[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                       REAUTHORIZING THE DEFENSE

                             PRODUCTION ACT
=======================================================================



                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON

                       MONETARY POLICY AND TRADE

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 8, 2013

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 113-18




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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

GARY G. MILLER, California, Vice     MAXINE WATERS, California, Ranking 
    Chairman                             Member
SPENCER BACHUS, Alabama, Chairman    CAROLYN B. MALONEY, New York
    Emeritus                         NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York              MELVIN L. WATT, North Carolina
EDWARD R. ROYCE, California          BRAD SHERMAN, California
FRANK D. LUCAS, Oklahoma             GREGORY W. MEEKS, New York
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
SCOTT GARRETT, New Jersey            RUBEN HINOJOSA, Texas
RANDY NEUGEBAUER, Texas              WM. LACY CLAY, Missouri
PATRICK T. McHENRY, North Carolina   CAROLYN McCARTHY, New York
JOHN CAMPBELL, California            STEPHEN F. LYNCH, Massachusetts
MICHELE BACHMANN, Minnesota          DAVID SCOTT, Georgia
KEVIN McCARTHY, California           AL GREEN, Texas
STEVAN PEARCE, New Mexico            EMANUEL CLEAVER, Missouri
BILL POSEY, Florida                  GWEN MOORE, Wisconsin
MICHAEL G. FITZPATRICK,              KEITH ELLISON, Minnesota
    Pennsylvania                     ED PERLMUTTER, Colorado
LYNN A. WESTMORELAND, Georgia        JAMES A. HIMES, Connecticut
BLAINE LUETKEMEYER, Missouri         GARY C. PETERS, Michigan
BILL HUIZENGA, Michigan              JOHN C. CARNEY, Jr., Delaware
SEAN P. DUFFY, Wisconsin             TERRI A. SEWELL, Alabama
ROBERT HURT, Virginia                BILL FOSTER, Illinois
MICHAEL G. GRIMM, New York           DANIEL T. KILDEE, Michigan
STEVE STIVERS, Ohio                  PATRICK MURPHY, Florida
STEPHEN LEE FINCHER, Tennessee       JOHN K. DELANEY, Maryland
MARLIN A. STUTZMAN, Indiana          KYRSTEN SINEMA, Arizona
MICK MULVANEY, South Carolina        JOYCE BEATTY, Ohio
RANDY HULTGREN, Illinois             DENNY HECK, Washington
DENNIS A. ROSS, Florida
ROBERT PITTENGER, North Carolina
ANN WAGNER, Missouri
ANDY BARR, Kentucky
TOM COTTON, Arkansas

                     Shannon McGahn, Staff Director
                    James H. Clinger, Chief Counsel
               Subcommittee on Monetary Policy and Trade

                  JOHN CAMPBELL, California, Chairman

BILL HUIZENGA, Michigan, Vice        WM. LACY CLAY, Missouri, Ranking 
    Chairman                             Member
FRANK D. LUCAS, Oklahoma             GWEN MOORE, Wisconsin
STEVAN PEARCE, New Mexico            GARY C. PETERS, Michigan
BILL POSEY, Florida                  ED PERLMUTTER, Colorado
MICHAEL G. GRIMM, New York           BILL FOSTER, Illinois
STEPHEN LEE FINCHER, Tennessee       JOHN C. CARNEY, Jr., Delaware
MARLIN A. STUTZMAN, Indiana          TERRI A. SEWELL, Alabama
MICK MULVANEY, South Carolina        DANIEL T. KILDEE, Michigan
ROBERT PITTENGER, North Carolina     PATRICK MURPHY, Florida
TOM COTTON, Arkansas


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    May 8, 2013..................................................     1
Appendix:
    May 8, 2013..................................................    21

                               WITNESSES
                         Wednesday, May 8, 2013

Kaufman, David J., Associate Administrator, Policy, Program 
  Analysis and International Affairs, Federal Emergency 
  Management Agency, U.S. Department of Homeland Security........     5
Lambert, Brett B., Deputy Assistant Secretary of Defense, 
  Manufacturing and Industrial Base Policy, U.S. Department of 
  Defense........................................................     7
Wolf, Hon. Kevin J., Assistant Secretary of Commerce, Export 
  Administration, U.S Department of Commerce.....................     3

                                APPENDIX

Prepared statements:
    Kaufman, David J.............................................    22
    Lambert, Brett B.............................................    25
    Wolf, Hon. Kevin J...........................................    36

              Additional Material Submitted for the Record

Grimm, Hon. Michael G.:
    Written responses to questions submitted to Brett B. Lambert.    43


                       REAUTHORIZING THE DEFENSE



                             PRODUCTION ACT

                              ----------                              


                         Wednesday, May 8, 2013

             U.S. House of Representatives,
                           Subcommittee on Monetary
                                  Policy and Trade,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2:01 p.m., in 
room 2128, Rayburn House Office Building, Hon. John Campbell 
[chairman of the subcommittee] presiding.
    Members present: Representatives Campbell, Huizenga, Lucas, 
Posey, Fincher, Stutzman, Mulvaney, Pittenger, Cotton; Clay, 
and Perlmutter.
    Chairman Campbell. The subcommittee will come to order. 
Without objection, the Chair is authorized to declare a recess 
of the committee at any time.
    And we now have all three witnesses, so that is just in the 
nick of time.
    The Chair recognizes himself for 5 minutes for an opening 
statement. Good afternoon, and thank you to our distinguished 
panel for appearing today before this subcommittee.
    Shortly after the outbreak of the Korean War, the Federal 
Government sought powerful authorities to mobilize the U.S. 
economy for the war effort in order to enhance military 
preparedness and ensure that we have the means to defend this 
Nation and its interests.
    Congress granted these powers to the President through the 
Defense Production Act, which we will probably throughout this 
hearing call the DPA for short because we have to have an 
acronym for everything.
    So for the Defense Production Act or the DPA, many of these 
expensive authorities have been abandoned and allowed to expire 
over time but others remain essential to providing for national 
security and defense, protecting critical infrastructure, and 
bolstering disaster relief capabilities.
    The three DPA titles that remain active are due to expire 
in 2014 and this subcommittee will be considering their 
reauthorization. Possessing exclusive jurisdiction over this 
statute in the House of Representatives, the Financial Services 
Committee can best ensure that these powers are exercised with 
the least possible distortions on the broader economy. That is 
why we have the jurisdiction over these titles and over the 
DPA.
    I hope to gain a better understanding from our witnesses' 
testimony about how government is using DPA authorities today 
and what systems and policies are in place to ensure that they 
are only exercised in the circumstances for which they are 
truly warranted.
    In addition, periodic reauthorizations of statutes provide 
Congress the opportunity to review the effectiveness of these 
programs and identify problems.
    Since the DPA was enacted in 1950, Congress has taken 
advantage of this opportunity to strip out provisions that were 
no longer relevant and add additional provisions to mitigate 
the risk of outsized or unintended consequences.
    I will be looking for our panel of witnesses to provide 
their expert opinions on what is working and what is not with 
regard to the DPA in order to help the committee identify 
appropriate solutions that we can implement in this 
reauthorization.
    Thank you again to the witnesses and the agencies they 
represent for appearing before this panel. I look forward to 
this thoughtful discussion on the Defense Production Act or 
DPA.
    I yield back my time, and I would like to yield 5 minutes 
now to the gentleman from Missouri, Mr. Clay, the ranking 
member of the subcommittee.
    The gentleman is recognized for 5 minutes.
    Mr. Clay. Thank you, Chairman Campbell, and thank you so 
much for conducting this hearing. I will not take the total 5 
minutes. The title of the hearing is, ``Reauthorizing the 
Defense Production Act.'' And as you stated, it gives the 
President broad powers to implement.
    There are three titles that need to be reauthorized, and as 
you know, Presidents have used the authorities granted under 
this Act in many ways.
    President George H.W. Bush used the Act during Operation 
Desert Storm. President Clinton used his authority under the 
Act during the Bosnian conflict.
    President George W. Bush used his authority during the Iraq 
and Afghanistan wars. Also, Presidents have used their powers 
under the Act in the wake of natural disasters.
    Congress last reauthorized the Act in 2009, and the Act is 
up for reauthorization when it expires at the end of 2014.
    So, again, thank you, Mr. Chairman, and I look forward to 
the witnesses comments. I yield back.
    Chairman Campbell. The gentleman yields back. I would now 
like to recognize for an opening statement, also for 5 minutes, 
the gentleman from Michigan, the vice chairman of the 
subcommittee, Mr. Huizenga.
    Mr. Huizenga. Thank you, Chairman Campbell. I appreciate 
that, and I also thank Ranking Member Clay.
    I do have a longer statement that I would like to submit 
into the record. Nobody wants to sit here through all this, but 
I do appreciate us holding this hearing.
    The fact that the Financial Services Committee is sort of 
one of the places where this resides and has the responsibility 
for this reauthorization is really testimony to how strongly 
our defense capabilities depend on our Nation's economic 
strength, and I think that just underscores how important this 
is.
    We cannot prepare for war without the private sector. We 
simply cannot. Coming from Michigan, being the home of the 
arsenal democracy, that is something that was drilled into us 
from a very early age, and we still see the remnants of that, 
but there have been some very challenging times, and we know 
that we have to make sure that we have that robust private 
sector.
    When it was first passed, this Act empowered the 
Administration's ability to force private industry to give 
priority to defense and homeland security contracts and to 
allocate those resources.
    We need to make sure that we are using those very powerful 
authorities to meet those critical needs, but also make sure 
that we are doing that in a way that deals with the private 
sector. So we are glad that we are going to be able to move 
forward on this.
    This is a very important element, and clearly these are 
worthy priorities, and I look forward to hearing from the 
members of the Departments of Homeland Security, Commerce, and 
Defense today.
    I yield back.
    Chairman Campbell. The gentleman yields back.
    Are there any further opening statements?
    If not, then we will proceed to the witnesses. Each of you 
will be recognized for 5 minutes for an oral presentation of 
your testimony. Without objection, each of your written 
statements will be made a part of the record.
    On your table, there is a light. It will start out green, 
when it turns yellow you have 1 minute to sum up, and when it 
turns red, please suspend.
    As I discussed with you all before, we are expecting votes 
to be called in about an hour. So I am going to dispense with 
your all of your impressive bios and just go straight to each 
of you by title because we would like to see if we can get 
everybody in before the votes are called in about an hour.
    We will begin with the Honorable Kevin Wolf, Assistant 
Secretary of Commerce for Export Administration.
    Secretary Wolf, you are recognized.

 STATEMENT OF HONORABLE KEVIN J. WOLF, ASSISTANT SECRETARY OF 
  COMMERCE, EXPORT ADMINISTRATION, U.S DEPARTMENT OF COMMERCE

    Mr. Wolf. Thank you very much, Chairman Campbell, 
Congressman Clay, and members of the subcommittee.
    I appreciate the opportunity to testify before the 
subcommittee this afternoon on the important role of the 
Defense Production Act, which it continues to play in 
supporting our national defense.
    The Department of Commerce plays several roles in 
implementing DPA related to the defense industrial base. First, 
under Title I, the Department administers the Defense 
Priorities and Allocations System.
    Second, under Title VII, the Department submits an annual 
report to Congress in the offsets of defense trade.
    Third, also under Title VII, the Department analyzes the 
health of the U.S. defense industrial base.
    All three DPA authorities need to be reauthorized before 
September of 2014. My written remarks go into each of these in 
more detail so I will just provide a summary of some of the key 
provisions and elements, and I will be happy to discuss them as 
you would like.
    Title I of the Defense Production Act authorizes the 
President to, as you summarized, require acceptance and 
priority performance of contracts and orders, other than 
contracts for employment, to promote the national defense over 
the performance of other contracts or orders and to allocate 
materials, services, and facilities as deemed necessary or 
appropriate to promote the national defense.
    These authorities to prioritize contracts and require 
allocations for industrial resources were most recently 
delegated to the Secretary of Commerce by an Executive Order in 
2012.
    Today, Commerce's Bureau of Industry and Security 
implements these authorities through the Defense Priorities and 
Allocations System regulation, commonly known as the DPAS 
regulations, and they establish procedures for the placement, 
acceptance, and performance of priority-rated contracts and 
orders and for the allocation of materials, services, and 
facilities which are regularly used to support the acquisition 
of industrial resources needed to support the U.S. national 
defense requirements.
    The Department of Defense is our primary user of the DPAS. 
Our industrial base is well-versed in the DPAS and has more 
than 60 years of experience in receiving and placing priority-
rated contracts and orders to support the Department of Defense 
requirements.
    The private sector also appreciates that the DPA includes a 
protection against claims in the event that a contractor is 
required to reschedule an unrated order after receipt of a 
rated order.
    My Department also works closely with the Department of 
Homeland Security's Federal Emergency Management Agency (FEMA) 
through the DPAS to support emergency preparedness and critical 
infrastructure protection and restoration requirements.
    My colleagues will highlight several examples in their 
testimony demonstrating how the DPAS is being used to support 
our national defense including military and homeland security 
requirements.
    If the DPA's Title I authority were to lapse, Commerce 
would be forced to rely on the limited priority authority it is 
delegated under the Selective Service Act of 1948 to administer 
the DPAS. The Selective Service Act authority may only be used 
to support procurement of products and materials for the 
exclusive use of the U.S. Armed Forces and may not be used to 
support emergency preparedness homeland security program 
requirements.
    In addition, the Selective Service Act does not provide 
contractors with protection against claims. Under Section 705 
of the DPA and the Executive Order, the Department also 
conducts survey assessments of defense-related industries and 
technologies, and these surveys are routinely requested by the 
Department of Defense to help with the analysis and development 
and strengthening of our industrial base.
    So, in sum, the DPA provides authority for a variety of 
programs at the Department of Commerce and is of substantial 
importance to U.S. national security. The DPAS continues to 
facilitate the timely delivery of industrial resources to 
support the Department of Defense, coalition partners, and 
increasingly meet Homeland Security requirements. The DPA also 
facilitates valuable assessments of the impact of offsets in 
defense trade and the health of key sectors of the defense 
industrial base.
    We look forward to working with the subcommittee on its 
reauthorization, and I am ready to answer whatever questions 
you may have after the opening statements. Thank you.
    [The prepared statement of Assistant Secretary Wolf can be 
found on page 36 of the appendix.]
    Chairman Campbell. Thank you, Secretary Wolf.
    Next, we have Mr. David Kaufman, who is the Associate 
Administrator for Policy, Program Analysis and International 
Affairs at the Federal Emergency Management Agency, FEMA.
    Mr. Kaufman, you are recognized for 5 minutes.

STATEMENT OF DAVID J. KAUFMAN, ASSOCIATE ADMINISTRATOR, POLICY, 
 PROGRAM ANALYSIS AND INTERNATIONAL AFFAIRS, FEDERAL EMERGENCY 
    MANAGEMENT AGENCY, U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. Kaufman. Thank you.
    Good afternoon, Chairman Campbell, Ranking Member Clay, and 
members of the subcommittee. It is a pleasure to be here today 
before you, and I appreciate the opportunity to testify in 
support of the Defense Production Act and its importance to 
homeland security and emergency preparedness and response.
    The DPA is the primary source of Presidential authorities 
to expedite supply of materials and services needed for both 
military and civil emergency preparedness and response.
    Expiration of this authority would seriously hinder our 
ability to prepare for and respond to natural disasters and 
other threats including catastrophic disasters such as a major 
earthquake, a major hurricane strike, or an incident involving 
a weapon of mass destruction.
    As discussed already, the use of DPA authorities has 
evolved over time, and while these authorities are used 
primarily to support Department of Defense programs, they are 
also used today to support disaster preparedness and response, 
critical infrastructure protection and restoration, including 
physical and cyber-based assets, as well as other homeland 
security activities.
    Title I of the DPA authorizes the priority treatment of 
contracts and orders. The priority rating is one that we invoke 
rarely in the civil departments but the availability of this 
authority is essential to ensure timely delivery of needed 
resources
    The priorities authority has gained increased importance 
for homeland security purposes. As with rated orders in support 
of military programs, rated orders for homeland security 
programs are used to ensure on-time performance when delays 
could place lives and property at greater risk. Ongoing or 
recent use of priorities authority for various homeland 
security purposes includes: the U.S. Army Corps of Engineers 
program to repair and restore floodwalls and levees after 
Hurricane Katrina; Aircraft for the U.S. Customs and Border 
Protection; and the emergency preparedness and critical 
infrastructure protection activities of the Architect of the 
Capitol.
    The priorities authority is also used, on an as-needed 
basis, to protect and restore critical infrastructure 
operations and to respond to and recover from domestic 
emergencies and disasters.
    Examples of these uses include: thermal imaging camera 
systems for perimeter security at both airport and seaport 
facilities in the Boston region; equipment to enable the rapid 
restoration of rail service in the Gulf Coast region after 
Hurricane Katrina; and components of weather satellites that 
help detect, monitor, and track severe weather for early 
warning to protect lives and property.
    While the use of the priorities authority for homeland 
security purposes is limited, it is still important. The DPA 
priority authority is essential, as we discussed, to ensuring 
our ability to respond to disasters, rapidly restore and 
protect critical infrastructure, and ensure that timely 
development of emergency preparedness and protection measures 
to protect lives and property can be enabled.
    Along with other FEMA responsibilities to coordinate 
Federal emergency preparedness and response activities, FEMA 
provides government-wide coordination and guidance for the use 
of DPA authorities on behalf of the Secretary of Homeland 
Security pursuant to Executive Order 13603
    To date, our use of these authorities has been limited 
primarily to resources falling under the jurisdiction of the 
Department of Commerce. These include most manufactured goods 
and services. The Department of Commerce has delegated 
authority to DHS to place priority ratings on contracts and 
orders to support emergency requirements, critical 
infrastructure protection and restoration, and homeland 
security programs.
    FEMA is continuing to work with all six resource 
departments that have been delegated priorities and allocations 
authority by the President to ensure the effective use of this 
authority, and we will continue to work with the appropriate 
Federal departments and agencies to ensure the proper 
implementation of DPA authorities and incorporate the DPA as an 
important planning tool for emergencies. It is a critical tool 
in our toolbox for preparing for, responding to, and recovering 
from disasters.
    Without the DPA, that critical authority to ensure timely 
procurement of materials and services to protect and restore 
critical infrastructure operations, whether they are key 
transportation capabilities, floodwalls, or levees, would be 
lost.
    Without the DPA, we would have no authority to prioritize 
contracts for resources needed to respond to and recover from a 
major natural disaster or act of terrorism.
    In closing, I urge Congress to reauthorize the DPA 
authorities which remain so critical to our homeland security.
    Thank you, Mr. Chairman, for the opportunity to appear 
before you today. And I would also be pleased to answer any 
questions that members of the subcommittee may have.
    Thank you.
    [The prepared statement of Mr. Kaufman can be found on page 
22 of the appendix.]
    Chairman Campbell. Thank you, Mr. Kaufman.
    And last but not least, Mr. Brett B. Lambert is the Deputy 
Assistant Secretary of Defense for Manufacturing and Industrial 
Base Policy for the U.S. Department of Defense.
    Secretary Lambert, you are recognized for 5 minutes.

 STATEMENT OF BRETT B. LAMBERT, DEPUTY ASSISTANT SECRETARY OF 
    DEFENSE, MANUFACTURING AND INDUSTRIAL BASE POLICY, U.S. 
                     DEPARTMENT OF DEFENSE

    Mr. Lambert. Thank you.
    Thank you, Mr. Chairman, and members of the subcommittee, 
for this opportunity to talk about this very important Defense 
Production Act in supporting the Nation's defense needs. I have 
a prepared testimony that goes into a lot more details, but I 
am sure you want to get to your questions, so I will keep this 
brief.
    The DPA provides important authorities to the Department, 
both to ensure timely delivery of equipment and services 
essential to our Armed Forces and to promote domestic 
industrial capabilities to produce superior defense systems at 
affordable costs.
    My testimony today will focus on the priorities authorities 
provided in Title I and the business incentives provided in 
Title III, but I will also note that Title VII provides a 
number of important authorities that support our capabilities 
to maintain and strengthen our defense industrial base.
    DOD supports the 5-year reauthorization of all the DPA 
precisions which are scheduled to expire in September of 2014.
    Let's start with Title I. Title I of the Defense Production 
Act is vital to ensure timely DOD access to industrial 
resources during both peacetime and periods of conflict. It 
authorizes the President: one, to require acceptance and 
priority performance of contracts and orders; and two, to 
allocate materials, services, and facilities, as necessary or 
appropriate to promote the national defense.
    These Presidential authorities are delegated to the 
Department of Commerce with respect to industrial resources. 
Commerce has re-delegated to the Department of Defense 
authority under the Defense Priorities and Allocations System--
another acronym; DPAS--to place priority-rated contracts and 
orders for industrial resources in support of DOD-approved 
programs.
    DPAS priority ratings help to ensure that rated orders will 
be performed on time. For the most part, contractors and 
suppliers act on their own to fulfill their obligations under 
rated orders, without further action required by the 
Government. However, when problems occur that cannot be 
resolved by the contractors and suppliers, the DPAS provides 
for special priorities assistance, whereby problems can be 
resolved with the assistance of DOD or, ultimately, the 
Department of Commerce.
    Although important in peacetime, DPAS is indispensable in 
times of conflict. It provides the authority and flexibility to 
address the critical procurement needs to our warfighters. Even 
though this authority was first enacted over 60 years ago, 
experience with providing direct support to the operations in 
Afghanistan and Iraq demonstrates its continued importance 
today.
    The DPAS played an important role during these operations 
in expediting delivery of equipment needed to counter new 
threats and protect the lives of our Armed Forces overseas.
    The DPAS, under Title I authorities, was instrumental in 
speeding the deployment of new and increased quantities of 
personal body armor, Counter Improvised Explosive Device or IED 
systems, MRAPs, Mine Resistant Ambush Protected Vehicles, and 
ISR platforms, night vision equipment, submarine environmental 
controls, weapons targeting systems, and many other items 
necessary to support our warfighters.
    Title III of the Defense Production Act authorizes various 
actions by the President to develop, maintain, modernize, 
restore, and expand the productive capacities of domestic 
sources for critical components, critical technology items, 
materials, and industrial resources essential for the execution 
of our national security strategy in this country.
    The Title III authorities were initially used, as was 
pointed out, during the Korean War era to establish the 
industrial infrastructure needed to transition aircraft 
production into the jet age and for other industrial base 
needs.
    Much of the U.S. processing capabilities for these and 
dozens of other key materials can trace their roots to Title 
III projects that were undertaken during the 1950s. The 
national defense and the U.S. economy overall are still reaping 
enormous benefits from these historical Title III actions.
    Today, Title III projects continue to support us in the 
transition of new and next-generation technologies that are 
essential to meeting the national security requirements 
identified by government customers.
    I suspect most people in this hearing room are carrying a 
device, which performs better and is cheaper, due to a Title 
III project that was completed several years ago. The project 
involved manufacturing capabilities for gallium arsenide 
wafers. The primary purpose of the project was to support 
defense needs of advanced integrated circuits, but gallium 
arsenide integrated circuits are also important components in 
your cell phones.
    U.S. Title III contractors more than doubled their share of 
the world market for gallium arsenide wafers over the course of 
the Title III efforts and reduced the wafer price by more than 
one-third. So everyone's cell phone is cheaper, performs 
better, and is more likely to contain integrated circuits 
fabricated and domestically-produced largely as a result of 
Title III actions.
    Most provisions of the Defense Production Act are now 
permanent law but must be renewed periodically by Congress. We 
request that the provisions scheduled to expire at the end of 
the next fiscal year be extended.
    The U.S. industrial base continues to be the cornerstone of 
our national defense structure and the Defense Production Act 
continues to provide unique and important authorities to 
establish, expand, maintain, and modernize critical elements of 
the base.
    Title I authorities play an important role to allow us 
timely access to domestic production. Title III authorities are 
important to expedite the transition of new and advanced 
technologies into defense systems that also have an economic 
benefit overall. While the primary purpose of Title III actions 
is to support the national defense, these actions also 
contribute, I believe, to a stronger, more competitive U.S. 
industrial base.
    I am happy to answer any questions you have regarding this 
issue.
    [The prepared statement of Deputy Assistant Secretary 
Lambert can be found on page 25 of the appendix.]
    Chairman Campbell. Thank you, Mr. Lambert.
    And thank you to the panel.
    I will now recognize myself for 5 minutes for questioning.
    Mr. Lambert, you just mentioned that you request that these 
three titles of the DPA be reauthorized as is. Is that the 
position of the DOD? Is that the position of the 
Administration? Is there an Administration request coming? Are 
any of you aware of what the Administration is actually going 
to request?
    Mr. Lambert. Congressman, I am not. We are working within 
the structure we have. We believe that we have the flexibility 
within the structure as currently written. I would look forward 
to a dialogue of where there may be instances where we could 
collectively agree on how to adjust given the changes of time 
and effort, but there is nothing I am aware of, a proposal at 
this time that would change what we currently have in statute.
    Chairman Campbell. Okay.
    Are any of the rest of you aware of the Administration's 
position on what their request is that we do with the DPA?
    Mr. Wolf. I am aware of no other position within any other 
department requesting any change other than reauthorization. We 
will ask around. There are different parts of the U.S. 
Government with equities in this and I will survey them, but as 
of now, I am not aware of any.
    Chairman Campbell. All right, thanks.
    Just for the record, for the Administration, I haven't been 
particularly good at sending up formal requests so that we 
know, okay here is our request, here is what we want, and so we 
would like to have that request. We would prefer to not let 
this reauthorization sit until the last minute as I know you 
would--you all would not like to see happen either.
    Okay. With these--you guys have all talked about when this 
thing--each one of you gave an example of when it has been 
used, when the DPA has been used, and how it has worked kind of 
as intended and so forth.
    Can any of you give any examples where you think the DPA 
fell short one way or another, either you weren't able to 
implement something that you wanted to or where the 
implementation didn't go right, or the other way around, where 
the implementation went too far or it caused ripple effects 
that you didn't anticipate?
    Mr. Kaufman?
    Mr. Kaufman. For my part, no. I don't have any example that 
comes to mind where we feel like the authority fell short.
    Chairman Campbell. Okay.
    Mr. Wolf. I would have the same answer. I was just checking 
with my staff, and we are unaware of any examples that would 
meet that definition. It has otherwise operated efficiently as 
far as we can tell.
    Chairman Campbell. Okay.
    Mr. Lambert. I came from business, so I am always looking 
back to see what we could do better. Are there examples where 
we have executed programs where we could have done better, we 
could have implemented better practices, I think the answer to 
that should always be yes, and if you can figure out what it 
is, you should go back and look again.
    I don't know of any examples where we failed. I think we 
could have succeeded better in previous examples and we have 
incorporated that into our processes.
    Chairman Campbell. Okay, and that is because of processes 
at the Department of Defense, not because of some weakness 
within the DPA itself--
    Mr. Lambert. That is correct.
    Chairman Campbell. --is what you are saying. Okay.
    There has been a lot of controversy lately about Title III 
funds being used for biofuels. I am not going to get into that 
controversy at the moment. We can deal with that at a later 
time or as things go forward, but are there any other 
controversial issues in the past where the use of DPA authority 
became a controversial issue because of what the authority was 
used for?
    Mr. Lambert. Sir, not that I am aware of. I think this is 
unique. Proposals to DPA come from other government agencies. 
We give every agency the same look and review.
    We are very meticulous about how we review them. We 
restructure them. Just because somebody asks, it doesn't mean 
we deliver. We take the same business--everyone has to apply 
the same business model and business case.
    It is a pretty set standard formula, but I am not aware in 
the past of anything being written about--I won't say 
controversial, but I will say written about that particular 
issue.
    Chairman Campbell. Okay.
    Mr. Wolf. With respect to the areas where the Commerce 
Department has a role, there are about 60 years' worth of 
practice of experience working with industry on implementing 
and working through these authorities, and DOD places an 
estimated 300,000 or so rated contracts and orders annually.
    And the feedback we have been receiving as long as I have 
been in government, and I asked people before I arrived, has 
been generally positive, and the Commerce Department is there 
to sort of help people understand and work through the 
regulations, but we have no indication of a negative reaction 
to the way it is administered or to its content. It has been 
quite helpful, generally.
    Chairman Campbell. Okay. My time has expired.
    I will now recognize the ranking member of the 
subcommittee, the gentleman from Missouri, Mr. Clay, for 5 
minutes.
    Mr. Clay. Thank you, Mr. Chairman.
    And I thank all of you for your testimony.
    Many DPA authorities have not been used by the Federal 
Government for years, even decades in some cases, though they 
remain in statute. Some of these less frequently used 
authorities include the Title III authority to provide loans 
and loan guarantees as well as the national defense executive 
reserve authority in Title VII.
    Could you please identify whether there are any authorities 
that you see as no longer needed for the national defense or 
perhaps redundant with other laws? I would like to hear from 
each one of you.
    Mr. Lambert. Yes, I am sorry, sir. I know the answer to 
that, but I don't have it in front of me. There is a reason we 
have stopped using loan guarantees. As I recall, in preparing 
for this, it was in the 1980s, and there was a reason that it 
ended, but I will have to get back to you for the record on 
that.
    Mr. Clay. How about you Mr. Wolf?
    Mr. Wolf. The Commerce Department has no role with Title 
III, so I have nothing more to add.
    Mr. Clay. Mr. Kaufman?
    Mr. Kaufman. Thank you, Congressman. FEMA also has no role 
with the Title III program. It is not an active program for us; 
no request for appropriations.
    Mr. Clay. Hopefully, Mr. Lambert, that will be an area 
where you come back with recommendations to this committee on 
how we can improve on the Act.
    Mr. Lambert. Yes, sir.
    Mr. Clay. Let me also look at under Title III, once a 
determination is made that a critical industrial resource is in 
short supply, what steps are taken to rectify the shortcoming, 
and is there a transparent competitive bidding process in place 
to ensure fairness among private market participants when the 
government determines a need for private direct support?
    Mr. Kaufman. Yes, sir. It is a very businesslike approach 
and here I would give a significant amount of credit to our 
executing agent, which is the Air Force Research Lab (AFRL.)
    A lot of business people and attorneys who scour--when we 
have a request, we go through a very methodical process. Is 
there a market out there? We usually go out with a request for 
information to determine whether this can be met by commercial 
needs.
    The request on behalf of the agency making the request or 
the service, and if that is not the case, we go through a very 
diligent--it is basically a due diligence process. We have laid 
it out. It is a format we have used for years and it has been 
very effective, but there is a process. Nobody gets special 
treatment.
    Mr. Clay. Okay. Is that the case, Mr. Wolf?
    Mr. Kaufman?
    Mr. Wolf. Again, the Commerce Department has no role in 
Title III, so we have nothing to add.
    Mr. Clay. Okay.
    Mr. Kaufman?
    Mr. Kaufman. Same for us.
    Mr. Clay. All right. The Defense Production Act defines 
``domestic source'' as both the United States and Canada. Can 
you explain how the authorities of the DPA function in the 
context of Canada?
    Mr. Lambert. Sir, I believe that is their--part of our 
North--it is in the North American, and Syd Pope will correct 
me if I am wrong, but North American industrial base.
    They are considered a part of our industrial base. They 
were instrumental, for instance to give you an example, in 
supporting us in this effort to provide MRAPS to servicemembers 
as we were trying to build up. So we do consider Canada part of 
our North American industrial base.
    Mr. Clay. Okay. Any additional comment?
    Mr. Wolf?
    Mr. Wolf. That is a fair summary.
    Mr. Clay. Mr. Kaufman?
    Mr. Kaufman. Fair summary. Thank you.
    Mr. Clay. Do any intergovernmental agreements or memoranda 
of understanding exist to allow the United States to prioritize 
contracts with Canadian companies?
    Mr. Lambert. Sir, not to my knowledge. I believe Canadian 
companies' needs are treated no differently than U.S. companies 
for this purpose.
    Mr. Clay. Okay. Can you give some examples of where DPA 
authorities have been used to provide military or critical 
infrastructure assistance to foreign nations in ways that 
advance our own self-interest?
    Mr. Lambert. Sir, I can give you--quickly, I can give you 
an example where DPS Title I authorities that came through our 
office--in the not-too-distant past--where we were asked to 
provide coalition forces with critical night vision equipment, 
and they were in theater, and we needed to work with the 
industry to assist them in providing that equipment to our 
coalition forces operating alongside of us, and we could not 
have done that without the authorities provided by Title I.
    Mr. Clay. An essential piece of equipment that helped our 
forces.
    Mr. Lambert. Absolutely.
    Mr. Clay. I thank the witnesses.
    And I yield back.
    Chairman Campbell. The gentleman's time has expired.
    The gentleman from Michigan, the vice chairman of the 
subcommittee, Mr. Huizenga, is recognized for 5 minutes.
    Mr. Huizenga. Thank you, Mr. Chairman. I appreciate that.
    I think Mr. Kaufman and Mr. Wolf are having an easier time 
here than Secretary Lambert.
    Mr. Lambert. I brought more people.
    Mr. Huizenga. I'm glad, and I hate to break that pattern, 
so my apologies to you, but Secretary Lambert and I had a 
chance to meet over an issue regarding A123 and its sale to 
Wanxiang a number of months ago and the--something called the 
Committee on Foreign Investment in the United States, CFIUS.
    So I am just wondering if you can give 30 seconds--just 
make sure all my colleagues know exactly, because I did not 
know about CFIUS or exactly the role it played until that had 
come up. So I wanted you to have an opportunity to describe 
that briefly and confirm my understanding that this is not a 
part of the reauthorization because it is part of permanent 
law, correct?
    Mr. Lambert. Correct. I believe it is Section 721. That is 
part of permanent law. I should start it out by saying the 
Department of Defense does not speak on behalf--this is the 
Department of the Treasury, so they are the only official 
party, I think by statute, that is allowed to speak on the 
matter but it is--
    Mr. Huizenga. Can you quickly describe CFIUS?
    Mr. Lambert. Sure. The Committee on Foreign Investment in 
the United States was established to ensure that national 
security concerns were resolved prior to any transaction that 
involved an international party that could affect national 
security.
    And it is a committee of government agencies that the 
Department of the Treasury is the chair of and is responsible 
for. We are one of many members that participate in that review 
process along with Commerce and other agencies, but it is truly 
at the purview of the Department of the Treasury.
    Mr. Huizenga. All right, thank you. And I will get back to 
you on another issue.
    But Mr. Kaufman, I am curious. Being completely honest and 
transparent here, probably of all of the three of you up here 
describing your usages of this Act, the DPA, I am probably most 
concerned about Homeland Security and I am sorry with FEMA and 
what those applications are and it seems to me that there is a 
greater chance of sort of wandering outside of the parameters 
of what this program is really for, it seems to me, with 
application within FEMA.
    So if you could just describe exactly how you have been 
using it. I know you gave a couple of examples, and one of 
those was dealing with railroads post-Katrina, trying to get 
equipment and trains running there, but help alleviate my 
concern, please.
    Mr. Kaufman. I will be happy to, Congressman.
    Mr. Huizenga. In about 45 seconds.
    Mr. Kaufman. Noted. First off, I would say we use it on a 
very limited basis. In homeland security and emergency 
management space, something on the order of 16 uses since 2006, 
but when we do use it, it is for a very important purpose.
    And the purpose statements are accounted for in the 
amendments to the Act, or the reauthorization of the Act in 
2009, which did expressly include homeland security, emergency 
preparedness and response, and critical infrastructure 
protection and restoration as part of the scope of the 
authority.
    So in support of that, in no particular order, but to give 
you a couple of other examples, most recently during Hurricane 
Sandy, we had a critical need to procure greater interpretive 
services, telephonic interpretive services.
    There are an awful lot of languages spoken in the New 
Jersey and New York region, and so that was something that we 
needed to ensure we had available in very short order to 
support response recovery operations.
    Mr. Huizenga. Just so I am understanding what you are 
saying, you basically jumped to the head of the line and said, 
sorry, hospitals that may need some of these translation 
services or whatever else, the government gets priority?
    Mr. Kaufman. Yes. In the case of that Act, and that 
disaster where we were in an all-hands-on-deck footing, we said 
we need to be able to ensure that we are providing support to 
the survivors of that disaster in the most expeditious manner 
possible. That is absolutely correct.
    Mr. Huizenga. All right. And I may want to unpack this a 
little more at some other point.
    But Mr. Lambert, getting back to you, and I am not trying 
to--I firmly believe that every garden party needs a skunk. All 
right? So, I am happy to be that skunk today.
    I want to read this--shortfall--so--the Title III 
expenditures reduced shortfalls of industrial resources, 
critical technology items, or essential materials needed for 
national defense purposes, and the chairman alluded to this.
    I am baffled how under NDAA, where we put a specific 
congressional requirement for congressional approval for these 
biofuel projects to be moving forward with the funding, how the 
DOD has the ability, much less the gumption, to move forward 
with that.
    Chairman Campbell. And the DOD will have to answer that as 
part of another Member's questioning, because the gentleman 
from Michigan's time has expired.
    I would now like to recognize the gentleman from Colorado, 
Mr. Perlmutter for 5 minutes.
    Mr. Perlmutter. Thanks, Mr. Chairman. If I could pass, I 
just want to listen and understand this a little more, and 
maybe it will trigger a question, but I don't have any 
questions right now.
    Chairman Campbell. Okay, then we will now turn to the 
gentleman from South Carolina, Mr. Mulvaney, for 5 minutes. The 
gentleman from Colorado yields--
    Mr. Huizenga. You could have recognized me to get the 
answer.
    Mr. Perlmutter. All right. I will recognize--if I could--I 
would recognize my friend from Michigan to finish his question.
    Chairman Campbell. All right. If you can hold on just a 
moment, Mr. Mulvaney, then the gentleman from Colorado has 
recognized the gentleman from Michigan, whom I believe will 
allow Mr. Lambert to answer his question.
    Mr. Huizenga. I deeply appreciate my friend from Colorado, 
my former neighbor, who has moved up to better environs in 
Longworth, but thank you for this time.
    So, I would love to hear an answer.
    Mr. Lambert. I'm sorry, could you repeat the--no, I'm 
sorry.
    [laughter]
    Mr. Huizenga. Okay. Would you like the quote as well? I am 
happy to do that.
    Mr. Lambert. This is a very serious issue, and we don't 
take it lightly. When we reauthorized in 2009, and if you look 
back at the legislation, energy was one of the important 
components of the Defense Production Act. We have done a lot of 
energy activity.
    Prior to the biofuels notification that we provided 
Congress on this current round, we had provided one in 2010, so 
there was a precedent. It was smaller, admittedly, but there is 
a precedent and there are are really only two factors by law 
that we look at and one is, is it something that--I am 
summarizing the language because I don't have it in front of 
me, but in my head I say, does it make sense for the Nation? Is 
important to national security?
    And then the more important question to me is, is this 
something the commercial market is not doing for some reason? 
And then in my mind, again coming from industry, this shouldn't 
be a defense program.
    My goal and the goal of the Defense Production Act and 
everything that we do is we should be building facilities that 
we can utilize and then get out of, so they can be of use to 
the overall U.S. economy. Those are kind of the general things 
that I--
    Mr. Huizenga. Okay. The Department of Energy, the 
Department of Agriculture, people that you had previously been 
partnering with specifically have not been funded for this.
    It seems to me then we inserted language into NDAA that 
prohibited DOD to be able to do this, but you are going around 
that language under this Title III authority to say well, we 
appreciate that, but we are going to use no year funding from 
2012 to fund these programs that pretty clearly Congress has 
said this isn't a direction we want to go and cellulosic 
ethanol plants are not that unusual.
    Mr. Perlmutter. If I could reclaim my time from my friend 
from Michigan, and I would just help him a little bit and help 
the panelists. Section 2(a)(6) of DPAS: ``to further assure the 
adequate maintenance of the domestic industrial base to the 
maximum extent possible domestic energy supplies should be 
augmented through reliance on renewable energy sources 
(including solar, geothermal, wind, and biomass sources), more 
efficient energy storage and distribution technologies, and 
energy conservation measures.'' It is in the law. So for them 
to pursue it, I am glad they are, because that is part of the 
DPAS as it sits today.
    Mr. Huizenga. Okay. Can I ask a question?
    Mr. Perlmutter. I would yield to my friend from Michigan.
    Mr. Huizenga. All right. I appreciate that.
    Mr. Perlmutter. Now, we are getting going.
    Mr. Huizenga. Now we are into something--yes, okay. My 
understanding is that might be a regulation, not the law. That 
is what I am being told. But--
    Mr. Perlmutter. ``The Defense Production Act of 1950 as 
amended.''
    Mr. Huizenga. Okay. ``As amended.'' I guess the question to 
me, or I guess the problem I am having that I am trying to sort 
out then is it appears that we may have a conflict between what 
we have passed and in three different budgets, a DOD budget, an 
agriculture budget, and a Department of Energy budget with 
specific language in NDAA, so four different places that appear 
to be in conflict with that and--
    Mr. Perlmutter. Reclaiming my time, we may have a conflict 
and we should iron that conflict out. I like this section of 
the Defense Production Act of 1950 because I think from the 
national security basis we can't just--I would like to see us 
rely on a variety of sources of energy, not just petroleum-
based, which we spent $17.3 billion compared to like $46 
million or something like that for biofuels.
    So, I appreciate the gentleman's questions, and if there is 
a conflict, as Members of Congress it is our responsibility to 
iron those conflicts out, but this particular section, I 
believe, does benefit the national security of the Nation and 
it may--and homeland security may be benefited as well if a 
bunch of refineries, petroleum refineries were to be attacked 
or lost in an earthquake or whatever. So, I appreciate that.
    Mr. Huizenga. Will the gentleman--
    Mr. Perlmutter. Of course, I will yield to my friend.
    Mr. Huizenga. All right. I appreciate that and only to say 
this: my reading and understanding, and this is new territory 
for a lot of us I think, is that these are for some critical 
things that are not being done anywhere else in the economy.
    And that a production of something that may have gone out 
of production for example only because it has limited military 
use, cellulosic ethanol is not just specifically a military use 
and there is private sector research and things that are 
happening.
    Mr. Perlmutter. I thank the chairman. And I will yield 
back.
    Mr. Huizenga. Thank you.
    Mr. Perlmutter. I appreciate the opportunity--
    Mr. Huizenga. I appreciate my friend.
    Chairman Campbell. The gentleman who was not going to use 
any of his time has now used all of his time with the help of 
the gentleman from Michigan.
    Mr. Perlmutter. I took my 5 minutes. So now, I have had a 
chance to prepare for your questions.
    Chairman Campbell. Now, we will go back--and I really mean 
it this time--to the gentleman from South Carolina, Mr. 
Mulvaney. You are recognized for 5 minutes.
    Mr. Mulvaney. I am not sure how I got dragged into that, 
but it was was fun to watch. Thanks, guys.
    Gentlemen, I congratulate you. You are actually seeing 
something that is rare in this process. I haven't been here 
very long, but we are actually having a hearing to find out 
information.
    Ordinarily, we come into these things with these scripted 
questions and we already know what we want to ask, and this has 
actually been interesting to me, because I didn't even know 
this thing existed until the chairman told us about it at the 
beginning of this year.
    So you are seeing Members of Congress doing things that 
they are not ordinarily comfortable doing, which is asking 
questions that they don't know the answers to already. So I 
appreciate you participating in the process.
    I am going to start with Mr. Kaufman, because I am going 
over your testimony, Mr. Kaufman, and help me understand that--
I think I grasp the role of the DPA under emergency or exigent 
circumstances.
    The examples you give in your testimony about restoring 
floodwalls and levees after Hurricane Katrina, and thermal 
imaging in Boston, make sense. I can follow them and they seem 
to make sense to me.
    I think I am having a more difficult time getting my head 
around your examples of aircraft for U.S. Customs and Border 
Protection and components for weather satellites to help detect 
moderate or track severe weather. Can you help me understand 
how those last two examples are things that are appropriate 
exercises of the DPA authority?
    Mr. Kaufman. I will be happy to. In the case of the 
aircraft for CBP, for Customs and Border Protection, those are 
their P-3 Orion aircraft and they needed critical parts for 
maintenance for those aircraft that actually if we hadn't 
executed a priority rating for that contract, then they would 
have fallen into a lengthy delay because similar ratings were 
in place from the Department of Defense. So that is a perfect 
example of--
    Mr. Mulvaney. Okay. Thank you. I am going to cut you off 
because--and I want to let you go, but I want to cut you off 
there because it raises a really good point. Is that--we have 
had these things since what, the 1950s, their DC-6s, I think, 
or something like that modified.
    Was the lack of spare parts simply lack of planning on 
somebody's part and it turned out being--my secretary, when I 
first started practicing law, had a sign that said, ``A failure 
to plan on your part does not constitute an emergency on my 
part.'' Is that what we saw in that particular circumstance?
    Mr. Kaufman. No, I do not believe that is what we saw. I 
think what you saw in that circumstance is a small market with 
competing demands on that market. And a need to adjudicate what 
was most critical at a point in time.
    Mr. Mulvaney. Right, but again, that is a knowable thing, 
isn't it? We have had these things for 60 years--why are you 
shaking your head, Mr. Lambert--I am not trying to be 
combative. I am just trying to--
    Mr. Lambert. No, it is a question about tempo and 
priorities, and in this particular case, as I recall, there 
were a lot of demands in a short period of time for these 
priorities. We were flying them or using them harder than we 
were prior and it was a question of how we adjudicated--from a 
business model perspective, your option is to build up a huge 
inventory of parts that may or may not be obsolete in a few 
years, which you pay a lot for, and then you store and manage, 
or to work with industry to do just-in-time prioritization, 
which the Title I authorities allow us to adjudicate that, that 
priority rating.
    Mr. Mulvaney. Okay, that helps. Thank you for that. I 
appreciate that.
    Mr. Lambert, that leads me to another question. You 
mentioned in part of your testimony, you said that agencies 
apply for DPA treatment. Have you ever turned anybody down?
    Mr. Lambert. Yes, sir.
    Mr. Mulvaney. And what is the--you said there is this two-
part test about whether or not it is important for national 
security and whether or not it is something the private sector 
would do. Is it basically, fail one of those two tests? Is that 
the idea?
    Mr. Lambert. No, that is just to get into the gate. That is 
to make the application. So any service--first of all, you need 
a government customer, so that is the first basis.
    The U.S. Government has to be a customer because frankly, 
this is U.S. taxpayer money. And so when we go out and look, we 
ask, is there a U.S. customer? That is one of the first 
internal hurdles we look at.
    Is there a private industry willing to match? A really 
important part of DPA that people don't appreciate is there 
needs to be a private sector contribution to this.
    Usually is more than one to one, but we strive to make it 
to give them incentive to get some skin in the game from the 
private sector. So it is not entitlement.
    We really are trying to transition a technology or 
capability from the government--something we need that isn't 
performing, there is a market error--and we need to help 
correct the market, but then the market should take over.
    At the end of the day, we don't want to be in this--we need 
to transition this to a commercial enterprise. So it needs to 
have a government customer. That is the first hurdle.
    If we can't find a sponsor for it, we get a lot of people 
coming in offering ideas. If there is no customer for it, even 
if it meets those first two DPA criteria, we will not fund it. 
We won't even put it in our hopper.
    Mr. Mulvaney. Can you give me an example of something that 
failed the test within recent memory?
    Mr. Lambert. Sure, we have had--they tend to be smaller 
entrepreneurial companies which have grand ideas. We had one 
recently, and I need to go back, because it may have been 
something that worked on the classified program, but it seemed 
to have great promise but we ran it on to ground, we put 
together these IPT's that are--we treat every inquiry very 
seriously.
    We put together an IPT and it was determined that there 
were alternatives--this was a good idea, but there were 
alternatives and the commercial market was already addressing 
that need for us, and so there was no need for government 
support.
    Mr. Mulvaney. And Mr. Lambert--one quick question if I may, 
Mr. Chairman.
    I'm sorry. I misunderstood. I thought you said earlier that 
the agencies make application to you. Are you telling us that 
individual companies, private companies come to you and ask for 
DPA treatment for the products?
    Mr. Lambert. Absolutely. Sometimes through Members. 
Historically, Members have provided us information about 
companies. Members tend to have a good ground sense of what is 
happening in their districts, and we always look and listen to 
those inquiries, but they run through the same process that if 
a government agency came to us, we would go through the same 
screening.
    Mr. Mulvaney. I thank the gentleman.
    Chairman Campbell. The gentleman's time has expired.
    And next, we have the gentleman from North Carolina, Mr. 
Pittenger. You are recognized for 5 minutes.
    Mr. Pittenger. Thank you, Mr. Chairman.
    And thank you, Secretary Wolf, Secretary Lambert, and Mr. 
Kaufman for your testimony.
    I would direct my question, frankly, to any of you. As we 
reauthorize any statute in this case, we look for what changes 
we could make that would make it more effective, particularly 
as it relates to the economy, and I really would like to know 
from your experience, as you work with this statute on a daily 
basis, what constructive changes you would recommend that we 
could make at this time?
    Mr. Lambert. Again, it is an incredibly functionable 
statute right now. We have a great deal of flexibility as long 
as we are informing you and communicating with you about what 
we are doing.
    We believe we have all the authorities in place to meet the 
demands. If we have tweaks on the edges, I believe it is on us 
to get back to you and explain what those are, but as a general 
rule, we think the Act is quite constructive, particularly the 
changes that were made in 2009, which helped us a lot in 
cleaning up a lot of the language and streamlining a lot of our 
processes.
    Mr. Wolf. We have no suggestions to make, either. It works 
very efficiently. We have had nothing but good responses in 
working with and educating industry about this and have no 
recommended changes.
    Mr. Kaufman. I would agree. The Administration did put 
forward proposals in 2009 that were adopted in the 
reauthorization, and we feel that the law works well as 
written.
    Mr. Pittenger. Let me ask you this: Do you hear complaints 
from private industry?
    Mr. Wolf. No. In fact before coming here today, in 
anticipation of that question, I polled some of my staff. And 
other companies have used it and I have not heard any 
complaints from anyone in industry who used it. To the 
contrary, with the advice and assistance of my staff from the 
Commerce Department, it has worked quite efficiently and well. 
I have not received any complaints.
    Mr. Pittenger. No threats, no challenges--
    Mr. Wolf. No, I am unaware of any threats or complaints, 
formal or informal.
    Mr. Lambert. Sir, I would add from DOD's perspective that 
we do get complaints, but it is usually because we are not 
funding something. We put everything through the same rigorous 
process. Sometimes, we determine it is not in the best interest 
of the taxpayer or the warfighter to fund something. That is 
when we get complaints, but we have never had a challenge or a 
protest.
    Mr. Pittenger. Thank you.
    Mr. Chairman, I appreciate it. I yield back my time.
    Chairman Campbell. All right. The gentleman yields back, 
and seeing no other Members who wish to ask questions--I 
thought we would run right up against the votes, but we have 
managed to complete all questioning without the votes.
    So I thank the panel very much for being here today.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    And without objection, this hearing is now adjourned.
    [Whereupon, at 2:55 p.m., the hearing was adjourned.]


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