After receiving strong opposition from the defense industry and
the Pentagon, provisions that would have expanded the statutory
definition of “core logistics capabilities” have been
stricken from both the House and Senate versions of the Fiscal Year
2003 National Defense Authorization Act.
Under current law, “core-logistics capabilities” are
defined as those maintenance and repair activities that must be
performed at public depots by public employees. A provision in the
two bills would have expanded the definition to include acquisition
logistics, supply management, systems engineering, and modification
management—activities currently performed in large part by
industry.
In assessing the potential impact of the revised definition on
industry, the National Defense Industrial Association conducted
a survey of its membership. Based on data provided, under the proposed
definition, approximately 50,000 private sector jobs would have
been moved to the public depots. As part of its advocacy efforts,
NDIA shared this data with congressional and Pentagon officials.
Additionally, NDIA President Lawrence P. Farrell, Jr., spoke out
against the provisions in two high-profile interviews with Washington-based
news media.
Congressional leaders agreed to strike the provisions after extensive
consultation with the military services and the office of the secretary
of defense. The breakthrough came when the Defense Department pledged
to maintain the additional capabilities with an appropriate mix
of government personnel, contractor personnel and public-private
partnerships.
A second issue was largely a repeat of last year’s so-called
“Abercrombie Amendment.” Both houses considered amendments
to the 2003 bill that would have increased the number of public-private
competitions that the department must perform, while restricting
industry’s opportunity to win such competitions. The amendments
also would have required that the same number of jobs be subjected
to competition in the private and public sectors. The Senate amendment
was defeated 50-49. A similar amendment was offered but withdrawn
when the House Armed Services Committee drafted the bill.
NDIA opposed the amendments in letters to all members of both the
House and Senate Armed Services Committees, citing increased costs,
reduced flexibility for Defense Department managers and exacerbation
of the federal government’s personnel crisis. The Office of
Management and Budget also denounced the amendments, as did the
Pentagon, in letters to the two armed services committees from the
secretary of defense and assistant secretary of defense for legislative
affairs.
New Export Tax Regime
Shortly before breaking for the congressional August recess, House
Ways and Means Committee Chairman Bill Thomas (R-CA) introduced
H.R. 5095, the American Competitive and Corporate Accountability
Act of 2002. The bill, which would repeal the Extraterritorial Income
(ETI) Exclusion Act of 2000, was introduced, among other reasons,
to bring the United States into compliance with current World Trade
Organization (WTO) rules.
In January, a WTO appellate panel issued a report prohibiting the
United States from allowing U.S. exporters to exempt a portion of
their foreign-sales earnings from their taxes. The finding marks
the fourth time in the past two and one-half years that the WTO
has ruled against the United States on this issue, and there is
no further opportunity for Washington to appeal this latest ruling.
At press time, the WTO was meeting to determine the level of retaliatory
trade sanctions that the European Union can impose against U.S.
exports.
NDIA recommended, in one of its top issues for 2002, that the ETI
Exclusion Act not be repealed. Repealing ETI without replacing it
with comparable benefits, we argued, would severely disadvantage
U.S. exporters, making them less competitive in the international
marketplace with a potential for loss of jobs. Consequently, NDIA
will track the developments of this legislation and continue to
oppose its passage.
Prominent Speakers
NDIA’s Legislative Information Division has stepped up its
efforts to schedule appearances by influential members of Congress
and high-ranking Pentagon officials. Since January, speakers at
LID meetings have included:
• Sen. John Warner, R-Va., ranking Republican on the Senate
Armed Services Committee.
• Rep. Curt Weldon, R-Pa., chairman of the House Armed Service’s
Military Procurement Subcommittee.
• Rep. Jim Moran, D-Va., member of the House Defense Appropriations
Subcommittee.
• Reps. Mike Honda, D-Calif., and Joe Wilson, R-S.C.—both
freshmen.
Future speakers include Rep. Norm Dicks, D-Wash., who also serves
on the House Defense Appropriations Subcommittee. Pentagon speakers
have included:
• Buzz Hefti, principal deputy assistant secretary of defense
for legislative affairs.
• Larry Lanzillotta, principal deputy undersecretary of defense
and comptroller.
• Lisa Bronson, deputy undersecretary of defense for technology
security policy.
Navy-Industry International Dialogue
In late June, NDIA’s International Division, in cooperation
with the Navy International Programs Office, continued its sponsorship
of the Navy-Industry International Dialogue. This session examined
the Coast Guard’s Deepwater Program, with representatives
from the Coast Guard, the Navy, the contractors and the Commerce
Department. The program highlighted the international opportunities
for Deepwater programs.
Speakers included the Coast Guard Vice Commandant, Vice Adm. Thomas
Barrett, and the program executive officer for Deepwater, Rear Adm.
Patrick Stillman. The dialogue was the third time in recent months
that NDIA divisions have hosted Coast Guard-related events, reflecting
increasing interest in this important component of Homeland Security.