The DoD Policy Update No OEM Can Afford to Ignore
The U.S. Department of Defense recently issued DMSMS contract language guidance that mandates major changes to how OEMs handle their obsolescence and shortage case management. And the policy update comes with major financial consequences for unwary vendors.
Today, original equipment manufacturers (OEMs) are dealing with an unprecedented number of existential challenges. Trade tensions between the United States and China have significantly reduced worldwide foundry support. COVID-19 is still prompting massive production disruptions in the microelectronics industry. The global chip shortage has pushed average electronic component lead times to 25.8 weeks, the biggest gap between semiconductor order and delivery in five years.
While those risks are significant, companies also face a major challenge from an essential but little-known new government policy.
The Massive Financial Implications of DMSMS SD-26
DMSMS SD-26 lays out the language any Defense Department contract must include to enact contract standardization for all Armed Forces suppliers. It aims to reinforce military supply chains by ensuring contract manufacturers prioritize component obsolescence.
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