of the first sentence of subsection (b) to any acquisition of material for, or disposal of material from, the stockpile. Whenever the President waives any such provision with respect to any such acquisition or disposal, or whenever the President determines that the application of paragraph (1) or (2) of such subsection to a particular acquisition or disposal is not feasible, the President shall notify the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives in writing of the proposed acquisition or disposal at least 45 days before any obligation of the United States is incurred in connection with such acquisition or disposal and shall include in such notification the reasons for not complying with any provision of such subsection.

(2) Materials in the stockpile may be disposed of under subsection (a)(5) only if such congressional committees are notified in writing of the proposed disposal at least 45 days before any obligation of the United States is incurred in connection with such disposal.

(e) Leasehold interests in property

The President may acquire leasehold interests in property, for periods not in excess of twenty years, for storage, security, and maintenance of materials in the stockpile.

(f) Loan of stockpile materials

The President may loan stockpile materials to the Department of Energy or the military departments if the President-

(1) has a reasonable assurance that stockpile materials of a similar or superior quantity and quality to the materials loaned will be returned to the stockpile or paid for;

(2) notifies the congressional defense committees (as defined in Section 101(a) of Title 10), in writing, not less than 30 days before making any such loan; and

(3) includes in the written notification under paragraph (2) sufficient support for the assurance described in paragraph (1).

50 U.S.C. 98e– 1. Transferred (to Section 98h-7 of this title)

50 U.S.C. 98f. Special Presidential disposal authority

(a) Materials in the stockpile may be released for use, sale, or other disposition-

(1) on the order of the President, at any time the President determines the release of such materials is required for purposes of the national defense;

(2) in time of war declared by the Congress or during a national emergency, on the order of any officer or employee of the United States designated by the President to have authority to issue disposal orders under this subsection, if such officer or employee determines that the release of such materials is required for purposes of the national defense; and

(3) on the order of the Under Secretary of Defense for Acquisition and Sustainment, if the President has designated the Under Secretary to have authority to issue release orders under this subsection and, in the case of any such order, if the Under Secretary determines that the release of such materials is required for use, manufacture, or production for purposes of national defense.

(b) Any order issued under subsection (a) shall be promptly reported by the President, or by the officer or employee issuing such order, in writing, to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives.

50 U.S.C. 98g. Materials development and research

(a) Development, mining, preparation, treatment, and utilization of ores and other mineral substances

(1) The President shall make scientific, technologic, and economic investigations concerning the development, mining, preparation, treatment, and utilization of ores and other mineral substances that (A) are found in the United States, or in its territories or possessions, (B) are essential to the national defense, industrial, and essential civilian needs of the United States, and (C) are found in known domestic sources in inadequate quantities or grades.

(2) Such investigations shall be carried out in order to-

(A) determine and develop new domestic sources of supply of such ores and mineral substances;

(B) devise new methods for the treatment and utilization of lower grade reserves of such ores and mineral substances; and

(C) develop substitutes for such essential ores and mineral products.

(3) Investigations under paragraph (1) may be carried out on public lands and, with the consent of the owner, on privately owned lands for the purpose of exploring and determining the extent and quality of deposits of such minerals, the most suitable methods of mining and beneficiating such minerals, and the cost at which the minerals or metals may be produced.

(b) Development of sources of supplies of agricultural materials; use of agricultural commodities for manufacture of materials

The President shall make scientific, technologic, and economic investigations of the feasibility of developing domestic sources of supplies of any agricultural material or for using agricultural commodities for the manufacture of any material determined pursuant to Section 98b(a) of this title to be a strategic and critical material or substitutes therefor.

(c) Development of sources of supply of other materials; development or use of alternative methods for refining or processing materials in stockpile

The President shall make scientific, technologic, and economic investigations concerning the feasibility of-

(1) developing domestic sources of supply of materials (other than materials referred to in subsections (a) and (b)) determined pursuant to Section 98b(a) of this title to be strategic and critical materials; and

(2) developing or using alternative methods for the refining or processing of a material in the stockpile so as to convert such material into a form more suitable for use during an emergency or for storage.

(d) Grants and contracts to encourage conservation of strategic and critical materials

The President shall encourage the conservation of domestic sources of any material determined pursuant to Section 98b(a) of this title to be a strategic and critical material by making grants or awarding contracts for research regarding the development of-

(1) substitutes for such material; or

(2) more efficient methods of production or use of such material.

50 U.S.C. 98h. National Defense Stockpile Transaction Fund

(a) Establishment

There is established in the Treasury of the United States a separate fund to be known as the National Defense Stockpile Transaction Fund (hereinafter in this section referred to as the "fund").

(b) Fund operations

(1) All moneys received from the sale of materials in the stockpile under paragraphs (5) and (6) of Section 98e(a) of this title shall be covered into the fund.

(2) Subject to Section 98d(a)(1) of this title, moneys covered into the fund under paragraph (1) are hereby made available (subject to such limitations as may be provided in appropriation Acts) for the following purposes:

(A) The acquisition, maintenance, and disposal of strategic and critical materials under Section 98e(a) of this title.

(B) Transportation, storage, and other incidental expenses related to such acquisition, maintenance, and disposal.

(C) Development of current specifications of stockpile materials and the upgrading of existing stockpile materials to meet current specifications (including transportation, when economical, related to such upgrading).

(D) Encouraging the appropriate conservation of strategic and critical materials.

(E) Testing and quality studies of stockpile materials.

(F) Studying future material and mobilization requirements for the stockpile.

(G) Activities authorized under section 98h–6 of this title.

(H) Contracting under competitive procedures for materials development and research to-

(i) improve the quality and availability of materials stockpiled from time to time in the stockpile; and

(ii) develop new materials for the stockpile.

(I) Improvement or rehabilitation of facilities, structures, and infrastructure needed to maintain the integrity of stockpile materials.

(J) Disposal of hazardous materials that are stored in the stockpile and authorized for disposal by law.

(K) Performance of environmental remediation, restoration, waste management, or compliance activities at locations of the stockpile that are required under a Federal law or are undertaken by the Government under an administrative decision or negotiated agreement.

(L) Pay of employees of the National Defense Stockpile program.

(M) Other expenses of the National Defense Stockpile program.

(3) Moneys in the fund shall remain available until expended.

(c) Moneys received from sale of materials being rotated or disposed of

All moneys received from the sale of materials being rotated under the provisions of Section 98e(a)(4) of this title or disposed of under Section 98f(a) of this title shall be covered into the fund and shall be available only for the acquisition of replacement materials.

(d) Effect of bartering

If, during a fiscal year, the National Defense Stockpile Manager barters materials in the stockpile for the purpose of acquiring, upgrading, refining, or processing other materials (or for services directly related to that purpose), the contract value of the materials so bartered shall-

(1) be applied toward the total value of materials that are authorized to be disposed of from the stockpile during that fiscal year;

(2) be treated as an acquisition for purposes of satisfying any requirement imposed on the National Defense Stockpile Manager to enter into obligations during that fiscal year under subsection (b)(2); and

(3) not increase or decrease the balance in the fund.

50 U.S.C. 98h-1. Strategic and Critical Materials Board of Directors

(a) Establishment

There is established a Strategic and Critical Materials Board of Directors (in this subchapter referred to as the "Board").

(b) Members

The Board shall be composed, at a minimum, of the following:

(1) The Assistant Secretary of Defense for Industrial Base Policy, who shall serve as chairman of the Board.

(2) One designee of each of the Secretary of Commerce, the Secretary of State, the Secretary of Energy, and the Secretary of the Interior.

(3) One designee of each of the chairman and ranking member of the Readiness Subcommittee of the House Committee on Armed Services.

(4) One designee of each of the chairman and ranking member of the Readiness Subcommittee of the Senate Committee on Armed Services.

(5) Four designees of the chairman of the Board, who shall have expertise relating to military affairs, defense procurement, production of strategic and critical materials, finance, or any other disciplines deemed necessary by the chairman to conduct the business of the Board.

(c) Duties of the Board

In addition to other matters assigned to it by the chairman, the Board shall conduct the following, without power of delegation:

(1) Adopt by-laws that ensure sufficient oversight, governance, and effectiveness of the National Defense Stockpile program.

(2) Elect or remove Board members.

(3) Advise the National Defense Stockpile Manager.

(4) Establish performance metrics and conduct an annual performance review of the National Defense Stockpile Manager.

(5) Set compensation for the National Defense Stockpile Manager.

(6) Review and approve the annual budget of the National Defense Stockpile program and conduct appropriate reviews of annual financial statements.

(7) Reallocate budget resources within the annual budget of the National Defense Stockpile program.

(8) Review and approve the Annual Materials and Operations Plan required by Section 98h–2(a)(2) of this title, including a review of the projected domestic and foreign economic effects of proposed actions to be taken under the Annual Materials and Operations Plan.

(9) Complete and submit the annual Board Report, in accordance with Section 98h–2(b)(2) of this title.

(10) Recommend to the Secretary of Defense-

(A) a strategy to ensure a secure supply of materials designated as critical to national security; and

(B) such other strategies as the Board considers appropriate to strengthen the industrial base with respect to materials critical to national security.

(d) Board meetings

The Board shall meet as determined necessary by the chairman but not less frequently than once every year to fulfill the duties described in subsection (c).

(e) Application of Federal Advisory Committee Act

Section 14 of the Federal Advisory Committee Act (5 U.S.C. App.) 1 shall not apply to the Board.

(f) Definitions

In this section:

Materials critical to national security

The term "materials critical to national security" means materials-

(A) upon which the production or sustainment of military equipment is dependent; and

(B) the supply of which could be restricted by actions or events outside the control of the Government of the United States.

(2) Military equipment

The term "

"military equipment" means equipment used directly by the Armed Forces to carry out military operations.

(3) Secure supply

The term "secure supply", with respect to a material, means the availability of a source or sources for the material, including the full supply chain for the material and components containing the material.

50 U.S.C. 98h-2. Reports

(a) Reports to the Board

The National Defense Stockpile Manager shall submit to the Board the following:

(1) Not later than 40 calendar days after the last day of each of the first three fiscal quarters in each fiscal year, unaudited financial statements and a Manager's Discussion and Analysis for the immediately preceding fiscal quarter.

(2) Not later than 60 calendar days after the conclusion of the fourth quarter of each fiscal year-

(A) audited financial statements and a Manager's Discussion and Analysis for the immediately preceding fiscal year; and

(B) an Annual Materials and Operations Plan for the forthcoming year.

(b) Reports to Congress

(1) Reports by National Defense Stockpile Manager

Not later than 90 days after the conclusion of the fourth quarter of each fiscal year, the National Defense Stockpile Manager shall submit to the congressional defense committees (as defined in Section 101(a) of Title 10) a report that shall include-

(A) information with respect to foreign and domestic purchases of materials for the stockpile during the preceding fiscal year;

(B) information with respect to the acquisition and disposal of materials under this subchapter by barter, during such fiscal year;

(C) information with respect to the activities by the National Defense Stockpile Manager to encourage the conservation, substitution, and development of strategic and critical materials;

(D) information with respect to the research and development activities conducted under Section 98g of this title;

(E) audited annual financial statements for the Strategic and Critical Materials Fund

(F) other pertinent information on the administration of this subchapter as will enable the Congress to evaluate the effectiveness of the program;

(G) details of all planned expenditures from the Strategic and Critical Materials Fund over the Future Years' Defense Program and anticipated receipts from proposed disposals of stockpile materials; and

(H) the report required by paragraph (2).

(2) Report by the Board

The Board shall prepare a written report to accompany the report required by paragraph (1) which shall include-

(A) the activities of the Board to carry out the duties listed in Section 98h–1(c) of this title; and

(B) the most recent Annual Materials and Operations Plan submitted under subsection (a)(2)(B).

50 U.S.C. 98h-3. Definitions

For the purposes of this subchapter:

(1) The term "strategic and critical materials" means materials that (A) would be needed to supply the military, industrial, and essential civilian needs of the United States during a national emergency, and (B) are not found or produced in the United States in sufficient quantities to meet such need.

(2) The term "national emergency" means a general declaration of emergency with respect to the national defense made by the President or by the Congress.

(3) The term "national technology and industrial base" has the meaning given such term in Section 2500 of Title 10.

50 U.S.C. 98h-4. Importation of strategic and critical materials

The President may not prohibit or regulate the importation into the United States of any material determined to be strategic and critical pursuant to the provisions of this subchapter, if such material is the product of any foreign country or area not listed in general note 3(b) of the Harmonized Tariff Schedule of the United States (19 U.S.C. 1202), for so long as the importation into the United States of material of that kind which is the product of a country or area listed in such general note is not prohibited by any provision of law.

50 U.S.C. 98h-5. Biennial report on stockpile requirements

(a) In general

Not later than January 15 of every other year, the Secretary of Defense shall submit to Congress a report on stockpile requirements. Each such report shall include-

(1) the Secretary's recommendations with respect to stockpile requirements; and

(2) the matters required under subsection (b).

(b) National emergency planning assumptions

Each report under this section shall set forth the national emergency planning assumptions used by the Secretary in making the Secretary's recommendations under subsection (a)(1) with respect to stockpile requirements. The Secretary shall base the national emergency planning assumptions on a military conflict scenario consistent with the scenario used by the Secretary in budgeting and defense planning purposes. The assumptions to be set forth include assumptions relating to each of the following:

(1) The length and intensity of the assumed military conflict.

(2) The military force structure to be mobilized.

(3) The losses anticipated from enemy action.

(4) The military, industrial, and essential civilian requirements to support the national emergency.

(5) The availability of supplies of strategic and critical materials from foreign sources during the mobilization period, the military conflict, and the subsequent period of replenishment, taking into consideration possible shipping losses.

(6) The domestic production of strategic and critical materials during the mobilization period, the military conflict, and the subsequent period of replenishment, taking into consideration possible shipping losses.

(7) Civilian austerity measures required during the mobilization period and military conflict.

(c) Period within which to replace or replenish materials

The stockpile requirements shall be based on those strategic and critical materials necessary for the United States to replenish or replace, within three years of the end of the military conflict scenario required under subsection (b), all munitions, combat support items, and weapons systems that would be required after such a military conflict.

(d) Effect of alternative mobilization periods

The Secretary shall also include in each report under this section an examination of the effect that alternative mobilization periods under the military conflict scenario required under subsection (b), as well as a range of other military conflict scenarios addressing potentially more serious threats to national security, would have on the Secretary's recommendations under subsection (a)(1) with respect to stockpile requirements.

(e) Plans of President

The President shall submit with each report under this section a statement of the plans of the President for meeting the recommendations of the Secretary set forth in the report.

(f) Briefings on shortfalls in stockpile

(1) Not later than March 1 each year, the National Defense Stockpile Manager shall provide to the congressional defense committees a briefing on strategic and critical materials that-

(A) are determined to be in shortfall in the most recent report on stockpile requirements submitted under subsection (a); and

(B) the acquisition or disposal of which is included in the Annual Materials and Operations Plan for the operation of the stockpile during the next fiscal year submitted under Section 98h–2(b) of this Title.

(2) Each briefing required by paragraph (1) shall include-

(A) a description of each material described in that paragraph, including the objective to be achieved if funding is provided, in whole or in part, for the acquisition of the material to remedy the shortfall;

(B) an estimate of additional amounts required to provide such funding, if any; and

(C) an assessment of the supply chain for each such material, including any assessment of any relevant risk in any such supply chain.

Appendix B. Unclassified Strategic and Critical Materials List

The following list of NDS inventories is taken from DOD's unclassified Strategic and Critical Materials 2023 Biennial Report on Stockpile Requirements, delivered to Congress on May 19, 2023. The inventories appear on pages 16 and 17 of the report. The list is current as of the end of FY2022 (September 30, 2022).