Statement of Administration Policy: H.R. 486 - Defense Production Act Amendments of 1990

(House)
(Oakar (D) Ohio)

The Administration opposes H.R. 486 and urges Congress to adopt the Administration's proposal, H.R. 4766, which would provide for permanent re-authorization of the Defense Production Act (DPA).

If H.R. 4766 is not adopted, the Administration would support an extension of the existing DPA for two years rather than enactment of H.R. 486. Such an extension could include several provisions of H.R. 4766 or H.R. 486 that are directly related to the energy aspects of the current situation in the Persian Gulf.

The DPA vests the President with the authority to direct materials and facilities from civilian to national defense use to ensure adequate industrial production and supply for national security purposes. Additionally, it authorizes loans, loan guarantees, purchase guarantees, antitrust protection and the use of the National Defense Executive Reserves (NDER). H.R. 486, however, would change the DPA to a statute which infringes upon the President's authority, establishes unneeded authorities and unwarranted reporting requirements, and authorizes unnecessary expenditures.

The provisions of H.R. 486 that are most troublesome to the Administration are sections 4, 5, 6 and 10. The Administration also opposes the approach used to remedy the conflicts of interest problem contained in section 8.

Section 4 of H.R. 486 would establish an array of industrial policy initiatives and procurement restrictions that could be counterproductive to the long term strengthening of the industrial base. Further, Section 4 would require that these procurement restrictions be included in all existing and future "Memorandums of Understanding." This would, in effect, be a unilateral amendment to previously negotiated international agreements.

Section 5 an unnecessary increase in the authorization levels for the existing Defense Information Network (DINET). The existing DINET system, as augmented by already planned improvements, will be adequate for Defense's needs.

Section 6 of H.R. 486 would authorize $130 million per year for the loans, loan guarantees and purchase commitments authorized by Title III of the Defense Product Act. The Administration has requested only $50 million per year for these programs.

Section 10 of H.R. 486 would authorize funds for a Congressional Commission on Evaluation of Defense Industrial Base Policy. The defense industrial base has been studied numerous times over the last several years and further reports such as those proposed by the Commission are not considered necessary.

Finally, although the Administration endorses the purpose of section 8, relating to conflicts of interest, it disagrees with the approach used to remedy the problem. Section 10 of H.R. 4766, the Administration's proposed amendments to the DPA, addresses the need for a national interest waiver in a manner that will not only protect fully the public and any individual receiving such a waiver, but allow for the expanded use of any individual's service during a time of national emergency.

As noted above, several provisions of both H.R. 4766 and H.R. 486 are directly related to the energy aspects of the current situation in the Persian Gulf. These include the bills' improved authority for the use of "voluntary agreements," the clarification that the DPA's priority contract rating authority applies to "services" contracts, and the bills' provisions concerning the NDER. With the caveat just noted about the form of the language concerning the NDER, the Administration urges that these provisions be enacted in the context of any bill that otherwise would extend the existing DPA.