Defense National Stockpile Center
The Defense National Stockpile Center is a field activity of the Defense Logistics Agency and has 11 staffed depots and 66 unstaffed depots worldwide. DNSC stores over 80 commodities with a market value of approximately $5 billion. Since 1992, they have generated over $2.2 billion in sales which goes back into military readiness accounts. The staffed depots are located in Scotia, N.Y.; Binghamton, N.Y.; Somerville, N.J.; Curtis Bay, Md.; Point Pleasant, W.Va.; Warren, Ohio; New Haven, Ind.; Hammond, Ind.; Baton Rouge, La.; Clearfield, Utah; and Stockton, Calif.
In 1997 the Defense Logistics Agency (DLA) began realigning designated missions and personnel to enduring DLA activities pursuant to recommendations by the BRAC Commission and related discretionary action plans. The plan would enclave Defense National Stockpile (DNSC) material at Letterkenny Army Depot, Chambersburg, PA, Seneca Army Depot, Romulus, NY, and Sierra Army Depot, Herlong, CA. Sell strategic materials and ores and return sites to the permitting military service at Savanna Army Depot, Savanna, IL, DDMT, and Naval Surface Warfare Center, Louisville, KY.
The National Stockpile operates under authority of the Strategic and Critical Materials Stockpiling Act (50 U.S.C. 98-h-2(a)). This act provides that strategic and critical materials are stockpiled in the interest of national defense to preclude a dangerous and costly dependence upon foreign sources of supply in times of national emergency. The Defense National Stockpile Center administers the storage, management, and disposal of the Nation's inventory of strategic and critical materials essential to the military and industrial requirements of the United States in times of national emergency.
The stockpile is a physical reserve of definite quantities of materials, owned by the United States government, stored mostly on government-owned property and in government warehouses. Currently, there are 68 different commodities stockpiled nationwide. It is an inventory of raw materials with a cash value. Today, that market value is approximately $3 Billion. These are recoverable assets owned by the people of the United States. In this sense, the stockpile acts like an insurance policy with an outlay return of many-folds over the original costs should the stockpile be used, and yet until used, it retains indefinite value (at current market value). It is a basic element and an integral part of the national defense structure. However, it is not solely a military element, but rather, it is intended for all essential civilian and military uses in times of emergencies. The function is closely linked to the whole arrangement of provisions for the national security relating to military and civilian requirement staking into account the formulation of DNSC objectives. There is a direct relationship with industrial mobilization planning with particular respect to the disposition of the stockpile in time of national emergency.
The National Stockpile was created shortly after World War II to acquire and store critical strategic materials for national defense purposes. Its primary mission was to protect the nation against a dangerous and costly dependence upon foreign sources of supply for critical materials in times of national emergency.
In the United States the concept of stockpiling materials for national defense dates back to World War One when shortages caused an imbalance in production schedules and delays in implementing programs (some would say that the idea of stockpiling for national defense dates back to the biblical story of Moses and the Israelites). By the end of World War One on 11 November 1918, the Army General staff had gotten the message concerning the need at least for including critical military materials in overall planning requirements. This led to development of a consolidated listing of 42 different materials, called the Harbord List, which the military found fundamentally critical in planning requirements. Later, the task of materials analysis passed to the Office of the Assistant Secretary of War, but with a broadened agenda dealing with more than just solving specific wartime shortage problems. It also encompassed programs and policies to expand materials resources, and looked at ways to improve the availability of materials coming from outside of the United States.
The first real initiative to establish a reserve inventory of critical, or strategic military materials began with passage of the Naval Appropriations Act of 1938. This legislation provided funds to procure certain materials. A year later, acting upon recommendations from the Army and Navy Munitions Board, Congress passed the Strategic Materials Act of 7 June 1939 (Public Law 76-117). Several other governmental agencies working in conjunction with the Army and Navy Munitions Board, had successfully anticipated such a move by Congress. The act allowed for the Army and Navy Munitions Board to set policy regarding what materials to stockpile, and provided for the expenditure of $70 Million, of a total authorization of $100 Million, for the purchase of such materials as rubber, tin, quartz crystals, and chromite. The Munitions Board had already established three separate lists of materials categorized under strategic, critical, and essential for wartime production. Materials gradation depended upon the degree of accessibility. Interestingly, midway through World War Two, this list served as the basis of policy for the formation of a postwar stockpile.
The need to procure materials escalated tremendously with the prospect looming of the United States becoming involved in World War Two. As a result, Congress passed additional legislation in 1940, giving the Reconstruction Finance Corporation (RFC) broad powers of authority to produce, acquire, and transport materials for national defense. Thus situated, most of the strategic materials procurement and other activities remained with the RFC’s Division of Stockpiling and Transportation throughout World War Two.
The United States began preparing for a postwar national strategic stockpile well before the war ended. The old Army and Navy Munitions Board policies received new stockpile definitions and guidelines based on the need for stockpiling. The Surplus Property Act of 1944 provided for additions to the Strategic Stockpile and also authorized the transfer of postwar surplus government stocks of minerals to the Stockpile. Furthermore, the act required the military services to report on the need for additional strategic stockpile materials, which they carried out in 1945. This led Congress to enact perhaps the most sweeping legislation ever associated with the Strategic Stockpile. On 23 July 1946, Congress passed the Strategic and Critical Materials Stock Piling Act (Public Law 520), which remains the basis for the current stockpiling law. This law (SCM) extended the need for stockpiling strategic materials beyond the war years and made it a permanent United States priority concerning national defense measures. Over the years this milestone legislation underwent amendments and expansions, and the National Defense Stockpile fell under different agencies for administration, but it remains an essential aspect of our national defense policy.
For a short time after World War Two, the strategic and critical materials stockpile program operated in the Purchase Branch of the Procurement Division, Treasury Department. During this time the stockpile program began to gradually elevate in importance and in 1947, the Procurement Division became the Bureau of Federal Supply. In July 1949, the Bureau of Federal Supply became part of the newly created General Services Administration (GSA). In December of that year the Bureau of Federal Supply took the new name of Federal Supply Service (FSS). Astonishingly the stockpile program never made it past this reorganization and the FSS dispersed its functions among the other organizational divisions.
With the build up for the Korean War, the stockpile program regained its previous momentum expanding to the point of becoming a separate and independent organization. GSA assigned the stockpile program to its newly created Emergency Procurement Service on 1 September 1950. This organization became the Defense Materials Service on 7 September 1956, with the responsibilities of managing not only the stockpile, but also the National Industrial Equipment Reserve Program, and the Civil Defense Emergency Program.
Between 1949 and 1988, the General Service Administration and Federal Emergency Management agency were responsible for the program. In 1988, the responsibility for the program was delegated to the Secretary of Defense who assigned the program to the Defense Logistics Agency (DLA) . The Defense National Stockpile Center (DNSC) was established within DLA to manage the program.
In 1992, Congress directed DNSC to sell the bulk of these commodities. Examples of some critical commodities are platinum, used for chemical catalyst applications including catalytic converters to treat automotive emissions, as well as in jewelry and dental restorations; germanium, used for detectors, fiber optic systems and infrared optics; and ferrochrome, a metal additive used in stainless steel and other specialized alloys.
The interagency National Defense Stockpile Market Impact Committee (MIC) provides expert advice to the Department of Defense National Stockpile Center (DNSC) on the projected domestic and foreign economic effects of all acquisitions and disposals of materials from the National Defense Stockpile (NDS) that are to be included in the Annual Materials Plan (AMP) submitted by the DNSC to Congress. This advice helps DNSC to meet its statutory obligation to limit undue market impact caused by material acquisitions or disposals while also protecting the government from avoidable loss. Formally established under the National Defense Authorization Act of FY 1993 (amending the Strategic and Critical Materials Stock Piling Act), the MIC is co-chaired by the Departments of Commerce and State and includes representatives from the Departments of Interior (Geological Survey), Treasury, Transportation, Agriculture, Energy, and Defense (DNSC), and the Federal Emergency Management Agency. Commerce is represented on the MIC by SIES staff with technical support provided by the Office of Materials, Machinery, and Chemicals of the Department’s International Trade Administration. These agency representatives bring substantial experience and expertise in mineral commodities markets to MIC deliberations. The NDS is a reserve of strategic and critical materials which are unavailable in the U.S. in sufficient quantities to meet anticipated national security emergency requirements.
DNSC is continuing their aggressive disposal program to meet inventory reduction targets. The type and quantity of each commodity chosen for sale in a fiscal year is based on statutory sales authority and on the Annual Material Plan (AMP), approved by the Market Impact Committee and submitted to Congress in accordance with section 11(b) of the Strategic and Critical Materials Stockpiling Act (50 U.S.C. 98h-2(b)). The revenue, however, is based on commodity market conditions. Volatility of the market can result in significant fluctuation of commodity prices and revenue to DNSC.
Historically the DNSC operates as an international commodity broker of strategic and critical materials for the US Government, primarily to meet national security requirements. It has the experience of over nearly half a century in buying, selling and warehousing industrial materials. The center, as a component of DOD's Defense Logistics Agency with a staff of less than 275 employees, sold more than $462 million of excess raw or semi-processed materials in Fiscal Year 1998. Sales efforts are expected to continue at a similar level to assist the Military Services program efforts. Proceeds will be determined by market responses to the Government's sales offerings of excess metals, ores, industrial minerals or materials, and medicinals.
The FY 1999 Strom Thurmond National Defense Authorization Act, 105-261, provides for the sale of commodities, depending on market conditions, in order to transfer specified target amounts to the Treasury and to the Secretary of HHS. In accordance with this statue, $102 million and $97.0 million will be transferred to the Treasury during FY 1999 and FY 2000, and $3.0 million and $22.0 million will be transferred to the Secretary of HHS during the same two fiscal years. In addition, this budget includes the transfer of $150 million per year to the Military Departments during FY 2000 and transfers to the U.S. Treasury in the amounts of $66.0M in FY 1999, and $46.0 million in FY 2000. This latter transfer is to offset the loss of receipts that would have been levied as a surcharge on Foreign Military Sales. Increasing concern over the environmental liability caused by DNSC’s aggressive sale of inventory requires action for a long-range disposal and cleanup of hazardous materials.
There are 4,408 metric tons of mercury safely stored in four secure locations in the United States. The DNSC is preparing an environmental impact statement (EIS) because the stockpiled mercury has been declared excess to national defense needs. The Mercury Management EIS will help identify alternatives for the management of the mercury and analyze potential impacts.
