By Stephen Barlas
Congress is about to pass an annual bill that dictates spending levels for the Department of Defense. This year’s legislation contains a couple of key items that should be of interest to small and medium-sized manufacturers.
As has been the case in the recent past in other legislative venues, “Buy American” provisions, in this case with regard to defense procurements, were quietly at issue. Both the House and Senate spending bills, which were in a conference committee for melding in mid-November, contained sections easing “Buy
American” provisions for multiple defense department procurement items.
Sen. Tammy Baldwin, D-Wis., had o;ered an amendment, with bipartisan support, on the Senate floor that would have kicked out the section weakening
“Buy American” provisions. Senate Republican leaders, taking their lead from
Sen. John McCain, R-Ariz., chairman of the Armed Services Committee, declined
to allow that amendment to come up for a vote.
“Section 863 would enact a harmful sunset provision on current requirements, eliminating them at the end of fiscal year 2018 and consequently opening taxpayer-funded defense contracts to unfairly subsidized foreign competition, placing American jobs at risk, including in Wisconsin’s skilled shipbuilding
industry,” Baldwin said. Her unsuccessful amendment was supported by the
Alliance for American Manufacturing.
Both the House and Senate bills also contain a provision requiring the Defense Department to establish a pilot program for small and medium-sized
manufacturers aimed at strengthening the defense industrial base. This may be
partially in response to President Trump’s July executive order on assessing and
strengthening the manufacturing and defense industrial base and supply chain
The pilot program would consist of:
1. The use of contracts, grants, or other transaction authorities to support
manufacturing and production capabilities of small and medium-sized
2. Purchases of quantities of goods or equipment for testing and
3. Purchase commitments to create incentives for industry to develop
manufacturing and production capabilities of interest to national
security, including cost sharing with funding from nongovernmental
4. Issuing loans directly to small and medium-sized enterprises to support
manufacturing and production capabilities.
The National Defense Industrial Association issued a statement that said,
“While NDIA did not specifically propose this pilot program, we support its intent and inclusion in the final version of the national defense authorization bill.
Moving forward, we encourage appropriators and the department to su;icient-ly resource this e;ort.”
Manufacturers Associations Oppose Coal Subsidies
Manufacturers are pushing back hard against a proposal from U.S. Energy Sec.
Rick Perry that would increase electricity costs for factories dependent on utilities that use coal.
Perry ordered the Federal Energy Regulatory Commission to issue a proposed
rule allowing regional transmission organizations, which set electric rates in
various regions of the country, to allow electric utilities that keep 90-day supplies of coal on hand to increase their rates to consumers. Perry is concerned
that the retirement of coal-dependent utilities, which has been going on for
years and is likely to hasten, would put parts of the country in jeopardy in the
event of disasters or extreme cold temperatures because those utilities couldn’t
immediately switch to natural gas in an emergency.
But the Industrial Energy Consumers of America (IECA), American Foundry
Society, and dozens of other national and local trade groups representing many
manufacturing sectors argued Perry’s plan would be a “bailout” of coal.
“We do not support subsidies for energy because it distorts markets and tilts
the playing field between the various energy sources,” Paul Cicio, IECA president, said.
Alliance for American Manufacturing, www.americanmanufacturing.org
Industrial Energy Consumers of America, www.ieca-us.com
National Defense Industrial Association, www.ndia.org
Senate Armed Services Committee, www.armed-services.senate.gov
U.S. Department of Defense, www.defense.gov
Read more from Stephen Barlas at www.thefabricator.com/author/stephen-barlas
“Buy American” requirements
are weakened in defense spending bills
But pilot program will look to shore up U.S. defense industrial base