We hope you enjoyed our Special Edition of A Capitol View where we shared exciting news about an SMI management transition! In our April issue, we hear from COO Ken Wetzel on the need for a more comprehensive strategy for our critical supply chains. We also include updates on the Biden jobs plan, budget, and earmarks.

SMI Announces Management Transition

Bill McCann Named President and CEO, Ken Wetzel Named COO
SMI’s Board of Directors announced on Monday, April 26 that Bill McCann has been appointed as President, Chief Executive Officer and Chairman of the Board. Ken Wetzel has been named the Chief Operating Officer of the company and has been appointed a Director of the company. Outgoing President and CEO, Glen Mandigo has assumed a Senior Vice President role at SMI and will remain on the company board.
Bill joined SMI in 2005. In 2008, he was named COO and joined the board of directors. Prior to SMI, he worked on Capitol Hill for ten years, primarily serving as a chief of staff and a national security adviser. Bill received a BA in Government from Georgetown University and an MBA from the Ross School of Business at the University of Michigan.
Ken joined SMI in 2014 and was named a Senior Vice President in 2019. Prior to SMI, he served in a number of national security roles within the Department of Defense’s Manufacturing & Industrial Base Policy office and the US Army at Picatinny Arsenal. Ken received a BS in Chemical Engineering from Villanova University and an MEng in Chemical Engineering from the Stevens Institute of Technology.
Bill and Ken both look forward to continuing SMI’s tradition of providing top-notch government relations services to our clients. Please find the press release here.

Supply Chain EO is a Good Start, but Periodic Reviews Necessary 

By Ken Wetzel
On February 24, 2021, The Biden Administration announced an Executive Order (EO) on America’s Supply Chains. The EO states “the United States needs resilient, diverse, and secure supply chains to ensure our economic prosperity and national security,” and calls on the Commerce, Energy, Defense, and Health and Human Services Secretaries to report on risks in the supply chains for various industries. These reports are to be submitted to the President within 100 days.
This administration policy is welcome news to most U.S. industry partners that supply critical items to the U.S. government, such as semiconductors, high-capacity batteries, active pharmaceutical ingredients, and strategic materials. For the defense industrial base, this EO also provides a one-year window to update the findings of EO 13806 (Assessing and Strengthening the Manufacturing and Defense Industrial Base Supply Chain Resiliency of the United States) and the Annual Industrial Capabilities Report.
Though it is encouraging to see the Biden Administration take a proactive approach to identifying industrial base vulnerabilities, the EO itself is quite ambitious with an aggressive timeline. It is questionable how much of this information is readily available to government analysts and how much of it will need to be mined from entangled and sometimes opaque supply chains. Even if the government can identify “single point[s] of failure, or limited resilience” for subcontractors, it is a massive undertaking to identify “the availability of substitutes or alternative sources for critical goods and materials.” The granularity and quality of the data that can be successfully gathered and meaningfully reported within one year is not promising. Equally concerning is whether the Executive Branch and Congress will be willing to initiate measures to counter current trends before the data is out-of-date and requires updating. Read more on our website here.

Biden Announces Infrastructure Bill
On March 31, President Biden announced a $2.3 trillion “once-in-a-generation” infrastructure plan called the “American Jobs Plan.”
The plan includes $650 billion for infrastructure at home including $111 billion for clean drinking water, $100 billion for high-speed broadband, $100 billion for electrical infrastructure, $213 billion for affordable and sustainable housing, $137 billion for public schools, early learning centers, and community colleges, and $28 billion for other programs.
The plan also includes $621 billion in transportation infrastructure including $115 billion for highways, bridges, and roads, $85 billion for public transit, $80 billion for passenger and freight rail, $174 billion for electric vehicles, $42 billion for airports, water transit, and ports, $45 billion for transportation inequities, $50 billion for infrastructure resilience, and $30 billion for other projects.
Additionally, the plan includes $180 billion for research and development, $300 billion for manufacturing and small business, and $100 billion for workforce development, totaling $680 billion. Specific programs include funding for the CHIPS Act, the Manufacturing Extensions Partnerships program, and more.
Furthermore, the plan includes $400 billion for home and community-based care for elderly and disabled people.
Alongside the American Jobs Plan, the Biden Administration is asking Congress to pass the “Made in America Tax Plan” which would implement tax changes including raising the corporate tax rate and closing loopholes. It is estimated to generate $2 trillion over the next 15 years.
Republicans criticized the plan, arguing that is expands the definition of “infrastructure” and is seeking to redefine it. Senate Minority Leader Mitch McConnell has called the plan a “Trojan horse” where Democrats have “thrown everything but the kitchen sink into it,” because it includes progressive policies that Democrats have wanted to advance for years under the guise of an “infrastructure bill.”
Earlier this week, Senate Republicans proposed a $568 billion, five-year infrastructure package as a counteroffer. Their plan focuses narrowly on traditional infrastructure projects and broadband access. The Republican plan would not result in higher taxes but would be fully paid for with user fees on electric vehicles and other items, unspent federal funds, and possible contributions from state and local governments. White House press secretary Jen Psaki called the Republican proposal a “good faith effort” and said that the President is willing to negotiate in the coming weeks.

Biden’s Proposed American Jobs Act Includes Investment in Pandemic Research & Response
In late March, President Biden introduced his American Jobs Plan to “create millions of good jobs, rebuild our country’s infrastructure, and position the United States to out-compete China.”
In his release, (detailed in an article above), Biden outlined a plan that would heavily invest in transportation infrastructure, housing, schooling, and federal building infrastructure, power and water infrastructure, digital infrastructure, and areas such as research and workforce development.
Of particular interest to SMI life science clients may be the plan’s commitment to invest $30 billion over 4 years for major investments in medical countermeasures manufacturing; research and development; and related biopreparedness and biosecurity, as well as an additional investment of $10 billion.
Investments may be used to:
  • shore up the nation’s Strategic National Stockpile,
  • accelerate the timeline to research, develop and field test therapeutics for emerging and future outbreaks,
  • accelerate response time by developing prototype vaccines through Phase I and II trials,
  • test technologies for the rapid scaling of vaccine production,
  • ensure sufficient production capacity in an emergency,
  • enhance U.S. infrastructure for biopreparedness and investments in biosafety and biosecurity,
  • train personnel for epidemic and pandemic response, and
  • onshore active pharmaceutical ingredients.
This investment would allow a major expansion of the nation’s research capabilities. “This massive investment will have a dramatic impact on U.S. science and its place as a leader in the world for innovation. There will be enormous opportunities for the development of transformative technology not just for the life sciences but also other greatly pressing needs, such as renewable energy,” says SMI’s Dr. Travis Taylor, who holds a PhD in Virology. 

Senate Appropriations Chair Patrick Leahy Releases Earmark Plan
On April 26, Senate Appropriations Chair Patrick Leahy released his plan to restore an overhauled and reformed version of earmarks that Senators can request on a bipartisan basis.
Reforms include those detailed in the House plan, such as capping earmarks to 1 percent of discretionary spending, banning money from going to for-profit entities, and requiring Senators to post their requests online for transparency. The plan sustains previous earmark requirements that do not allow earmarks to direct benefit Senators or their immediate family. Additionally, the Government Accountability Office will audit earmark requests.
Where the House plan limited Representatives to 10 requests, the Leahy plan does not appear to include a cap. Senate Democrats, along with some Republican appropriators, plan to move forward with earmarks.

White House Publishes FY22 “Skinny” Budget 
On April 9, the White House sent a copy of their topline discretionary funding request and policy priorities for FY22 to Congress. Overall, the discretionary request proposes $769 billion in non-defense discretionary funding in FY22, a 16 percent increase over the FY21 enacted level, and $753 billion for national defense programs, a 1.7 percent increase. The budget focuses on five key issues: (1) investing in public health, (2) creating an economy that works for all, (3) tackling the climate crisis, (4) advancing equity, and (5) restoring America’s global standing and confronting 21st century security challenges.
It is important to note that the discretionary spending caps imposed by the Budget Control Act of 2011 have expired, meaning there are no limits on discretionary spending unless Congress chooses to pass another law. This appears unlikely at this time.
The FY22 discretionary budget request for the DoD includes $715 billion. Notably, this request discontinues Overseas Contingency Operations (OCO) as a separate funding category. The OCO account provides additional budget authority to Congress to appropriate emergency funds in the case of war or conflict.
Base discretionary funding by Department is listed as follows:
  • Agriculture: 27.8 billion
  • Commerce: 11.4 billion
  • Defense: 715 billion
  • Education: 102.8 billion
  • Energy: 46.1 billion
  • Health and Human Services: 133.7 billion
  • Homeland Security: 52 billion
  • Housing and Urban Development: 68.7 billion
  • Interior: 17.4 billion
  • Justice: 35.2 billion
  • Labor: 14.2 billion
  • State and International Programs: 63.5 billion
  • Transportation: 25.6 billion
  • Treasury: 14.9 billion
  • Veterans Affairs: 113.1 billion
House Armed Service Chair Adam Smith warned on Thursday, April 22 that debates over annual defense policy and spending bills could “slip into the Fall” if the Biden administration doesn’t deliver its full budget to Congress by the middle of next month.
It is anticipated that the Administration will release its complete budget request including program level funding in early May. While top line numbers are expected to remain consistent with the request, details will likely change.