By Emelie Rutherford
House appropriators want the Pentagon to consider how its acquisition programs impact the domestic industrial base, and are calling on defense officials to explain how such workforce considerations factor into the Air Force’s aerial refueling tanker program.
“The Committee is deeply concerned with the potential implications to the national industrial base with the trend in the Department of Defense towards contracting for major defense acquisition programs that are developed and produced overseas,” states the report accompanying the fiscal year 2009 defense appropriations bill the House Appropriations Committee (HAC) plans to take up tomorrow.
The closely held bill and report, both obtained by Defense Daily, reflect the work of the House Appropriations Defense subcommittee (HAC-D) in July.
The report points out that a section of the U.S. Code “addresses the need for consideration of industrial base” in defense acquisition programs. “The Committee believes that a recent example of the (Defense) Department not adhering to this statutory requirement is the Air Force’s KC-X program,” it states.
After the Air Force awarded the KC-X tanker contract in February to a Northrop Grumman [NOC]-European Aeronautic Defence and Space Co. (EADS) team, supporters of losing bidder Boeing [BA] argued the Pentagon should have considered the number of U.S. jobs lost if a partially foreign outfit constructs the aircraft. Auditors criticized that initial tanker award, for other reasons, and the Pentagon is recompeting the contract.
Section 2440 of Title 10 of the U.S. Code–which is referenced in the HAC-D report–states: “The Secretary of Defense shall prescribe regulations requiring consideration of the national technology and industrial base in the development and implementation of acquisition plans for each major defense acquisition program.”
Thus, the report prepared by the HAC-D directs the defense secretary “to comply with 10 USC 2440 as it applies to the consideration of national technology and industrial base in the development and implementation of acquisition plans for each major defense acquisition program.”
The panel also mandates a report from the secretary of defense “on how the Department implemented Section 2440 in the KC-X program.”
As was previously disclosed, the HAC-D bill lists eight requirements for the new tanker competition upon which it says the $893 million in requested funding is contingent (Defense Daily, Aug. 4).
It says the Pentagon, in its competition do-over, must include military construction, fuel, personnel, and maintenance costs over a 40-year life cycle–instead of the 25 years used the first time–in calculating life-cycle costs. It says independent cost estimates must be conducted, no consideration will be provided for exceeding key-performance- parameter objectives, the winning tanker must be able to refuel all required aircraft, and the Pentagon must “take into account the fact that one of the proposals offered satisfies more technical requirements relating to trade space than the other proposal.” The language is viewed by some as favoring Boeing’s bid.
The HAC-D’s report also calls for moving the tanker monies, within the Pentagon’s budget, into a Tanker Replacement Transfer Fund. This was done so the funds “are available until such time as they are required for obligation in accounts as needed, subject to prior approval of the congressional defense committees,” the report states.
Under this setup, the defense secretary would have to follow the normal prior-approval reprogramming process to transfer monies out of the fund for execution.
The House appropriators’ report says the committee “fully supports the KC-X Tanker program as a high priority for our military” but is also “very concerned that the acquisition decision must be conducted with appropriate deliberation and care.”
This tanker language was crafted by HAC-D in July. HAC-D Chairman John Murtha (D-Pa.) said his panel’s markup of the bill–which was held July 30–had been delayed partly because staff members were busy writing the tanker language. Boeing backer and HAC-D Vice Chairman Norm Dicks (D-Wash.) is an outspoken critic of how the Air Force handled the initial tanker competition. He said in July he was pleased with the results of the subcommittee’s markup.
The HAC is scheduled to mark up the FY ’09 defense appropriations bill tomorrow, and is not expected to significantly alter the HAC-D’s work. The full House is slated to debate the measure next week, aides said.