When the House Armed Services Committee passed the 2004 National Defense Authorization
Act last May, it included a series of legislative requirements, which came to
be known as the “Buy America” provisions. Subsequently, these provisions
were approved by the House of Representatives and sent to a House-Senate Conference
Committee for final resolution.
Few, if any, issues in recent history have generated more reactions from a
wide variety of interest groups. From the onset, the requirements were opposed
strongly by the Departments of Defense, State and Commerce; Office of Management
and Budget; U.S. Trade Representative; European Union; several allied nations,
and a large portion of the U.S. defense industry.
Without delving deeply into the individual provisions themselves, it is hard
to understand how anyone could be against initiatives that would strengthen
the U.S. industrial base. It is a well-known fact that significant numbers of
U.S. manufacturing capabilities have been migrating overseas for a number of
years. There is little doubt that U.S. defense industrial base capabilities
have been part of that migration and that national security could be at risk
if critical parts and supplies became unavailable in times of emergency.
During Operation Iraqi Freedom, for example, a foreign company refused to ship
critical parts for one of this nation’s premiere weapons systems, because
the company did not agree with the U.S. decision to enter Iraq.
Much media attention was devoted to this unacceptable situation. Little notice,
however, was given to the fact that as soon as the Defense Department learned
what was going on, it identified an alternative U.S. supplier, and within 48
hours, the parts were on their way.
The “Buy America” stipulations were well intended and sought to
address real industrial base issues. The reason for the largely negative reaction
lies in how the House attempted to correct those issues.
The provisions took everyone by surprise. There were no public hearings or
other forums where the administration and representatives of the defense industry
could comment on the proposals. Without this prior consultation, many of the
provisions were drafted poorly. Many interested parties felt that the proposals
could cause significant harm to the U.S. defense industry.
Some would have required that all critical items in all weapons systems be
produced in the United States. If enacted into law, these requirements would
have violated existing trade agreements with many of America’s allies,
who produce a significant portion of the parts and supplies for U.S. military
services. Under the provisions, for example, the Joint Strike Fighter, which
is being developed with considerable participation by U.S. allies, could not
The legislation would have required the United States to establish some industrial
capabilities within its borders that currently do not exist, at a significant
new cost to the taxpayer. Further, many companies—especially small businesses—argued
that several of the proposals would increase their costs and record-keeping
requirements and discourage them from continuing to do business with the Defense
After nearly six months of negotiations and a presidential threat to veto the
bill, the conference committee agreed to modify the “Buy America”
language in the final measure, which the president signed into law in November.
The most positive result of the provisions is that they brought important issues
to the attention of Congress, the administration and U.S. industry. No one can
argue that the industrial base issues highlighted by the House passed bill are
not valid. What is needed, however, is a process to identify workable solutions
that include all stakeholders.
Those provisions that were approved provide a foundation to sustain a responsive,
effective and affordable U.S. defense industrial base. They require the department
Evaluate U.S. defense industrial base capabilities. The assessment is limited
to data currently available to the department.
- Identify essential defense items, based upon information currently provided
to the department.
- Establish a Defense Industrial Base Capabilities Fund, which is to be used
to enhance or reconstitute U.S. industrial ability to produce essential military
items. The bill, however, provides no money for the fund.
- Keep a list of unreliable foreign sources of defense items and not purchase
items from any country on the list. An unreliable source is defined as any foreign
country that has restricted the provision or sale of military goods or services
to the United States because of U.S. counter-terrorism or military operations.
The secretary of defense, however, could remove a country from the list if it
is deemed to be in the interest of national security.
- Establish an incentive program for major defense contractors to use U.S. machine
tools. In source selection, the department is instructed to exercise special
consideration for any contractor agreeing to purchase and use U.S. machine tools
and other capital equipment for major defense programs.
- Publish in the Federal Register information concerning the U.S. machine tool
- Study the adequacy of the industrial base to meet defense requirements for
Beryllium, a strong, lightweight metal alloy that is used in the aerospace,
nuclear and electronic industries.
The provisions that were approved provide exceptions to the Berry Amendment
for contingency operations and other urgent situations. Also exempted are waste
and byproducts of cotton and wool fiber, which are used in the production of
propellants and explosives, and ball and roller bearings, which are contained
in systems and components supplied by U.S. allies.
The Berry Amendment—named for its author, Rep. Marion Berry, D-Ariz.—requires
that certain products bought for the military services be made in the United
States of entirely U.S. materials.
In addition, the law makes clear that the “Buy America” provisions
do not apply if they are found to be inconsistent with U.S. obligations under
current or future trade agreements.