The Department of Defense (DoD) is seeking innovative solutions through the Small Business Innovation Research (SBIR) program to develop smart contracts for Supply Chain Risk Management (SCRM) utilizing blockchain technology. The objective is to create an acquisition and sustainment contracting framework that enhances visibility into sub-tier vendors within the supply chain, thereby improving the resilience and reliability of defense-critical supply chains. This initiative is crucial for maintaining effective logistical support for weapon systems and ensuring the security of supply chains in a dynamic threat environment. Interested parties should note that the solicitation will open on January 8, 2025, and close on February 5, 2025, with further details available at the provided source link.

## Description

As noted in the February 2022 memorandum, &ldquo;Securing Defense-Critical Supply Chains An action plan developed in response to President Biden's Executive Order 14017&rdquo;; The Department of Defense (DoD) is aligning its priorities and capabilities to enhance our readiness. By modernizing our approach to supply chain resilience, DoD can deliver decisive advantages to our Warfighters in a dynamic threat landscape. In an effort to improve supply chain resilience and protect against material shortages, President Joseph R. Biden Jr. signed Executive Order (E.O.) 14017, America's Supply Chains. In response to the EO, this report provides DoD's assessment of defense critical supply chains in order to improve our capacity to defend the Nation [Ref 1].As stated in the SSP Director&rsquo;s Mission Priorities section of Sea Based Strategic Deterrence (SBSD) Director&rsquo;s Intent: &ldquo;Through programmatic excellence in shipboard sustainment and modernization programs across the Strategic Weapons System (SWS) subsystems and in Nuclear Weapons (NW) surety, and through diligent oversight of the logistical supply chains, SSP not only will maintain a credible and reliable weapons system, but will also continue unlocking new capabilities the warfighter can leverage to enhance strategic deterrence and act decisively should deterrence fail.&rdquo; A significant aspect in delivering and maintaining a credible and reliable weapon system is having a thorough understanding of our global supply chain. New concepts to improve visibility and responsiveness to address issues for sub-tier vendors within the global supply chain are necessary to ensure weapon system delivery. The implementation of smart contracts backed by blockchain technology can provide government with visibility into all sub-tier vendor activities. This can provide program managers with an understanding of where critical parts and technologies are coming from (around the world). Implementation of this technology provides a revolutionary increase in the government&rsquo;s ability to conduct Supply Chain Risk Management, Systems Security Engineering, and Program Protection Plans. The April 2024 Investopedia article &ldquo;What Are Smart Contracts on the Blockchain and How Do They Work?&rdquo; provides a high level description of smart contracts and blockchain technology [Ref 4]. It states, &ldquo;A smart contract is a self-executing program that automates the actions required in an agreement or contract. Once completed, the transactions are trackable and irreversible. The best way to envision a smart contract is to think of a vending machine&mdash;when you insert the correct amount of money and push an item's button, the program (the smart contract) activates the machine to dispense your chosen item. Smart contracts permit trusted transactions and agreements to be carried out among disparate, anonymous parties&hellip;&rdquo;.Work produced in Phase II may become classified. Note: The prospective contractor(s) must be U.S. owned and operated with no foreign influence as defined by 32 U.S.C. &sect; 2004.20 et seq., National Industrial Security Program Executive Agent and Operating Manual, unless acceptable mitigating procedures can and have been implemented and approved by the Defense Counterintelligence and Security Agency (DCSA) formerly Defense Security Service (DSS). The selected contractor must be able to acquire and maintain a secret level facility and Personnel Security Clearances. This will allow contractor personnel to perform on advanced phases of this project as set forth by DCSA and SSP in order to gain access to classified information pertaining to the national defense of the United States and its allies; this will be an inherent requirement. The selected company will be required to safeguard classified material during the advanced phases of this contract IAW the National Industrial Security Program Operating Manual (NISPOM), which can be found at Title 32, Part 2004.20 of the Code of Federal Regulations.

## Objective

Develop an acquisition and sustainment contracting framework to implement Smart Contracts for Supply Chain Risk Management (SCRM) (blockchain technology) for Strategic Systems Programs (SSP) . This technology can be applied to acquisition or sustainment programs across the DoD. This collaboration between government and industry will provide the government greater visibility of sub-tier vendors in the supply chain.

## Phase I

Provide a concept to incorporate smart contract (blockchain based) technology into Navy contracting and supply operations. This concept will be captured in a Word document that describes &ldquo;to-be&rdquo; business processes, potential technology solutions, and potential pilot industry partners for Phase II. This should also discuss integration of supply chain data into SCRM and related efforts and insights that may be gleaned to help the Government better understand industrial base capability, capacity constraints, risks, and opportunities. The concept should describe how this solution can provide: <ul><li> Manufacturing Visibility</li><li> Inventory Visibility</li><li> Logistics Visibility</li><li> Visibility into &ldquo;Nth Tier&rdquo; subcontract vendor information and associate parts/material delivery</li></ul>Perform data discovery, examination of supply chain challenges from both the Government and Vendor perspectives, operational use cases, and a governance mode.

## Phase II

Develop and deliver a prototype SCRM system for Smart Contracts that utilizes blockchain technology (immutable ledger) in order to achieve the visibility described in Phase I. Collaborate with Government, industry stakeholders, and active partners. The prototype will be evaluated on its ability to operate from a manager and end-user perspective, data security, and data analytics capabilities. This should include chosen technology solutions and agreed upon business practices. An additional deliverable will be a &ldquo;scalability assessment.&rdquo;It is probable that the work under this effort will be classified under Phase II (see Description section for details).

## Phase III: Dual Use Applications

Support the Navy in transitioning the technology to Navy use. Phase III should result in a small number of SSP contracts executed as Smart Contracts. These contracts will serve as use cases that will be managed and executed at multiple layers of the supply chain. Data analysis should provide information regarding all supply chain sources (company level information) and identify products/parts they are under contract to deliver. This information must be easily transferrable to other SCRM and Supply Chain Illumination tools in use by SSP and the Navy. Due to the sensitive nature of some contracts, it is expected that pricing data may not be maintained on the blockchain or will have very limited access. The Defense Information Systems Agency (DISA) will likely need to validate and accredit the new system.This technology can be applied to any industry (commercial or government) that is concerned with understanding and managing risks of sourcing/procurement of parts that end up in their products/platforms. All industries can benefit from having more clarity on sub-tier vendors.

Smart Contracts for Supply Chain Risk Management (SCRM)

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