Government Executive - Authors - Amy Svitak

Pentagon completes draft criteria for 2005 base closings

Amy Svitak — Fri, 19 Dec 2003 00:00:00 -0500

The draft list was sent to the Federal Register Friday and is expected to be published Monday, according to a Pentagon spokesman, which would trigger a 30-day public comment period.

The final list of criteria must be published and transmitted to the House and Senate Armed Services committees by Feb. 16. The list of draft criteria are defined by military value and other considerations, and include:

The current and future mission capabilities and the impact on operational readiness of the Defense Department's total force, including the impact on joint warfighting, training, and readiness.
The availability and condition of land, facilities and associated airspace -- including training areas suitable for maneuver by ground, naval, or air forces throughout diversity of climate and terrain areas and staging areas for the use of the Armed Forces in homeland defense missions -- at both existing and potential receiving locations.
The ability to accommodate contingency, mobilization, and future total force requirements at both existing and potential receiving locations to support operations and training.
The cost of operations and the manpower implications.
The extent and timing of potential costs and savings, including the number of years, beginning with the date of completion of the closure or realignment, for the savings to exceed the costs.
The economic impact on existing communities in the vicinity of military installations.
The ability of both the existing and potential receiving communities' infrastructure to support forces, missions, and personnel.
The environmental impact, including the impact of costs related to potential environmental restoration, waste management, and environmental compliance activities.

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Lawmakers challenge Austrian sidearms purchase for Iraq

Amy Svitak and Richard H.P. Sia — Fri, 12 Dec 2003 00:00:00 -0500

At least three lawmakers, including House Armed Services Chairman Duncan Hunter, R-Calif., have launched separate inquiries into what they believe is a sole-source contract awarded by the U.S.-led Coalition Provisional Authority in Iraq to Austrian gun manufacturer Glock. In a Dec. 3 letter to Ruben Jeffery, executive director of the CPA's Washington division, Hunter expressed his concern and questioned whether U.S. handgun manufacturers that supply U.S. police and military personnel were considered in the bidding.

"I feel that since the U.S. taxpayer is paying the largest burden for the reconstruction efforts in Iraq, U.S. companies, and the U.S. taxpayers they employ, should benefit from these dollars," wrote Hunter.

Glock, which maintains a North American headquarters in Smyrna, Ga., has manufactured handguns in Austria since the 1980s. The $19 million contract for 50,000 Glock Model 19 sidearms, with an option to purchase an additional 50,000 handguns, was awarded late this summer, several U.S. industry sources told CongressDaily. A company official in Smyrna confirmed that Glocks were selected for Iraqi security forces, but otherwise would not comment. A Glock attorney in Smyrna failed to return repeated telephone inquiries made in recent weeks. Hunter asked in his letter whether the Glock award was sole-sourced or competitively bid, and requested a list of companies that submitted quotes under the CPA's solicitation in the event that multiple sources were considered. He also questioned whether the CPA plans any more weapons purchases in 2004, and asked how such future procurements will be handled. A Pentagon spokesman for the Coalition Provisional Authority in Washington was unable to comment on Hunter's letter by presstime. But a committee spokesman said the chairman had yet to receive Jeffery's response.

In a Nov. 25 letter, Rep. Jeb Bradley, R-N.H., expressed similar concerns with Defense Secretary Rumsfeld. Bradley visited Iraq recently as part of a congressional delegation comprised of members of the House Small Business Committee interested in the reconstruction process and the competitive participation of U.S. companies for contracts.

"It would appear that the procurement process was not sufficiently open," Bradley wrote upon his return, adding that a lack of bidders might have artificially inflated the cost of the firearms.

Bradley asserted that SigArms, a Swiss firearms company with a manufacturing facility in his district, was not aware of the CPA's contract solicitation. "A representative of SigArms informed me that the company routinely monitors the the CPA Web site and was still unaware of the pending purchase and bidding procedure," Bradley said. A spokesman said Bradley had not yet received a response from Rumsfeld.

Rep. J.D. Hayworth, R-Ariz., whose district is home to the venerable firearms giant Smith & Wesson, directed his questions to Secretary of State Powell, asking in a Sept. 25 letter "why the order was made to a foreign manufacturer without consideration of any American manufacturers." U.S. industry sources said Rep. Richard Neal, D-Mass., has received complaints about the Glock purchases from Smith & Wesson, which runs a law enforcement training academy in his district. Neal's office was unable to comment by presstime. In addition, aides to House Small Business Chairman Don Manzullo, R-Illinois, who strongly favors limiting Iraq reconstruction contracts to U.S. firms, have been aware of the firearms deal for several weeks. Manzullo recently sought an explanation for the Pentagon's decision to outfit Iraqi police with Russian-made AK-47 automatic rifles and is likely to broaden his inquiry to include the Glock handguns.

Firearms companies with U.S. factories have been frustrated in their attempts to learn details from the CPA about the Glock contract, according to industry sources. Some congressional aides said they understood the CPA may have considered as many as eight companies for the handgun contract, but that U.S. suppliers apparently were either passed over or absent entirely from the solicitation process. Bob Scott, Smith & Wesson's president and board chairman, lamented the contract award and the the CPA's failure to respond to his company's interest in the solicitation.

"As a U.S. taxpayer and a U.S. manufacturer, I am greatly offended that my tax dollars are being used to buy foreign weapons for the Iraqis when there were U.S. companies that could have supplied that product," Scott told CongressDaily last week week.

But other industry sources suggested that the CPA may not have purchased the weapons directly from Glock, but through a U.S. middleman named Doug Kiesler, a firearms wholesaler based in Jeffersonville, Ind. Kiesler did not return telephone inquiries, and Mark Barnes, a Washington-based firearms lobbyist who provides regulatory counsel to Kiesler's police supply company, said he could not confirm Kiesler's involvement with the solicitation. He referred media questions to the CPA, but acknowledged that the contract was awarded competitively to an U.S. firm.

"An American company was required to provide goods and services, and an American company did," Barnes said. "It was appropriately awarded and appropriately filled."

In addition to the weapons contract, the CPA allegedly awarded a separate contract for 50,000 holsters designed for Glock handguns, according to U.S. industry sources. Tom Marx, law enforcement marketing manager at Uncle Mike's Holsters in Oregon City, Ore., confirmed that his company was involved with the contract, but said the award was actually handled by a U.S. wholesaler, and that the wholesaler was likely Kiesler.

Congressional aides familiar with the issue said the efforts to contact the CPA regarding the contract had proved difficult. One aide said the CPA's response to inquiries regarding the contract revealed that Iraqi funds, rather than U.S.-appropriated tax dollars, may have been used to pay for the handgun contract. Others observed that the CPA is under significant pressure to hastily equip new Iraqi military and police forces, a factor that could preclude its ability to rely solely on competitive procurement practices.

Nonetheless, these aides are still hoping to learn more about how Glock ended up with the CPA award, and are anxious to learn more about Kiesler's role in the deal. Earlier this week the CPA posted on its Web site a Dec. 5 decree from the Defense Department that some countries would be excluded from bidding on prime contracts in Iraq. Included was a list of countries deemed eligible to bid on the $18.6 billion in U.S-funded prime contracts for reconstruction projects in Iraq. Austria was not included on the list.

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Democrats unveil plan to increase troop strength

Amy Svitak — Wed, 10 Dec 2003 00:00:00 -0500

Rep. Ellen Tauscher, D-Calif., introduced legislation Monday that would increase Army troop levels from 482,400 to 522,400, Air Force from 359,300 to 388,000, and Marines from 175,000 to 190,000. The bill is co-sponsored by 25 House Democrats, including House Armed Services ranking member Ike Skelton, D-Mo., and Defense Appropriations Subcommittee ranking member John Murtha, D-Pa.

The issue could come to a head next year if Tauscher and other Democrats garner Republican backing for the measure. During a telephone news conference Tuesday, Tauscher and Skelton told reporters they expect bipartisan support for the measure when Congress reconvenes in January.

"You will see a bipartisan effort toward these goals, and we'll have testimony to back this up," Skelton said.

Although Tauscher and others said they are frustrated by what they see as a lack of majority attention to the issue, House Armed Services Committee Chairman Duncan Hunter, R-Calif., has raised the subject publicly on several occasions, according to a committee spokesman. Hunter has long favored an increase in end strength, the spokesman said, adding that the chairman opposed end-strength cuts during the 1990s when the Army's 18 divisions were whittled down to 10, and Air Force wings were cut nearly in half, from 24 to 13.

"He has directly discussed this with President Bush and [Defense] Secretary [Donald] Rumsfeld," the spokesman said.

Historically, Rumsfeld has opposed the idea of increasing troop numbers, arguing repeatedly that added personnel would be very expensive over the long term, and that measures should instead be taken to reduce demands on the force.

Last year the House Armed Services Committee, then chaired by the late Rep. Bob Stump, R-Ariz., passed the annual defense authorization bill with a provision to increase end-strength across the services, including the National Guard and Reserves, by a total of 12,552 troops. The Congressional Budget Office said the increase would cost over $1 billion per year.

At that time, each service asked for increases in end-strength, according to a Dec. 6, 2002, issue brief by the Congressional Research Service on defense spending. Conferees deleted the House-approved increases and agreed instead to allow "the secretary of Defense to increase end-strength by up to 3 percent above the authorized level," according to the issue brief. The existing law had allowed a 2 percent increase.

This year, a failed Senate amendment to the president's fiscal 2004 Iraq supplemental would have boosted troop levels by 10,000. Rumsfeld opposed the amendment, introduced by Sen. Jack Reed, D-R.I.

In the 2004 defense authorization bill, House and Senate conferees authorized an increase in Army active-duty end strength by 2,400 above the president's budget request, with $68 million in additional funding to support the increase, according to the House Armed Services Committee spokesman.

Tauscher and Skelton said they plan to engage Hunter and other Republican members when Congress returns in January. "We're in a different environment now," Tauscher said. "The debate is changing."

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'Losers' in 2004 base funding could be vulnerable to closure

Amy Svitak and Richard H.P. Sia — Tue, 09 Dec 2003 00:00:00 -0500

So far, the Pentagon is not saying which facilities are most likely to get the ax -- although Raymond DuBois, deputy undersecretary of Defense for installations and environment, has lamented the Washington area's excess capacity in the past and suggested how it might be put to better use in the future.

"We have now -- very large military installations here in the Washington area. We also have an enormous amount of leased space in the Washington metropolitan area," DuBois said at a news briefing late last year. "Can we better utilize the military installations, the military real property assets owned by the services, and reduce the expense of leased space?"

Bolling was one of many casualties of the fiscal 2004 appropriations process, failing to garner any new construction funds that might deflect scrutiny next fiscal year, when the 2005 Base Realignment and Closure Commission decides which facilities to shut down. President Bush sought $9.3 million this year for an adjudication facility at Bolling in his budget request, but the House nixed the funds in the conference for the military construction spending bill, which now awaits his signature.

Vandenberg Air Force Base in California and several Army National Guard centers -- three alone in Alabama -- also failed to get funding from conferees, despite presidential requests for multimillion-dollar upgrades. (For a complete database ranking allocations of fiscal 2004 construction funds by facility, click here.) As for Bolling -- a relatively small Air Force installation situated in a densely populated urban area -- several analysts see it as an obvious choice for closure. While it houses the Defense Intelligence Agency, the Air Force headquarters building, a ceremonial air wing, band and honor guard, these analysts say other area facilities, such as the Washington Navy Yard or Maryland's much larger Andrews Air Force Base, could take on these missions in a realignment.

The 2004 spending bill also left Moody Air Force Base in Georgia vulnerable to a closure decision. In 2001, Rep. Sanford Bishop, D-Ga., added $6.9 million to the House version of the military construction bill to build a C-130 maintenance hangar there. The effort failed in conference with the Senate but has been revised since then. Two attempts were made this year in the Senate to add $7.6 million for the base to the 2004 Defense appropriations bill and the military construction bill.

Both add-ons failed in conference, leaving Moody without any construction funds -- not even family housing money. But community groups remain hopeful, saying the base, home to the 347th Rescue Wing -- the only such wing in the Air Force -- is well-positioned to avoid closure. This is partly because the Air Force Special Operations Command, whose vice commander is a former member of that unit, controls it.

Another facility absent from the 2004 spending bill was Hanscom Air Force Base in Massachusetts. It has survived earlier closure rounds but was omitted from the president's budget and both House and Senate versions of the spending measure. That may have helped spur state officials to launch a campaign last month to save the base and hire a retired Air Force general as a consultant.

A state development agency called MassDevelopment is lobbying to acquire adjacent land in hopes of attracting a high-tech tenant that might make the base too valuable to close. The agency also hopes to influence the Pentagon as it develops criteria, due at the end of this month, for BRAC decision making. Its aim is to give science and technology facilities like Hanscom a higher profile in the Pentagon's evolving BRAC process.

Vandenberg Air Force Base in southern California also was denied 2004 military construction funds. President Bush sought $16.5 million to build a consolidated fitness center there, but the Senate eliminated the requested funds in conference.

The base houses the Air Force Space Command and the 30th Space Wing. It could take on the service's Space and Missile Systems Center now at Los Angeles Air Force Base if that base were to close. The Los Angeles base is located in an expensive section of Los Angeles County, and analysts consider it an obvious choice for closure, since it boasts no actual space or missile facilities.

But a Senate add-on, giving the Los Angeles base $5 million for a "main gate complex," survived the conference, possibly helping safeguard the installation from the BRAC process.

Another major southern California facility -- Edwards Air Force Base, known for its test pilot school -- won an infusion of nearly $26.4 million for new construction in the final spending bill.

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Winners in military construction bill hope to stave off base closures

Amy Svitak and Richard H.P. Sia — Mon, 08 Dec 2003 00:00:00 -0500

In the scramble for military construction funds a year before the 2005 Base Realignment and Closure Commission is expected to cut as much as 25 percent of excess domestic base infrastructure, facilities in Alaska, Hawaii and Texas fared exceptionally well, while some in Alabama, California and Georgia did not.

An analysis by CongressDaily of funding allocations in the military construction bill shows bases with high-priority missions -- for example, Hawaii's Schofield Barracks, home of one of the Army's new Stryker brigades -- among those receiving the most federal funds. Rapid reaction forces at Fort Drum, N.Y., home of the Army's 10th Mountain Division, and Fort Bragg, N.C., headquarters of the 82nd Airborne Division and XVIII Airborne Corps, were among the big winners.

In addition, Virginia's sprawling Norfolk Naval Base and the Navy's sole recruit boot camp at Great Lakes Naval Training Center, north of Chicago, ranked high on the allocation list.

Other facilities, such as Shaw Air Force Base in South Carolina and the Blount Island Marine Corps maritime prepositioning facility in Florida, grabbed a sizable amount of money, thanks to well-organized lobbying efforts by groups seeking to protect them from the 2005 closing round, the analysis shows. (For a complete database ranking allocations of fiscal 2004 construction funds by facility, click here.) Lawmakers, prodded by local officials and lobbyists retained by community groups, added millions to the construction bill in hopes of shielding the bases from the Pentagon's ax. But the Defense Department insisted such efforts to protect them would not work.

"All installations are going to be judged equally," said Raymond DuBois, the Pentagon's former deputy undersecretary for installations and environment, last December. "You must approach this in a comprehensive and objective fashion. All installations are on the table."

Maybe not, said Chris Hellman, director of the Project on Military Spending Oversight, a Washington-based watchdog group.

"You can't BRAC-proof a base, even with new construction ... but it doesn't hurt," Hellman said. "And just because there is a BRAC round looming, that doesn't mean you put construction projects on hold, either."

The Blount Island facility, for example, garnered a hefty $115.7 million in 2004 funds for land acquisition. Part of the funds will allow the Navy to buy 137 acres of undeveloped property and a restrictive-use easement on another 133 acres of developed land.

The deal between the Navy and the Jacksonville Port Authority, negotiated with support from Florida Democratic Sens. Bill Nelson and Bob Graham, along with Reps. Ander Crenshaw, R-Fla., and Corrine Brown, D-Fla., could help ensure the Marine Corps' long-term use of Blount Island.

These funds, along with $30 million in congressional add-ons to the bill, are a likely boon to Florida Gov. Jeb Bush's recently formed task force to help save the state's 21 military installations and three unified commands. During the past two BRAC rounds, Florida lost its Cecil Field Naval Air Station, the largest military installation in the Jacksonville area.

A smaller, but no less important, amount of money -- $26.3 million -- is earmarked in the bill for Edwards Air Force Base in California, for the first phase of a complex for the military's next-generation, joint-strike fighter and a House add-on of a new base operations facility. A coalition of local governments and businesses near the base traveled to Washington last spring to lobby for help in protecting Edwards from the 2005 BRAC.

Fort Dix, the venerable New Jersey Army base that has barely survived past closure rounds, received a House add-on of $6.4 million for construction of an urban assault course and a major conference center. The base lately has served as a major processing facility for reserve forces bound for Iraq and Afghanistan.

Funds to improve mission-specific infrastructure and upgrade base housing are the most helpful, Hellman said. The Pentagon has pledged to solve the military's substandard housing woes, giving installations with new or improved living quarters a leg up. Other bases could benefit from new construction allowing them to take on old missions from closed facilities, he said.

"Unlike rounds in the 1990s, we're not going to see missions going away," Hellman said. "We'll see more consolidation; and if they close a facility, they'll probably move it to a new one, so any new construction is going to be positive in that regard."

Shaw Air Force Base, for example, received an $8.5 million congressional add-on to pay for a deployment-processing center. Shaw was a potential candidate for the ax during the 1995 BRAC round, but it is home to the 20th Fighter Wing with three F-16 fighter squadrons. Airmen regularly deploy from this medium-sized base to others around the world, including those in the Persian Gulf.

Local governments near Shaw hope the passage of land-use ordinances to limit encroachment also will protect the base from shutdown. While the Air Force is now planning to reduce its overall number of fighter squadrons, an overseas fighter wing could be moved to Shaw, further protecting it from the budget ax.

But Hellman said the best way for a local community to shelter a base from the next BRAC round is through planning.

"The people that intrigue me are the ones that are looking at what the community can do to make the base a better match," he said. "They can't affect what goes on inside the base, but they may be improving highway access to bases for, say, mobility centers; and that's going to be something that the military is going to look at."

For example, the state of Texas authorized $250 million in bonds in September for communities to do just that type of work, "which makes a lot more sense than hiring a lobbyist," Hellman said.

Mississippi is also taking this approach. Three of the state's installations -- Columbus and Keesler Air Force bases and the naval reserve facility at Pascagoula -- won $16.7 million in congressional add-ons to the administration's $26.3 million Military Construction request for that state.

While Democratic Rep. Gene Taylor has carefully overseen Mississippi from Washington, the state is working locally to protect its military assets, recently establishing authority for local communities to borrow up to $300 million annually for base-related improvements.

Tomorrow: A Look At The Losers.

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Defense transformation leader suggests improvements

Amy Svitak — Wed, 03 Dec 2003 00:00:00 -0500

Cebrowski, speaking Wednesday at a breakfast address at the IFPA-Fletcher conference on military transformation, said there are a number of combat capabilities that, if not pursued, "will result in regret at some future date."

For example, although the Defense Department spends hundreds of billions of dollars annually, "it only spends about $50 million a year on non-lethal [weapons]," said Cebrowski, who directs the Pentagon's Office of Force Transformation. "What this means is that soldiers at checkpoints have to act in a binary mode, if you will, applying lethal force or accepting intolerable risk. We should be able to do better by our soldiers and provide another, broader choice."

Other areas include directed and re-directed energy weapons, which can be used for both lethal and non-lethal purposes -- including lasers, communications and sensing. Research efforts are under way, but are not funded at levels that will allow the department to keep pace with technological advances, he said.

Maneuver is another area that deserves more attention, Cebrowski said. "We need to have operational maneuver from the sea and strategic distances as part of our national capabilities," he said, adding that the concept of sea-basing is of growing interest to the department. He also raised the issue of mobility in combat and the need to advance new technologies to keep pace with the evolution of information technology on the battlefield.

Urban operations also need more attention, Cebrowski said. He said he believes there is more to operating in urban settings than mere combat. "We're not talking about taking a city, we're certainly not talking about destroying a city. What we're talking about is moving into an urban environment and keeping the social structure, the economic structure, the political institutions up and running, which is a somewhat different approach to urban warfare," he said.

Intelligence is also ripe for change, Cebrowski said. Today, electronic transmissions collected daily greatly overwhelm the individuals available to analyze them. It might be possible to ignore some intelligence collection, and possibly even triage it in an automated fashion, he said. Automating the analysis itself is also an option, although technological limitations could hinder that effort.

"We are going to become increasingly sensitive to the powers of intelligence and surveillance, and we're going to position ourselves to reference these things," he said.

Cebrowski also said improvements are needed in logistics, noting that during the rush to Baghdad, Iraq, the military's advance outpaced logistical communications and transportation. Logistics must be adaptable to the rapidly changing needs of battlefield commanders and must be jointly done so needed material can be drawn by any type of unit from a common pool, he said.

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Boeing fires former Pentagon official involved in tanker lease deal

Amy Svitak — Mon, 24 Nov 2003 00:00:00 -0500

The company's chief financial officer, Michael Sears, also was dismissed for his role in hiring Druyun to work as vice president and general manager of Boeing's Missile Defense Systems unit, according to a company statement.

Sears is said to have violated company policies by communicating directly and indirectly with Druyun about future employment when she had not disqualified herself from acting in her official Air Force capacity on matters involving Boeing, the company said. In addition, an internally initiated review found both attempted to conceal their misconduct.

"Compelling evidence of this misconduct by Mr. Sears and Ms. Druyun came to light over the last two weeks," Boeing Chairman Philip Condit said. "Upon review of the facts, our board of directors determined that immediate dismissal of both individuals for cause was the appropriate course of action."

Druyun has come under scrutiny recently for her alleged role in Boeing's massive lobbying effort to secure the multi-billion dollar tanker lease. Senate Commerce Committee Chairman John McCain, R-Ariz., a senior Armed Services Committee member and outspoken critic of the deal, obtained from Boeing thousands of internal e-mail exchanges, including some that could implicate Druyun for allegedly mishandling proprietary information belonging to Airbus, Boeing's top European competitor in the global aerospace market.

In addition, Druyun has come under fire in recent media reports that revealed Druyun's daughter worked for Boeing in St. Louis, and that Druyun had sold her house to a Boeing executive in the Washington area.

Boeing has made a concerted effort recently to improve its tarnished credibility on several fronts, including the Druyun allegations and its suspension from bidding on military satellite contracts as a result of unethical business practices. The company has retained former Sen. Warren Rudman, R-N.H., to review Boeing's ethics programs, Condit said in the release, adding that one of Rudman's tasks is to examine Boeing's "procedures and practices on hiring government employees to ensure this type of incident never happens again."

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Intelligence reauthorization bill retools information capabilities

Amy Svitak — Fri, 21 Nov 2003 00:00:00 -0500

The bill would provide full support for the intelligence community's efforts in the war on terrorism and focus attention on the need to enhance human intelligence capabilities and tools, according to a summary by the House Intelligence Committee.

The bill would authorize more resources to improve analytical depth in all areas of intelligence, and increase analytical capacity to process, exploit, and disseminate collected intelligence, the committee said.

The bill addresses the need to improve government information sharing, one of the principal findings of a congressional inquiry into the events leading up to the terrorist attacks of Sept. 11, 2001. A GAO report in April found that the government still lacked any standardized or centralized method to monitor suspected terrorists.

The bill establishes a Bureau of Intelligence and Analysis within the Treasury Department, to be headed by an assistant secretary for intelligence and analysis, to learn more about financial support for terrorism.

And it would require the director of central intelligence to report on lessons learned as a result of military operations in Iraq.

The bill also would extend authority for the use of funds designated for intelligence and related purposes for counter-drug activities in Colombia, and would also fund counter-terrorism activities there in fiscal 2004.

Also included were provisions allowing limited immunity from tort liability to special police officers of the CIA and the National Security Agency. It authorizes limited liability for some agents and personnel ceilings for intelligence divisions.

A controversial provision opposed by the administration that would give the Defense Department authority to review CIA and other intelligence agencies' measurement and signature intelligence -- or MASINT -- programs survived the conference, based on conference language.

Its would give equal authority to both the Defense secretary and the director of central intelligence to oversee "basic research on sensors into the measurement and signatures intelligence systems of the United States." However, it also makes the "director of the Defense Intelligence Agency's Directorate for MASINT and Technical Collection" the point man for the effort.

It was not immediately clear how the White House would react to the language. However, an aide to House Intelligence Committee Chairman Porter Goss, R-Fla., said Thursday that the chairman remarked recently that MASINT is an important element of comprehensive intelligence coverage, and that while little is known about it, the unfamiliarity works to the U.S. government's advantage given the type of enemy now attacking Americans and U.S. interests here and abroad.

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McCain puts Pentagon on notice about tanker purchase

Amy Svitak — Thu, 20 Nov 2003 00:00:00 -0500

The plan is to execute any contracts for the planes by the end of 2003.

In a Nov. 20 letter to Wynne, who is the president's choice to fill the Pentagon's top civilian acquisition slot, McCain reminded him of a statement made during Wynne's confirmation hearing Tuesday, regarding new language authorizing the tanker acquisition in the fiscal 2004 defense authorization bill. That language would allow the Air Force to lease up to 20 tankers and to buy no more than 80.

Some lawmakers and senior Pentagon officials have suggested the new law would allow the Air Force to delay paying for the 80 aircraft until they are delivered. But in response to McCain's questions during the hearing, Wynne had indicated that the language "requires payment at the time of order" and that the Defense Department will proceed in accordance with the law, McCain noted.

During the hearing, McCain referred to a Nov. 5 letter from Deputy Defense Secretary Paul Wolfowitz that suggested the Pentagon will wait to request budget authority for acquiring the tankers until after Boeing delivers the aircraft "and, thereby, reduce anticipated savings by about half," McCain wrote. "I am pleased that the DoD will in fact not do so."

McCain noted that a recent Congressional Budget Office estimate of the acquisition approach mandated in the new authorizing statute could save as much as $5.3 billion, compared to the Air Force's original proposal to lease 100 tankers. In his letter, McCain asked Wynne to ensure compliance with the law's Title 10 requirements that call for 30 days written notice to the congressional defense committees of proposed contract and cancellation ceilings that exceed $100 million. He also requested a draft of the final contracts before they are executed -- something he has been seeking since late July.

McCain asked Wynne to respond by next Wednesday if he does not intend to provide a copy of the contracts.

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Senators warn Pentagon against flouting air tanker requirements

Amy Svitak — Thu, 13 Nov 2003 00:00:00 -0500

But on Wednesday, senators continued to wrangle with top Pentagon officials and House members over exactly what the new tanker legislation meant.

Under the authorizing language, the Air Force would lease no more than 20 Boeing 767 tankers and purchase as many as 80 aircraft through annual appropriations.

The language represents the culmination of weeks of negotiation between Senate Armed Services Chairman John Warner, R-Va., ranking member Carl Levin, D-Mich., and Commerce Chairman John McCain, R-Ariz., to reach a compromise on the Air Force's original-and more costly-proposal to lease all 100 tankers.

However, Warner, McCain and others worry that the Pentagon will disregard the authorizing language and continue to pursue the original plan, as indicated in a Nov. 5 letter to the House and Senate Armed Services committees from Deputy Defense Secretary Paul Wolfowitz.

In his letter, Wolfowitz suggests the compromise does not require the Air Force to seek funding each year to pay for the purchase of the 80 aircraft before placing orders for the planes.

Under this approach, anticipated savings from the compromise would be cut nearly in half, based on preliminary CBO estimates, McCain said in a colloquy submitted for the record when the Senate approved the authorization by a 95-3 vote.

"Unfortunately, I have every reason to believe that the Air Force will proceed in this manner, which fundamentally belies the compromise proposal," McCain said.

While the Wolfowitz letter on its own poses little threat to any authorizing statute, a handful of House members late last week submitted a colloquy of their own that referred to the Wolfowitz memo, potentially conveying a congressional intent not agreed to during the defense authorization conference, Senate aides told CongressDaily.

According to the text of the House colloquy, Armed Services Chairman Duncan Hunter, R-Calif., and Reps. Norman Dicks, D-Wash., and Todd Tiahrt, R-Kan., stated that the defense authorization conferees relied largely on the Wolfowitz letter in coming to an agreement.

They also asserted that the language authorized a multi-year procurement under a single contract that would not require the Air Force to have the full budget authority needed to purchase an aircraft before placing an order.

In response, McCain, Warner, Budget Chairman Don Nickles, R-Okla., and Governmental Affairs Financial Management Subcommittee Chairman Peter Fitzgerald, R-Ill, submitted three colloquies of their own Wednesday in an effort to set the legislative record straight.

Contrary to the House colloquy, the compromise detailed in the authorizing language "does not endorse or codify any such agreement" to allow the Air Force to pay for the aircraft on delivery, according to Warner.

McCain added it would be an approach that "could be very costly and could dramatically slash the savings that this compromise intends to provide-an outcome that is unacceptable."

What the conference report language does allow is acquisition of all 100 tankers under two separate contracts.

The report also calls on the Pentagon to obtain budget authority before it orders the construction of any aircraft it intends to buy and to make progress payments that will be credited toward the final purchase price of those tankers, a plan that Warner and McCain say they expect to save the government $5.3 billion when compared to the Air Force's original lease proposal.

This differs from Wolfowitz's suggestion that the Air Force intends to pay for the tankers upon delivery, presumably under the terms of the original lease authorization. Instead of obtaining funding in advance and making progress payments during construction, construction would be paid for with money borrowed in the private market at an additional cost of $7.4 million per aircraft.

Another concern is that the Air Force will proceed with the acquisition under the currently proposed lease but not bother to renegotiate the price of the aircraft to exclude lease-specific costs for the 80 planes purchased through more traditional acquisition methods, costs that McCain estimates to be as high as $5.5 million per plane.

In approving the bill, the Senate sent the $401.3 billion bill to President Bush. Other provisions in the measure give the Defense Department more flexibility in assigning its civilian workers.

The bill also orders enforcement of environmental laws relaxed for military operations.

The conference report is $1.5 billion higher than the spending sought by Bush. The house approved the conference report on Nov. 7.

One provision sought by veterans would address penalties disabled veterans believe they suffer under government policies that reduce their military pensions by the amount they receive in disability pay.

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McCain presses for inquiry on Boeing tanker lease deal

Amy Svitak — Tue, 11 Nov 2003 00:00:00 -0500

In a letter sent Monday to the company's parent company, Citigroup, McCain asked Chief Executive Officer Charles Prince to produce a series of documents that he hopes will provide an accurate accounting of any hidden lease costs in an agreement negotiated earlier this year between Boeing and the Air Force for the lease of 100 tankers. A compromise altered that agreement in the fiscal 2004 defense authorization conference report to allow for the lease of only 20 aircraft. But McCain is concerned that the costs related to the lease may be applied to the remaining 80 tankers, which were authorized in the conference report to be purchased through the more traditional procurement process, a McCain aide told CongressDaily.

Under the terms of the original leasing arrangement, Boeing and the Air Force negotiated a price of $131 million per plane plus more than $7 million each to cover construction costs, bringing the total to $138.4 million. This was significantly more than the $120.7 million price tag determined earlier this year in a study conducted by the Institute for Defense Analyses, a nongovernmental research organization that performs studies for the Pentagon. McCain, an outspoken critic of the 100-plane lease, has been investigating the deal for months and has concluded that the pricing arrangement reached between Boeing and the Air Force includes $5.5 million per plane in lease-unique costs that should not be applied to any planned acquisition of the tanker aircraft through purchases, the aide said.

McCain called on the Pentagon to shed some light on the justification behind these costs in a Sept. 11 letter to Defense Secretary Donald Rumsfeld, in which he requested any e-mail exchanges or other records between Boeing and two top Defense Department officials-acting acquisition chief Michael Wynne and Air Force Secretary James Roche-that might reveal "when, how or why the decision was made to use the $138.4 million figure." And in a Sept. 4 letter, Senate Armed Services Chairman John Warner. R-Va., called on Rumsfeld to explain the Air Force's decision "to pay $10.3 million per aircraft more" than the $120.7 million price determined by IDA. But in an October memo to McCain from Deputy Defense Secretary Paul Wolfowitz, McCain's call for internal records related to Wynne and Roche was rebuffed, and aides say Warner's request for cost data related to the lease has not been addressed.

Now McCain is asking Citigroup to hand over any draft or final contract documents between the Air Force's so-called special purpose entity, established to finance the lease of Boeing's tanker aircraft, and holders of any securities issued. In addition, McCain also called for any draft or final contract agreements between the special purpose entity and Boeing, the Air Force and the trustee, as well as any draft or final prospectuses, placement memorandums or records related to the proposal. McCain asked Citigroup to hand over the information by Nov. 17. A receptionist at Citigroup's public relations office said that a request by CongressDaily for a comment could not be met today because of the Veterans Day holiday.

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Conferees authorize $400 billion for Defense programs

Amy Svitak — Fri, 07 Nov 2003 00:00:00 -0500

The House passed the conference report Friday morning on a 362-40 vote. The Senate is expected to act on the measure next week.

The bill includes $74.2 billion for procurement, $63.4 billion for research and development, and $114.4 billion in funding for operations and maintenance.

Highlights of the conference resolution include provisions intended to strengthen the U.S. defense industrial base in a number of ways, including using existing Pentagon databases to report levels of foreign procurement and the market sectors they affect, along with the elimination of foreign sources of supply that fail to deliver military systems, parts and components as a result of political opposition to U.S. counterterrorism or military operations.

The provisions call on the Defense secretary to identify all critical components and essential U.S. capabilities necessary to produce key major military weapons systems, and to create a Defense Industrial Base Capabilities Fund to foster U.S. production of parts and materials critical to the operation and performance of military systems. One provision would create an incentive program to encourage U.S. defense contractors to use U.S.-made machine tools to get special preferences from the Pentagon in contracting.

Following a news conference Friday, House Armed Services Committee Chairman Duncan Hunter, R-Calif., said the provisions will help ensure reliable domestic sources of weapons and equipment for the U.S. military. He also said the legislation is not intended to harm defense cooperation with U.S. allies who have harshly criticized Hunter's "Buy American" proposals.

"They're not being punished," Hunter said, adding that he has had constructive discussions with British officials and others regarding his industrial base concerns.

Hunter was especially pleased with the removal of what he referred to as a "poison pill" included in the Senate version of the bill that would have exempted countries engaged in bilateral Declaration of Principles agreements with the United States from most current and future Buy American legislation.

The legislation also allows for the Pentagon to implement a merit-based management system for civilian personnel, a hotly contested issue that came under fire by Senate conferees. And it addresses the Pentagon's desire to eliminate unnecessary infrastructure through the base realignment and closure (BRAC) process.

Hunter's committee noted in a news release that while current BRAC law requires the Defense secretary to assess future threats, it does not specifically require the military to retain the infrastructure necessary to support operational surges to meet those threats.

"Therefore, the conferees required the secretary of Defense to evaluate the probable threats to national security and determine the surge requirements necessary to meet those threats," the statement said. In addition, the conferees required the secretary to use this determination throughout the BRAC process.

The conference report also provides for concurrent receipt for military veterans whose retirement benefits were, until now, offset by the amount of disability coverage for which they were eligible. In addition, military personnel will receive a 4.15 percent average increase in base pay, a reduction in the average amount of housing expenses, extension of special pay and bonuses for active duty personnel through Dec. 31, 2004, an increase in the family separation allowance for service members with dependents, and an increase in the rate of special pay for those subject to hostile fire and imminent danger.

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Senate conferees mull defense authorization agreement

Amy Svitak — Thu, 06 Nov 2003 00:00:00 -0500

Sources said the Senate participants were considering a House proposal to remove a section in the Senate-passed bill that would have exempted countries engaged in bilateral Declaration of Principles agreements with the United States from so-called "Buy American" laws. Senate conferees were also reported to be considering modifications to, or removal of, a section included in an Office of Management and Budget compromise proposal on tough "Buy American" language included in the House version of the bill that would require the Pentagon's major weapons systems to be manufactured using domestic components.

OMB's proposed language on the section, released to lawmakers last week, had already largely neutralized the tough domestic-source restrictions from House Armed Services Chairman Duncan Hunter, R-Calif., and allowed for waivers for countries that hold Memoranda of Understanding or other bilateral trade agreements with the United States, or which contributed to U.S.-led military operations in Afghanistan and Iraq.

In another defense matter, Senate Armed Services Chairman John Warner, R-Va., praised the Bush administration and fellow committee members today for hammering out a compromise on the acquisition of Air Force aerial refueling tankers. Warner said the Senate proposal to authorize the Air Force to lease up to 20 Boeing 767 aircraft and purchase no more than 80 of the planes through more traditional procurement methods would save taxpayers money.

Warner's statement came in response to a Wednesday letter from Deputy Defense Secretary Paul Wolfowitz in which he indicated that the Air Force planned to implement the Senate proposal. The Air Force's original plan involved leasing all 100 Boeing commercial jets, a $21 billion proposal that was harshly criticized by Warner, Armed Services ranking member Carl Levin, D-Mich., and Sen. John McCain, R-Ariz., a senior committee member, as being too costly.

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Senate unlikely to bow on Defense authorization legislation

Amy Svitak — Wed, 05 Nov 2003 00:00:00 -0500

Pentagon support for the controversial tanker proposal is likely to undermine House support for the Air Force's original plan to lease 100 Boeing 767 aircraft in an effort to replace their aging fleet of KC-135 tankers.

It also could leave House conferees with less room to negotiate other key issues in the conference, observers said, particularly on "Buy American" language included in House and Senate versions of the bill.

Although House Armed Services Chairman Duncan Hunter, R-Calif., reportedly is seeking some changes to a recent Office of Management and Budget proposal that would gut much of the industrial protection legislation included in his version of the bill, the Senate is likely to insist on passing the OMB compromise as it stands.

However, top government officials in the United Kingdom and the Netherlands who recently reviewed the OMB draft are expected this week to express concerns, and could even recommend a presidential veto of the bill if it includes any of the OMB language.

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Defense conferees await break in 'Buy American' logjam

Amy Svitak — Tue, 04 Nov 2003 00:00:00 -0500

House Armed Services Committee Chairman Duncan Hunter, R-Calif., told Senate conferees last week he was dissatisfied with OMB's proposal-the culmination of two months' negotiations among Hunter, Deputy Defense Secretary Paul Wolfowitz and a smattering of key Cabinet-level agencies that expressed strong opposition to early versions of the draft language.

The final version of the compromise, which OMB released to lawmakers last week, largely neutralizes tough protections included in the House version of the bill.

But in meetings with Hunter last week, senators proposed dropping all "Buy American" language from the conference in favor of revisiting the issue in next year's defense authorization.

Since then, Hunter reportedly has called on the Senate to omit a provision in its version of the bill allowing the Defense secretary to waive domestic source or content requirements on defense goods produced by countries engaged in certain bilateral agreements with the United States, according to Senate aides.

Hunter also reportedly asked that one section of OMB's proposal that could limit U.S. defense contactors' use of foreign sources of titanium in manufacturing be modified. However Hunter's committee could not confirm details of ongoing conference negotiations. A committee spokesman said Monday that negotiations continue.

It remains unclear whether Senate Armed Services Committee Chairman John Warner, R-Va., would agree to any proposed changes without administration backing, although congressional watchers predict his support will be linked to any official position expressed by the White House.

Arizona Sen. John McCain, the committee's ranking Republican and a vocal opponent of Hunter's industrial base protections, may be less inclined to take his cues from the White House, observers said.

"Warner may be trapped into buying off on whatever the administration wants," said Joel Johnson, vice president of international affairs at the Aerospace Industries Association here. "However, McCain may still say 'no.'"

Opposition of senior British and Dutch government officials to OMB's draft proposal probably will fuel McCain's continued opposition to the draft legislation-and any further tweaking of it.

Given the reaction of allies, additional House and Senate negotiations are likely to be in the offing, said one U.S. defense industry consultant familiar with the issue who asked to remain anonymous.

However, talks are not expected to continue today, as Hunter is not slated to return from his California district until late this afternoon, a House aide said Monday.

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Tanker lease, "Buy American" provisions collide in defense bill talks

Amy Svitak — Fri, 31 Oct 2003 00:00:00 -0500

House Armed Services Chairman Duncan Hunter, R-Calif., was expected to raise the possibility of reverting to a Sept. 10 version of a compromise agreement on "Buy American" legislation negotiated between Hunter and Deputy Defense Secretary Paul Wolfowitz with Senate Armed Services Committee Chairman John Warner, R-Va., and Commerce Committee Chairman John McCain, R-Ariz., in talks Thursday.

Top Bush administration officials initially snubbed the compromise, intended to dilute language in the House version of the bill. They said it would harm U.S. defense companies and isolate the United States from its closest allies.

Since Sept. 10, the language has undergone generations of changes, with each version further weakening Hunter's original language. On Monday, the Office of Management and Budget approved a final version that removed many of the teeth from the original House legislation.

However, House aides said Hunter is not satisfied with the OMB proposal, and he now wants the original compromise language put back on the table.

In return, Hunter is expected to support a proposal offered last week by Warner, McCain and Senate Armed Services ranking member Carl Levin, D-Mich. It would modify a $21 billion Air Force plan to lease 100 Boeing 767 tanker aircraft.

The Senate proposal stipulates that the Air Force may lease up to 20 of the planes and purchase no more than 80 tankers through an incrementally funded, multiyear procurement. The Air Force is considering the proposal, but officials have said they might need to cut some new procurement programs to pay for the plan in the near term.

Hunter met late Thursday afternoon with McCain, a senior Senate Armed Services Committee member, and Warner, House aides said. It is unclear whether the senators will support the original Sept. 10 language in the conference, aides said.

An outspoken advocate of free trade, McCain has adamantly opposed Hunter's legislation.

Warner has shown less heated opposition to the language. But in September, he boldly called on the State Department, the Office of the U.S. Trade Representative and OMB to clarify their position on the Sept. 10 compromise.

In letters to the three agencies, Warner asked whether the administration's position on the language had changed since a threat by Defense Secretary Donald Rumsfeld in July to recommend the president veto the bill if it includes Hunter's industrial base proposals.

Warner's office would not comment on details of the conference. An aide said Warner is reviewing the OMB language and has yet to receive any formal response from the State Department or USTR to his September inquiries.

In the meantime, the State Department and other key agencies are not expected to recommend a presidential veto of the bill if it includes the final OMB compromise proposal, although a number of administration officials reportedly continue to oppose aspects of the final draft.

Given earlier opposition to the original Hunter-Wolfowitz language, it is unlikely the administration would support a conference resolution that incorporates the Sept. 10 version of the compromise.

Regardless of Hunter's position on the Senate's tanker lease proposal, support from House Speaker Hastert and, subsequently, House appropriators will be critical to its passage, aides said.

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Curbs sought on DoD contracting with foreign civil air carriers

Amy Svitak — Wed, 29 Oct 2003 00:00:00 -0500

House Armed Services Chairman Duncan Hunter, R-Calif., has reportedly proposed new legislation to include in the fiscal 2004 defense authorization conference report that would limit the Defense Department's ability to contract with foreign civil air carriers during a crisis, according to congressional aides.

The proposal, which would amend laws that govern the Pentagon's Civil Reserve Air Fleet, or CRAF, falls beyond the committee's jurisdiction. But sources say Senate Armed Services and Senate Commerce committees staff are reviewing it.

Under current law, U.S. airlines contract with the Pentagon through the CRAF program in emergencies, when the need for airlift exceeds the capability of military aircraft. As of January 2003, 33 carriers and 927 aircraft were enrolled in the CRAF, contractually pledging aircraft to be ready for activation when needed.

To provide incentives for civil carriers to commit aircraft to the CRAF program, the government makes peacetime airlift business available to participating civilian airlines. The International Airlift Services contract is the largest of these. For fiscal 2003, the guaranteed portion of the contract is $394 million. The Pentagon estimates throughout fiscal 2003 it will award more than $224 million in additional business.

Although U.S. airlines hold most CRAF contracts, current statute allows for exceptions to this rule for contracting with foreign air carriers.

However, Hunter's new proposal would make it more difficult for the Defense Department to utilize foreign carriers in emergency situations. Specifically, the language would curb the Pentagon's ability to contract with a foreign carrier flying to and from points outside the United States. However, Hunter's provision would continue to allow some exceptions. It also would prohibit the use of foreign aircraft for overseas flights originating within the United States.

In addition, the proposal would swap the term "air carrier" in favor of "aircraft," a subtle change in legal terminology that would require the Pentagon to contract with any U.S. entity, such as a private firm with a corporate jet capable of flying to points overseas, possessing long-range aircraft.

Finally, while current law defines U.S. corporations eligible to participate in the CRAF program as those in which U.S. citizens own or control at least 75 percent of voting interest, Hunter's proposal would change the definition of such corporations to those in which U.S. citizens own or control at least 75 percent of company stock. This modification could remove limited liability corporations from CRAF eligibility.

It is unclear whether Hunter's Senate counterparts will support the proposal in conference. But Senate Armed Services Chairman John Warner,R-Va., and Arizona Sen. John McCain, the number two Republican on the committee, oppose Hunter's "Buy American" proposals in the House version of the bill.

Those proposals would limit the amount of foreign content included in U.S. weapons systems. Hunter could not be reached for comment by presstime.

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Senate deal would modify Air Force tanker lease program

Amy Svitak — Fri, 24 Oct 2003 00:00:00 -0400

Senate Armed Services Chairman John Warner, R-Va., announced a proposed agreement for a plan to let the Air Force lease up to 20 Boeing tanker aircraft and to purchase no more than 80 through an incrementally-funded multi-year procurement, according to Senate aides.

The proposal, announced by Warner, Armed Services ranking member Carl Levin, D-Mich., and Sen. John McCain, R-Ariz., will be offered as part of the fiscal 2004 defense authorization conference, the senators said Thursday night on the Senate floor.

"This is a much more honest approach that will save taxpayers up to $4 billion in the long run," Warner said.

Warner said the proposal would cost $4.2 billion less than the Air Force's current $21.1 billion plan to lease 100 Boeing tankers, and would be more true to federal acquisition and budget processes.

In addition, the proposal would give total ownership of at least 80 aircraft to the Air Force, allowing them to use the planes for scrap or to sell to other countries at the end of their lifecycle.

The stipulation that 80 aircraft be acquired through an incrementally funded multiyear procurement parallels the spirit of a leasing arrangement in which the Air Force can delay upfront costs until the aircraft are delivered, one Senate aide said.

However, the proposal would prohibit the current Air Force plan to retire 67 of its existing KC-135E tankers in fiscal 2004 and 126 in fiscal 2005. It would allow for the draw down of only 12 planes in anticipation of a new analysis of alternatives to modernizing its aging tanker fleet also included in the proposal.

In addition, the Defense secretary would be required to provide an independent assessment to the congressional defense committees on the condition of the KC-135 fleet to determine the urgency of the need to replace them.

A second independent study would be required to identify alternatives for meeting the long-term requirements of the Air Force's maintenance and training for the Boeing tanker planes.

Under the current Air Force plan, Boeing would be given a sole-source contract for these functions, totaling more than $6 billion, an amount determined in a recent CBO study of the tanker lease proposal to be excessively high.

As a result of the new proposal, the Senate Armed Services Committee will not act on the Air Force's fiscal 2003 reprogramming request, which was approved by three other committees of jurisdiction this summer. Instead, Warner's amendment will authorize approval of the plan to lease 20 aircraft and purchase the remaining planes, pending the approval of all four committees having jurisdiction.

A second Senate aide said the committee is confident it will garner support from the House Armed Services Committee for the new proposal. However, winning support from the House and Senate Appropriations Committees could prove challenging. It remains unclear whether the new proposal could pre-empt efforts by lawmakers who back the Air Force's plan to bypass Warner's committee and approve the deal in the fiscal 2004 wartime supplemental appropriations conference. The 100-aircraft lease plan boasts numerous supporters in the House.

Language proposed by the House is likely to be inserted into the wartime spending package expected to be negotiated in final conference next week. The House version of the bill created a place-holder provision for tanker legislation with an amendment that calls for the Air Force to describe a study of alternatives for replacing its aging fleet of KC-135s.

A similar measure was attempted in the Senate version of the bill, but was removed at the last minute by Senate Appropriations Chairman Ted Stevens, R-Alaska, at the request of McCain, a vocal opponent of the deal.

"With this proposal, we have begun to set a standard," McCain said in a statement. "This is a message that there are those in the Senate who will not tolerate backroom deal-making and policy making done in the dead of night."

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Senator considering new Air Force tanker lease plan

Amy Svitak — Thu, 23 Oct 2003 00:00:00 -0400

Senate Armed Services Chairman John Warner, R-Va., is considering a proposal that would allow the Air Force to lease up to 20 Boeing tanker aircraft and to purchase no more than 80, according to congressional aides.

The proposal could likely make its way into the fiscal 2004 Defense authorization conference, although congressional aides say the vehicle for the plan remains in flux. Previously, Warner and Armed Services ranking member Carl Levin, D-Mich., had called on the Air Force to consider leasing up to 25 tankers and purchasing the remaining planes through standard acquisition practices.

The Air Force's response to the Warner-Levin plan included an assessment of several lease and purchase options, but ultimately concluded that leasing all 100 aircraft is the best choice. Such a plan would permit the Air Force to immediately modernize its tanker fleet, and would balance cost savings with the reality of available funds, according to senior defense officials.

While the new Warner proposal would save about $4.2 billion, it would require the Air Force to scrape together between $4 billion and $5 billion over a six-year period beginning in fiscal 2006, congressional aides said. However, the new plan would not affect the aircraft delivery schedule as currently planned in the Pentagon's 100-aircraft lease arrangement.

Air Force officials did not return calls seeking comment by presstime.

Warner's committee is the only one of four that has not signed off on the Pentagon's request to approve the deal in a 2003 reprogramming action submitted to lawmakers this summer. If Warner's latest plan is included in the fiscal 2004 Defense authorization bill, it could pre-empt efforts by lawmakers who back the Air Force's plan to bypass Warner's committee and approve the deal in the fiscal 2004 Iraq supplemental appropriations conference. The 100-aircraft lease plan boasts numerous supporters in the House, and Warner's new proposal would likely face opposition in conference.

Language proposed by Rep. Norman Dicks, D-Wash., supporting the 100-aircraft lease plan is likely to be inserted into the supplemental. The House version of that bill created a place-holder provision for such legislation with an amendment calling for the Air Force to describe a study of alternatives for replacing its aging fleet of KC-135 tankers. A similar measure was proposed during Senate debate, but it was removed at the last minute by Senate Appropriations Chairman Ted Stevens, R-Alaska, at the request of Sen. John McCain, R-Ariz., a vocal opponent of the deal.

It is unclear how much funding would be required for the 100-aircraft lease in fiscal 2004. If the transaction is scored as an operating lease under OMB circulars, the fiscal 2004 funding requirements would be minimal. But McCain Wednesday called on OMB Director Josh Bolten to revisit the tanker lease issue in light of new information included in recent GAO and CBO studies that assert the Air Force's current tanker proposal fails to meet four of five criteria required for an operating lease. McCain's letter gave OMB until Tuesday to respond.

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House, Senate conferees remain divided on overseas bases

Amy Svitak — Wed, 22 Oct 2003 00:00:00 -0400

House Military Construction Appropriations Subcommittee Chairman Joseph Knollenberg, R-Mich., offered a compromise to Senate Military Construction Appropriations Subcommittee Chairwoman Kay Bailey Hutchison, R-Texas, and ranking member Dianne Feinstein, D-Calif., that cut funding for some overseas projects. But the two senators asked for more time to consider funding needs for two key naval air stations in Europe.

Both senators have questioned the wisdom of spending funds on overseas bases before the Defense Department has a chance to complete a thorough review of its future military needs there. The ongoing study is expected to recommend a major overhaul of the U.S. overseas basing structure, particularly in Europe and South Korea.

Knollenberg said he was sympathetic to the Senate's concerns but emphasized the need to wrap things up by Thursday morning. But Hutchison held him at arms length, recommending a meeting later in the day to discuss further the two outstanding basing issues.

House Appropriations Committee Chairman Bill Young, R-Fla., and Senate Appropriations Committee Chairman Ted Stevens, R-Alaska, reminded the panel that if a resolution cannot be reached by Thursday, they would assume management of the bill, as directed by the House and Senate leadership.

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Administration divisions on procurement provision may slow Defense bill

Amy Svitak — Tue, 21 Oct 2003 00:00:00 -0400

With the fiscal 2004 defense authorization conference expected to make some headway this week, the administration remains divided on controversial provisions in the House version of the bill, congressional and industry sources say.

Although Deputy Defense Secretary Paul Wolfowitz has worked ardently with House Armed Services Chairman Duncan Hunter, R-Calif., to draft and revise a compromise proposal that dilutes the House legislation and quells concerns raised by several Cabinet-level agencies, the State Department reportedly continues to oppose the effort.

The State Department is calling on Hunter to delete one section of the bill that would require the Pentagon to purchase from domestic sources certain military systems components identified by the Defense secretary as essential to the functioning of key U.S. weapons systems.

However, the language includes authority that allows the secretary to waive this restriction if the technology is not available in sufficient quantity, satisfactory quality or at a reasonable cost in the United States-or if the waiver is determined to be in the interest of national defense.

The Pentagon would be required to submit an annual report to the Armed Services committees, disclosing the number of waivers used to circumvent the domestic source restrictions.

In addition, the restrictions would not apply to countries participating in international agreements, such as memoranda of understanding or other bilateral accords with the United States, if such agreements were made before the enactment of the proposed legislation.

Agreements made after the effective date would be subject to the Pentagon's determination that the MOU or other arrangement was in the public interest. The Defense secretary would be required to consider the place of performance for any contract work in his determination. In addition, the secretary would have 24 months to prepare a plan to implement the legislation, if enacted, and another 12 months to put the plan into effect.

Two other provisions in Hunter's language were deleted in an earlier iteration of the Hunter-Wolfowitz compromise. One would have amended the "Buy American Act" requiring that U.S. weapons systems have at least 65 percent U.S. content-an increase over the current 50 percent mandate.

But even with the omission of these sections and the call to eliminate yet another, the State Department is said to remain concerned that the overall language will isolate the United States from its trade partners and minimize America's ability to develop cooperative technological innovations that will win future battles and save lives in combat, congressional and industry sources say.

In addition, compromise language addressing trade concerns raised by the U.S. Trade Representative remains an obstacle.

Although the compromise includes a provision allowing the Defense Department to waive any restrictions that might conflict with World Trade Organization obligations, USTR reportedly remains unclear on language that specifically limits the use of foreign-produced machine tools by American suppliers.

Defense trade is generally exempt from WTO rules, but the language in the compromise may be seen as giving an unfair advantage to U.S. machine tool manufacturers, because their equipment is often used for both commercial and defense production.

Joel Johnson, vice president of international affairs of the Aerospace Industries Association, said difficulties in interpreting language in the Hunter-Wolfowitz compromise is likely because it is being negotiated by people who are experts neither in the field of acquisition policy nor in international trade law.

"Because you have people negotiating who don't know procurement or trade, you've got language that is very hard to interpret at the moment," Johnson said, adding that a good scrubbing of the proposal by House and Senate legislative counsel might be needed before it could be seriously considered.

The chairmen and ranking members of the Armed Services Committees in both chambers are slated tentatively to meet Tuesday to discuss the path forward on the fiscal 2004 defense authorization conference, congressional aides said.

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Rumsfeld takes hard line against boosting Army troop strength

Amy Svitak — Fri, 17 Oct 2003 00:00:00 -0400

In a letter Wednesday to Senate Appropriations Committee Chairman Ted Stevens, R-Alaska, Rumsfeld said the additional troops would cost too much and take too long to train and equip for deployment to Iraq.

"The addition of Army end-strength is not a near-term solution to the current stress on the force," Rumsfeld wrote. "It takes a great deal of time to recruit, train, organize, and equip new forces."

Rumsfeld wrote, "The current cost estimates for an additional Army end-strength of 10,000 forces are imprecise, but I am told they could be between $500 million and $1 billion per year." He added that the troop increase proposed in the amendment could take two years to fully integrate into deployable forces.

Senate Republicans Wednesday failed to defeat the amendment, intended to provide more troops for an occupation force, according to statement by Reed. Specifically, the increase would create additional military police, light infantry, special operations and civil affairs units.

Reed and Hagel said they believe the Army is stretched too thin to handle a protracted commitment in Iraq that could last as long as 10 years, although Rumsfeld argued in his letter that "adding long-term end-strength to address what we hope will prove to be near-term stresses on the force" is not the answer.

Reed, in his statement, said there is an urgent need for Congress to take steps to provide the Army the tools needed to rotate troops in and out of Iraq "without sending the same units again and again."

He also said Congress must ensure that the United States is "prepared to face potential future crises around the world in countries such as Iran, North Korea and Syria while continuing our occupation in Iraq and fighting the war on terror in Afghanistan."

The amendment is intended in part to expand the number of active military personnel in an effort to avoid plummeting recruitment and retention rates in active, Reserve and National Guard units in the future.

Reed and Hagel said the end strength increase would be paid for through the Iraqi Freedom Fund, a discretionary Pentagon account. The fiscal 2004 supplemental would add $1.9 billion to the fund.

But Rumsfeld, who has resisted efforts to increase end strength in the past, said that if Congress wants to assist the Pentagon with long-term management of military personnel, "the single most important thing the Congress could do now would be to pass the House version of the 'National Security Personnel System' reforms that the president proposed in his legislative submission."

Rumsfeld contended the controversial personnel reforms would provide the department with greater flexibility in the management of civilian personnel that would end the use of active duty military personnel for tasks that could be assigned to civil servants.

"Unfortunately, outdated civil service laws make it too difficult to hire, transfer, assign, and otherwise manage civilian personnel, so the department has fallen into the longstanding practice of using military where civilians would be equally or more appropriate," he wrote.

Rumsfeld cites studies done during the Clinton administration that concluded there are some 320,000 such positions, and that even if only 20,000 of these jobs could be converted, the department would significantly improve long-term military availability and reduce stress on the force without the need to increase end strength.

During Wednesday's floor debate, Stevens offered a motion to table the Reed-Hagel amendment.

Stevens' effort failed, but because he cast a tactical vote against his own motion, he was allowed to offer a motion to reconsider. The state of the amendment remained in play at presstime late Thursday.

Last year, Sen. John McCain, R-Ariz., and former Sen. Max Cleland, D-Ga., won Senate approval for an amendment to the FY03 defense authorization bill increasing total active-duty military end strength by 12,000. And the House Armed Services Committee under former Armed Services Chairman Bob Stump, R-Ariz., attempted to raise end strength for all of the active duty services and the reserves by 12,552.

Rumsfeld resisted these attempts as well, and a compromise was reached in the authorization conference to allow the Defense secretary discretionary authority to exceed current end strength by 3 percent.

It was unclear whether lawmakers intended the increase to be temporary or permanent. But a December 2002 Congressional Research Service issue brief on end strength stated that the Congressional Budget Office estimated the increase would have cost over $1 billion annually in the Pentagon's personnel accounts to fully train, equip and sustain additional troops.

However, Pentagon analysts also have said that Rumsfeld's proposed reforms to military personnel management would take just as long to implement and would not yield any immediate lessening of the burden on troops, particularly those now in Iraq and Afghanistan.

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Proposed Air Force tanker purchase plan said to cost less than lease

Amy Svitak — Fri, 17 Oct 2003 00:00:00 -0400

In its analysis of possible tanker acquisition strategies, CBO reinforced its earlier assertions that a lease arrangement is significantly more costly than purchasing the planes through the normal appropriation and procurement process.

The least costly option, according to the study, is purchasing all 100 planes under a newly negotiated contract. This would allow the Pentagon, as a large buyer, to obtain the best price from Boeing-roughly $15 billion in current dollars and a savings of $6.7 billion compared to the current proposal-the study found.

The Warner-Levin proposal to lease 25 planes and purchase the remaining 75 under existing contracts would save about $4 billion in acquisition costs, compared to the original plan to lease all 100 planes. And if this option is pursued under two newly negotiated contracts, it could save as much as $5.1 billion, the study contends.

After reviewing the Pentagon's own analyses of these and other alternative strategies, CBO found the department's estimates understate potential savings. This is due to the fact that the Pentagon's savings estimate of only $2 billion is based on the original contract, "which includes terms and conditions that are unique to this lease arrangement and increase the costs of acquiring the tankers."

Still, the Pentagon has said all along that the benefits of the lease outweigh a direct purchase. Leasing the planes would allow the department to defer large payments into the future while providing timely delivery of the aircraft.

Direct purchase of the planes would require the Pentagon to pay more money upfront-most likely in fiscal 2006 and 2007-and delay acquisition of the aircraft in the process.

The study also finds that while the Pentagon continues to describe its proposed financing arrangement as a lease, CBO believes the transaction would in fact qualify as a federal government purchase of the tankers because the special purpose entity set up to buy the aircraft would be substantially controlled by, and act on behalf of, the federal government.

In addition, CBO says the proposal negotiated by the Air Force, or any option that might take advantage of leasing mechanisms, fails to meet the conditions for an operating lease specified in congressional and OMB scorekeeping guidelines, and that "recording such transactions as an operating lease would be at odds with standard government accounting principles."

The study adds, "We believe that, if recorded properly, the budget authority and outlays for the Air Force's leasing arrangement, or any hybrid lease and purchase proposal, would be similar to the amounts required for a direct purchase in both magnitude and timing."

Senate Commerce Committee Chairman John McCain, R-Ariz., will conduct a hearing Thursday to consider new information provided by CBO, GAO and others regarding the lease proposal.

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Pentagon official grilled on inability to track costs

Amy Svitak — Thu, 16 Oct 2003 00:00:00 -0400

In his opening statement, Nussle said that lawmakers had a fundamental obligation to assure that the Pentagon spent money judiciously and with proper planning and oversight.

Two years into the war on terrorism, lawmakers have obligated $160 billion in emergency spending to pay for wars in Iraq and Afghanistan-money that is outside the budget. But while this money was necessary to fight the global war on terrorism, Nussle said, Congress could not continue to pay for the war efforts on an ad hoc basis.

Nussle called on Pentagon Comptroller Dov Zakheim, who testified before the committee, to deliver a solid plan to set spending priorities for the coming year, and asked Zakheim to provide details on one-time expenditures in the president's $87 billion Iraq supplemental, the length of time that the money is expected to last, and any future spending plans for Iraq. He also asked for an estimate of long-term budget needs for Iraq and other future contingencies related to the war on terrorism.

Zakheim declined to be specific but said that the $66 billion requested in the president's wartime supplemental for military operations in Iraq would last through the end of fiscal 2004, implying that another emergency supplemental request is anticipated in 2005. He also said that the $20.3 billion grant needed to rebuild Iraq was expected to be a one-time, front-loaded request that would help the country get back on its feet, adding that the administration would likely build any future costs for this purpose into the annual budget request.

Nussle expressed impatience with the Pentagon's perceived lack of a sound financial planning mechanism geared toward funding the war on terrorism.

"We're growing frustrated," he said, adding that the farther the Sept. 11 attacks recede into history, the more Congress hopes to see better fiscal planning for defense in the future.

Zakheim said that many new threats related to the war on terrorism were now accounted for in the Pentagon's planning, programming and budget process, and that military transformation was a key part of this effort. But he added that the unpredictable nature of military force levels in the future, particularly in Iraq over the coming year, made it difficult to estimate costs. "This is something that we are looking at now in the 2005 budget," Zakheim said.

Nussle also criticized the Pentagon's lack of financial accountability for military spending, despite its obligation under the 1990 Chief Financial Officers Act to verify through annual audits that money is spent in the manner that Congress intended.

Zakheim said that the internal auditing process mandated by the 1990 legislation had proved difficult to implement because of bureaucratic resistance and other obstacles, but he added that the department expected to have a complete and clean audit by 2007.

Nussle was underwhelmed with Zakheim's audit schedule, saying that the clarity of the administration's argument for additional wartime money is weakened by its inability to account for how those funds are spent.

"We're talking about following the law here," he said. "I don't consider 2007 a success."

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Pentagon again seeks Defense authorization compromise

Amy Svitak — Wed, 15 Oct 2003 00:00:00 -0400

Unlike in earlier efforts, Wolfowitz did not bother this time to circulate his latest iteration of the draft proposal to other Cabinet-level agencies involved in the debate.

Those agencies include the Commerce and State departments and the Office of the U.S. Trade Representative. Along with OMB, all have voiced concern over Wolfowitz's two earlier efforts to neutralize what critics see as some of the more onerous language in the legislation by House Armed Services Committee Chairman Duncan Hunter, R-Calif.

Although Wolfowitz's effort to negotiate a compromise on the draft legislation proved successful-many measures were amended and some were deleted entirely, including those that would strengthen so-called Buy American laws-strong opposition by the State Department continues.

In the meantime, both the House and Senate Armed Services committees are biding their time as the administration hashes out a unified compromise on Hunter's provisions. Senate Armed Services Committee Chairman John Warner, R-Va., continues to await a formal response to his letters last month to OMB, the USTR and the State Department, requesting written clarification on the administration's position.

Until then, the industrial base protection language included in Hunter's bill remains a sticking point in the 2004 defense authorization conference, along with the Pentagon's civilian personnel reform and environmental flexibility proposals, veterans' benefits and military base realignment and closure.

A spokesman for the House Armed Services Committee said staff-level meetings on the defense authorization conference continue, and Hunter may be in contact with Warner this week to discuss reconciling the two chambers' versions of the bill.

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