Congress quietly revises 'Buy America' rule for Defense materials

Much to the surprise of the Defense Department's legion of industry suppliers, Congress last week approved legislation that would give them some relief from heartburn-inducing restrictions regulating the amount of domestic metal content in the U.S. military's weapons systems.

The fiscal 2008 defense authorization bill, which President Bush is expected to sign into law, revises language in last year's defense bill that stipulated that all "specialty metals," including titanium, zirconium and certain steel alloys, in U.S. defense hardware come from domestic sources.

The provision is a relatively obscure one in the sweeping policy measure. But it is almost certain to have significant long-term effects on the defense industry's ability to deliver equipment, such as vehicles and aircraft, to the military.

With fervent "Buy America" heavy hitters, including House Armed Services ranking member Duncan Hunter, R-Calif., behind last year's law, many in the defense industry were resigned to living with the domestic-content restrictions a little while longer.

But it became apparent this year that the restrictions weren't working.

The specialty metals industry complained that the Defense Department had found a way to work around them by using waivers allowed by last year's law.

Meanwhile, defense suppliers cried that it had become too difficult and too costly to comply with the law's requirements. Both sides of the polarizing "Buy America" debate agreed that the law simply was getting impossible to live with.

"You can't bend the laws of physics; it's like ordering me to get taller," quipped House Armed Services Air and Land Forces Subcommittee Chairman Neil Abercrombie, D-Hawaii.

Defense suppliers had to track the origins for every specialty metal in their products -- an arduous and expensive task, they said.

Often hit the hardest were firms that sell mainly in the commercial market, forcing them to weigh whether their limited defense business was worth the headaches associated with last year's law.

One subcontractor on Boeing's massive C-17 Globemaster III cargo plane learned at the last minute that some of the parts it had provided were from foreign sources, John Douglass, the retiring president of the Aerospace Industries Association, recounted in an interview this fall.

The subcontractor ultimately had to charter a jet and fly several engineers to the plane's assembly site to replace "maybe $10 worth of nuts and bolts" before Boeing could deliver the C-17 to the military, he said.

Chris Myers, the Washington manager for Caterpillar Inc., a largely commercial firm that also sells engines and other equipment to the Defense Department, said this fall that executives were doing a cost-benefit analysis of their military business in light of the specialty metals law.

In an e-mailed statement last week, Caterpillar praised the new language, which the company believes will "streamline the compliance process."

Bill Greenwalt, deputy undersecretary of Defense for industrial policy, said he is still reviewing the new legislation, but noted, "The problem with the earlier law is that it doesn't recognize that the department's industrial base is highly dependent upon commercial vendors."

"At the end of the day, I don't think anybody wants to see the Department of Defense unable to take products," Greenwalt added.

To deal with last year's law, the Pentagon issued a broad waiver exempting all fasteners, a major portion of the specialty metals business.

That move drew immediate concerns among U.S. metal manufacturers, who feared the department's work-around was the beginning of a slippery slope toward the gutting of last year's law.

The recently approved FY08 defense bill puts less focus on the waiver process and includes more specific exemptions that leave less wiggle room for the Pentagon while at the same time giving defense suppliers more breathing space.

It closely resembles language pushed by the Senate and the defense industry last year, but ultimately shot down by House lawmakers.

Supporters of "Buy America" laws called the new language a compromise that still reaches their overarching goals of supporting domestic metals suppliers.

Rep. Robin Hayes, R-N.C., a senior member of the House Armed Services Committee and advocate of last year's law, said the intent of the new provision is to "make it realistic, make it practical, make it as flexible as we can."

Still, several industry sources said they were surprised with the outcome of this fall's conference negotiations.

The House originally tried to expand last year's restrictions by tightening the rules and provided little, if any, new relief for defense suppliers while giving greater protection to U.S. specialty metals manufacturers.

Some said they believed the final language came about because Hunter was on the presidential campaign trail and often absent during negotiations.

"Mr. Hunter was otherwise occupied running for president," Abercrombie said. "Buy America" restrictions "did not have the same prominence" in the House-Senate conference this year, he said.

But Hunter -- and congressional aides on both sides of the aisle -- said he was very involved with crafting the new provision, which he touted in an interview as a way to give defense suppliers some relief while still protecting the domestic specialty metals sector.

"I put this package together at the behest of the specialty metals industry that wanted to accommodate the industrial base," Hunter said.

He acknowledged concerns that last year's law might have been "too complicated" and "couldn't be complied with."

The specialty metals industry, meanwhile, is still reviewing the conference to determine how it will affect their sector.

"The specialty metals industry is studying the conference report," said Jeff Green, a former House Armed Services aide who runs a lobbying firm representing several small defense contractors, including metal producers.

Larry Lasoff, who represents the Specialty Steel Industry of North America, likewise said he is still sorting through the language.

"What I see so far is there seems to be real effort here by Congress to achieve some fair balance between the need for flexibility and also the need to preserve the integrity of the law," Lasoff said.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

    Download
  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download
  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

    Download
  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.

    Download

When you download a report, your information may be shared with the underwriters of that document.