October 17, 2007
Pentagon Fights Limits on Use of Foreign Specialty Metals
Megan Scully - National Journal's CongressDailyAM

Pentagon officials are resisting House efforts to increase restrictions on metals in weapons systems provided by foreign suppliers, arguing that several provisions in the chamber's version of the FY08 defense authorization bill might hinder procurement of needed equipment.

In a package of appeals on the defense authorization bill sent last week to the House and Senate Armed Services committees, the Pentagon said the new language is "unnecessary, costly, inefficient and counter-productive."

The provisions, which have drawn a veto threat from the White House, expand on hard-fought compromise language in last year's defense authorization bill mandating that all "specialty metals" in U.S. defense hardware come from domestic sources.

The House language would require companies competing for major weapons systems to submit an extensive evaluation of their prospective suppliers' abilities to provide domestic-bought "strategic materials," which include metals like titanium and steel.

Pentagon officials argued that the process would add costs and delay programs by requiring a "lengthy examination of proposed supplier chains without any demonstrated national security benefit."

They stressed the provision would drive the military to use only traditional defense companies to supply parts for weapons systems, forcing them to turn away commercial items that often are less expensive and state-of-the-art but include foreign metals.

Another provision requires contractors to go through a formal rulemaking process before receiving multicontract waivers for metals not immediately available domestically.

For waivers that affect a single contract, the Defense secretary would make information on the decision-making process publicly available. Supporters of the language argue it would provide transparency in a waiver process that often goes unchecked.

Jeff Green -- a former House Armed Services staffer who runs a lobbying firm that represents several small defense contractors, including metal producers -- said the department's waiver decisions based on the domestic nonavailability of available metals like titanium have raised some questions.

"We don't doubt that their intentions are pure," Green said. "We just want to make sure we have a voice in the process."

The Pentagon recognized that -- "on the surface" -- the requirement for rulemaking procedures is intended to provide more transparency to the public. "However, this provision would make the process so burdensome and complicated that very few [waivers] will be issued," according to the appeal.

The provision also mandates a detailed accounting of all foreign components and specialty metals -- another move Pentagon officials said would force commercial companies out of the defense market and make the department's suppliers a "boutique business."

The battle over specialty metals pits the Pentagon against House Armed Services ranking member Duncan Hunter, R-Calif., traditionally a strong ally of the Bush administration and the defense industry.

Hunter, one of Congress's biggest boosters of "buy America" laws, has repeatedly pushed for regulations limiting the amount of foreign parts in U.S. military equipment despite opposition from the Bush administration. As committee chairman last year, Hunter supported strict specialty metals provisions that ultimately got watered down during often tense House-Senate negotiations on the bill.

The two chambers agreed to allow more leeway in granting waivers to contractors and provide a four-year grace period to comply with the new restrictions. But even the compromise language has frustrated defense suppliers, who have struggled to ensure that all parts of weapons systems comply.

John Douglass, president of the Aerospace Industries Association, estimated in a recent interview that the total cost to companies of implementing the specialty metals provision in the FY07 bill could reach hundreds of millions of dollars.