[House Document 104-124]
[From the U.S. Government Publishing Office]





        104th Congress, 1st Session - - - - - - - - - - - - House 
Document 104-124


 
  REQUEST FOR DOD TO MAKE PURCHASES AND PURCHASE COMMITMENTS, AND TO 
 ENTER INTO COST SHARING ARRANGEMENTS UNDER THE DEFENSE PRODUCTION ACT 
                                OF 1950

                               __________

                             COMMUNICATION

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

NOTIFICATION FOR DOD TO MAKE PURCHASES AND PURCHASE COMMITMENTS, AND TO 
     ENTER INTO COST SHARING ARRANGEMENTS FOR EQUIPMENT TO DEVELOP 
 MANUFACTURING PROCESSES UNDER THE DEFENSE PRODUCTION ACT OF 1950, AS 
           AMENDED, PURSUANT TO 50 U.S.C. APP. 2093(a)(6)(A)




October 13, 1995.--Referred jointly to the Committees on Appropriations 
     and Banking and Financial Services, and ordered to be printed
                                           The White House,
                                       Washington, October 5, 1995.
The Speaker of the House of Representatives.
    Sir: As required by the Defense Production Act of 1950, as 
amended, I hereby notify Congress of the intent of the 
Department of Defense to make purchases and purchase 
commitments, and to enter into cost sharing arrangements for 
equipment to develop manufacturing processes under the Defense 
Production Act. This budget amendment is consistent with my 
Administration's emphasis on maintaining national security 
while increasing America's global competitiveness. No 
additional budgetary resources are required.
    The determinations of the Under Secretary of Defense that 
these purchases and purchase commitments and cost sharing 
arrangements meet the requirements of the Defense Production 
Act are enclosed.
    The details of this action are set forth in the enclosed 
letter from the Director of the Office of Management and 
Budget. I concur with her comments and observations.
            Sincerely,
                                                William J. Clinton.
    Enclosures.
                Estimate No. 17, 104th Cong., 1st. Sess.

                 Executive Office of the President,
                           Office of Management and Budget,
                                   Washington, DC, October 5, 1995.
The President,
The White House.
    Submitted for your consideration is a request for the 
Department of Defense to make purchases and purchase 
commitments, and to enter into cost sharing arrangements under 
the Defense Production Act (DPA) of 1950, as amended.
    The DPA (50 U.S.C. App. 2061, et seq., Title III, sec. 
303(a)(6)) requires Presidential notification, either in the 
budget or in an amendment thereto, before the Department of 
Defense can use existing funds to make purchases and purchase 
commitments and to enter into cost sharing arrangements under 
the DPA. The Department of Defense will use DPA authority to 
purchase high technology materials from suppliers to stimulate 
market demand and to share in the cost of equipment necessary 
to develop manufacturing processes. Use of the DPA authority is 
consistent with your strong emphasis on maintaining our 
national security while investing in technologies that will 
increase America's global competitiveness.
    Use of the DPA authority will not increase budget 
authority. Outlays will be incurred to the extent that actual 
purchases are made and production equipment is procured.
    I have carefully reviewed this proposal and am satisfied 
that it is necessary at this time. Therefore, I join the 
Secretary of Defense in recommending that you approve the 
notification required by the DPA by signing the enclosed letter 
to the Speaker of the House of Representatives.
            Sincerely,
                                           Alice M. Rivlin,
                                                          Director.
    Enclosure.
  NOTIFICATION REQUIRED BY THE DEFENSE PRODUCTION ACT, DEPARTMENT OF 
                                DEFENSE

    Of the funds available from the Defense Production Act 
Purchases account, $15,000,000 will be available for Aluminum 
Metal Matrix Composites, and $25,000,000 will be available for 
Titanium Metal Matrix Composites.
    The Department of Defense will use Defense Production Act 
(DPA) authority to encourage private companies to work with the 
Department on the two projects described in the attachments to 
address industrial resource shortfalls. Both of these projects 
meet the criteria specified in the DPA.
    Use of the DPA authority will not increase budget 
authority. Outlays will be incurred to the extent that actual 
purchases are made and production equipment is procured. As 
required by the DPA, the Department of Defense will take no 
action until 60 days have elapsed.
    The determinations of the Under Secretary of Defense that 
these projects meet the requirements of the DPA are attached.
   TITLE III PROJECT DETERMINATION--ALUMINUM METAL MATRIX COMPOSITES

    1. The industrial resource is essential to the national 
defense. Aluminum Metal Matrix Composites (Al MMCs) is an 
enabling technology that will increase combat performance and 
reduce life cycle costs for a variety of defense systems, e.g., 
missiles, where reduced weight will reduce time to kill and/or 
increase range; and combat vehicles, where reduced weight 
increases fuel efficiency and reduces logistics costs.
    2. Without Presidential action, US industry cannot 
reasonably be expected to provide the capability for the needed 
industrial resource in a timely manner. Industry has been 
unwilling to assume the risk of establishing the production 
capacity necessary to support defense requirements. Title III, 
through cost sharing, will facilitate the establishment of both 
the needed production capacity and the military's access to 
this critical technology.
    3. Purchases, purchase commitments, or other actions are 
the most cost-effective, expedient, and practical alternative 
method for meeting the need. No other program can successfully 
mitigate the risks to industry or offer the incentives industry 
requires to establish the needed production capacity, The 
authorities contained in the Defense Production Act were 
enacted specifically to meet the needs embodied in this project
    4. The combination of the US national defense demand and 
foreseeable non-defense demand for the industrial resource or 
critical technology items is not less than the output of the 
domestic industrial capability, including the output to be 
established through this project. Current domestic production 
capacity for Al MMCs is 100,000 pounds per year, with existing 
demand at 200,000 pounds per year. But the year 2000, domestic 
demand for Al MMCs for use in aerospace and automotive 
applications will approach 750,000 pounds per year.
                        Approved by: Hon. Paul G. Kaminski,
             Under Secretary of Defense (Acquisition & Technology).
   TITLE III PROJECT DETERMINATION--TITANIUM METAL MATRIX COMPOSITES

    1. The industrial resource or critical technology item is 
essential to the national defense. Titanium Metal Matrix 
Composites (Ti MMCs) is an enabling technology that is 
essential to improving combat performance of a number of 
defense systems. Ti MMCs provide significant increases in 
strength and temperature resistance with a simultaneous 
reduction in weight over conventional alloys. In fighter 
aircraft, these weight reductions result in increased range, 
speed, payload and maneuverability; in transport aircraft, they 
produce increased range and reduced fuel costs per cargo 
sortie. Ti MMCs' advantages in high temperature stiffness and 
toughness will result in reduced engine failure due to 
component fatigue and mechanical overstress, and will reduce 
required maintenance actions and life cycle costs.
    2. Without Presidential action, U.S. industry cannot 
reasonably be expected to provide the capability for the needed 
industrial resource in a timely manner. Industry has been 
unwilling to assume the total risk of establishing the 
production capacity necessary to support defense requirements. 
Title III, through a cost sharing effort, will facilitate the 
establishment of the needed capacity and ensure the U.S. 
military's access to this critical technology.
    3. Purchases, purchase commitments, or other actions are 
the most cost-effective, expedient, and practical alternative 
methods for meeting the need. No other program can successfully 
mitigate the risks to industry or offer the incentive industry 
requires to establish the needed production capacity. The 
authorities contained in the Defense Production Act was enacted 
specifically to meet the needs embodied in this project.
    4. The combination of the US national defense demand and 
foreseeable non-defense demand for the industrial resource or 
critical technology items is not less than the output of the 
domestic industrial capability, including the output to be 
established through this project. The current domestic 
production capability for Ti MMCs is approximately 2,000 pounds 
per year, with existing demand at 5,000 pounds per year. By the 
year 2000, the combined domestic military and commercial 
aircraft demand for Ti MMCs in engines and structural 
components will approach 20,000 pounds per year.

                        Approved by: Hon. Paul G. Kaminski,
             Under Secretary of Defense (Acquisition & Technology).

                                
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