Senate Committee Amends New Export Bill.

The Senate Committee on Banking, Housing and Urban Affairs has passed the Export Administration Act (EAA), or S. 149--introduced by Sen. Mike Enzi, R-Wyo., and Sen. Phil Gramm, R-Texas. The committee approved three amendments.

Gramm offered an amendment prohibiting the exportation of goods that could contribute to the proliferation of weapons of mass destruction. The amendment also provides the administration with increased authority to revise and update a list of goods that may not be exported, and countries that may not receive exports because of national security concerns.

Sen. Robert Bennett, R-Utah, proposed an amendment abolishing the requirement that Congress be notified when the administration modifies export restraints on computers. Enzi inserted a third change, authorizing the EAA only through fiscal year 2004. At press time, a vote by the full Senate had not been scheduled.

GAO Commercial Activities Panel

The Government Accounting Office (GAO) in April formed a Commercial Activities Panel to examine outsourcing and privatization, the process of transferring of commercial activities from federal employees to contractors.

The panel was authorized by the National Defense Authorization Act for fiscal year 2001 (PL 106-298). Section 832 requires the comptroller general of the United States to convene a panel of "highly qualified and knowledgeable persons" and report its findings to Congress no later than May 1, 2002.

Specifically, the panel will examine the implementation of the Federal Activities Inventory Reform Act (FAIR Act) of 1998, the public-private competition process known as A-76; how they apply to procedures for determining whether or not activities should be contracted out, and the relative costs of this decision. The FAIR Act requires agencies to evaluate federal employee activities to determine if they could be performed by a federal contractor. The A-76 public-private competition is the process by which a private industry petitions to perform tasks previously done by federal employees.

The panel consists of representatives from organized labor, private industry, the Defense Department, the Office of Management and Budget and the comptroller general. NDIA has publicly supported this panel and welcomes its recommendations to streamline federal government operations.

TRAC Bill

H.R. 721, the Truthfulness, Responsibility and Accountability in Contracting (TRAC) Act -- introduced by Rep. Albert Wynn, D-Md. --has raised many objections within the defense community.

Supporters of the legislation, which is awaiting action by the House Government Reform and Oversight Committee, say that it will provide a central reporting mechanism to manage and evaluate the effectiveness of government outsourcing. Until such a system is implemented, no real savings can be attributed to outsourcing, according to the bill's supporters. Only after such a system has been implemented should outsourcing continue, they insist.

Opponents of the bill believe that TRAC is a thinly veiled attempt to stop outsourcing. If passed, it would seriously threaten the government's ability to function, opponents charge.

The bill would impose a moratorium on new contracts until the critical reporting system is in place. The Coalition for Outsourcing and Privatization (COP), of which NDIA is a member, states that, effectively, TRAC would halt all government activity, because of the indefinite moratorium on outsourcing. The coalition suggests that legislation on this matter is unnecessary, because the GAO has already convened a national, independent panel to study the A-76 process and other public-private sector competition models.

DARPA Letter

Requiring defense contractors to pay any of the development costs of a weapon, or weapon system, is "highly suspect" and violates the general requirement that agencies spend only what Congress appropriates for programs, NDIA said in a letter to the Defense Advanced Research Projects Agency (DARPA).

The letter was in response to a request from the Defense Advanced Research Projects Agency (DARPA) for industry comments on the impact of section 803 of the National Defense Authorization Act of Fiscal Year 2001 (PL 106-398) on the use of section 845 (Other Transactions for Prototype Authority).

In its response, NDIA said that requiring contractor investment as a means of subsidizing inadequate government budgets is a practice that cannot be defended and should be stopped. The NDIA letter noted that the legislation stipulated that the defense con tractor must contribute at least one-third of the total cost of the prototype project.

The legislation--attempting to broaden the technology and industrial base available for meeting Defense Department needs--set new conditions on the use of Section 845. DARPA wanted specifically to know how those conditions might impact contractors' decisions on whether to use this authority, and how the conditions might affect their strategy (i.e. teaming and corporate-investment commitments).

NDIA recommended that the text be changed to provide that contractor contributions are to be sought only when--and if--the contribution matches the expected commercial benefit to the contractor.

Defense Bill Schedule

Introduction of next year's defense appropriation and authorization bills has been delayed until July. The process has been pushed back because of the transition to the new administration and the strategic military reviews ordered by Defense Secretary Donald H. Rumsfeld.

The House and Senate leadership hope to clear the bills through their respective chambers before the August recess. If the legislation does pass both chambers by August, it is likely that key staff will spend most of the August break working on the bills in preparation for a House-Senate conference in September.

Another cause of the delay is the President's tax package. The size of the total package and the final negotiations will have a large impact on the amount of discretionary spending available. Although this is expected to have little effect on the content of the defense appropriation bill, it may put pressure on the total dollar amount appropriated.