Industry Gets Reprieve in '03 Defense Bill. (Government Policy Notes)

By Stone, Ben; Thompson, Steve | National Defense, September 2002 | Go to article overview

Industry Gets Reprieve in '03 Defense Bill. (Government Policy Notes)


Stone, Ben, Thompson, Steve, National Defense


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 A similar amendment was offered but withdrawn when the House Armed Services Committee drafted the bill.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 Extrarerritorial 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 Stares from allowing U. …

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