The 2021 National Defense Authorization Act marked another step in the ongoing attempt to untangle U.S. defense supply chains from strategic dependencies that could compromise national security. Nowhere is this more visible than in the field of rare earth elements (REEs). These critical minerals underpin everything from missile guidance systems to communications gear. And yet, for all their importance, the U.S. remains heavily reliant on imports—particularly from China—for both raw materials and downstream processing capacity. The NDAA’s 2021 provisions reflect the Pentagon’s mounting concern. Defense contractors, whether prime or Tier 1, are expected to adjust their sourcing and reporting practices accordingly.
The NDAA explicitly called on defense contractors to take more concrete steps to secure their supply chains. While some firms were already aware of the issue, the law’s language brought sharper focus to the operational requirements. At the heart of this is the need to build a clearer map of where critical minerals come from and how they move through processing stages before reaching U.S. assembly lines. This is no simple task. Supply chains for REEs are notoriously opaque, often involving layers of intermediaries and trading firms that mask the true origin or transformation site of the material. Yet clarity, imperfect as it may be, is what the Department of Defense is now demanding.
An obvious starting point for contractors is to work with open data resources already maintained by U.S. government agencies. The U.S. Geological Survey (USGS) provides one of the most comprehensive critical-minerals data sets publicly available. The USGS open reports offer granular insights into both domestic and international production sites, processing plants, and trade flows. The detail varies, of course. Not all facilities are documented to the same degree of specificity. But used thoughtfully, these data help contractors identify where key vulnerabilities might lie. Cross-referencing supplier lists against USGS maps can reveal potential over-reliance on specific regions or processors, even when those links might initially have seemed indirect.
One recommended method is to build a layered view of the supply chain that connects known sources of REE concentrate to downstream processing facilities, including separation plants and alloy manufacturers. Contractors can plot these nodes geographically and assess how much of their supply is tied, directly or indirectly, to regions with heightened strategic risk. Here, again, China tends to dominate the map. But identifying the specific facilities involved—not just the country of origin—allows for a more nuanced risk picture. This also aids in preparing documentation that satisfies Department of Defense inquiries under NDAA reporting requirements.
Beyond mapping, contractors are increasingly advised to cross-check their sourcing data with Defense Logistics Agency (DLA) procurement lists. The DLA has its own records of approved or preferred suppliers for critical materials, including REEs. By comparing company-level procurement records with the DLA’s lists, contractors can identify mismatches, gaps, or unintended exposure to supply nodes linked to China or other strategic competitors. This process is rarely straightforward. Supplier disclosure may be incomplete, or company records may not cleanly align with DLA categories. Nevertheless, persistence here pays dividends in building a credible supply-chain security file.
What many firms are now doing—or at least beginning to do—is formalizing this work into what some have termed an “ominous-risk watch” report. The idea is to create an annual submission for internal use, and ultimately for Pentagon review, that outlines identified risks, mitigation strategies, and ongoing gaps. Such reports typically include a combination of narrative explanation, supply chain maps, and data tables summarizing facility-level risks. They are not meant to provide perfect answers. Rather, they signal to the Department of Defense that the contractor is engaging with the problem in good faith and with a data-driven mindset.
A basic template for these reports might begin with an executive summary that highlights key concerns—such as percentage of REE supply tied to Chinese processing nodes or the existence of single-source dependencies for critical inputs. The body of the report would then walk through the methodology used to compile the data, noting reliance on USGS open data sets, DLA procurement records, and supplier self-disclosures. The inclusion of limitations and areas for further inquiry is not only acceptable but arguably necessary. A report that claims absolute clarity is, paradoxically, less likely to be taken seriously given the inherent complexity of these supply chains.
Firms are also encouraged to outline their mitigation actions. Have they sought alternative sources? Are they collaborating with domestic processing initiatives funded under other parts of the NDAA or related legislation? What steps are being taken to enhance supplier transparency? These details matter not only for compliance but for building a record of responsiveness that will be important in future contract evaluations.
While many defense contractors are already familiar with the broad strategic challenge posed by REE supply chains, the NDAA’s provisions effectively shift that awareness from the background to the operational foreground. What was once viewed as a policy-level concern has now become an item on the compliance and reporting checklist. The combination of public data sources, internal procurement records, and thoughtful documentation offers a practical path forward, even if no one should expect simple solutions any time soon.