Congressional Record, Volume 142 Issue 105 (Wednesday, July 17, 1996)

[Congressional Record Volume 142, Number 105 (Wednesday, July 17, 1996)]
[Senate]
[Pages S7987-S8007]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1997

The Senate continued with the consideration of the bill.

Amendment No. 4443, as Modified

(Purpose: To strike $2,000,000 available for environmental activities
with respect to the Joint Readiness Training Center at Fort Polk,
Louisiana)

Mr. STEVENS. I send to the desk an amendment numbered 4443, as
modified, pertaining to the Joint Readiness Training Center in Fort
Polk, LA, and ask to set aside the pending amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Alaska [Mr. Stevens], for Mr. McCAIN,
proposes an amendment numbered 4443, as modified.

The amendment (No. 4443), as modified, is as follows:

On page 8, line 3, before the period, add the following:
``Provided, That the amount made

[[Page S7988]]

available by this paragraph for Army operation and
maintenance is reduced by $2,000,000.''

Mr. McCAIN. Mr. President, this amendment would reduce Army operation
and maintenance funding by $2 million to eliminate an add-on for
Readiness Training Center at Fort Polk, LA.
During Senate consideration of the fiscal year 1997 Defense
authorization bill, an amendment was adopted which would authorize the
transfer of additional acreage from the Forest Service to the Army at
Fort Polk. This transfer would increase the training area at Fort Polk
to ensure adequate acreage to conduct realistic land forces training. I
had no objection to this amendment and believe it will serve the needs
of the Army and the other Services.
However, at the same time, it is unclear that an additional $2
million will be required in fiscal year 1997 to adequately protect the
land and facilities in this additional area.
The report accompanying this bill describes the purposes for which
this funding would be used, including hiring more foresters,
environmental engineers, and natural resources support personnel, as
well as maintaining the forest, roads, and public recreational areas,
and protecting the red-cockaded woodpecker, long leaf pine, pitcher
plant bogs, and archaeological resources. These are activities which
certainly should be undertaken for this new property, but they are also
activities which are underway on the current property utilized by the
JRTC.
Mr. President, therefore, I suggest that, instead of setting aside $2
million for these purposes now, we instead encourage the Army to
conduct the necessary land management and environmental maintenance
activities for these additional acres in the most cost-effective way
possible. However, if the funds currently available to Fort Polk are
insufficient to ensure that the high standards of land and
environmental management are maintained at the newly expanded Fort
Polk, I believe the Congress would look favorably on a reprogramming
request from the Army to make funding available. In addition, I expect
the Army to make funding available. In addition, I expect the Army to
include in the fiscal year 1998 budget any additional costs associated
with expanding Fort Polk's Joint Readiness Training Center.
Mr. President, I understand that my colleagues from Louisiana may
offer an amendment to retain $500,000 of these earmarked funds. While I
would prefer that the Army proceed with this effort and request
reprogramming authority if additional funds are required, I would have
no objection if the managers preferred to retain $500,000 of these
funds.

Amendment No. 4448, as Modified, to Amendment No. 4443

(Purpose: To restore $500,000 for environmental activities with respect
to the Joint Readiness Training Center at Fort Polk, Louisiana)

Mr. STEVENS. Mr. President, we have two amendments. One is in the
first degree and one is the second degree.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Alaska [Mr. Stevens], for Mr. Johnston,
for himself and Mr. Breaux, proposes an amendment numbered
4448, as modified, to amendment No. 4443.

The amendment (No. 4448), as modified, is as follows:

On page 1, line 7 strike out ``$2,000,000'' and insert in
lieu thereof ``$1,500,000''.

Mr. JOHNSTON. Mr. President, I have identified $500,000 in one-time
costs that need to be funded immediately to ensure that the natural
resources and archeological sites at Fort Polk are protected. The
Army's environmental record has clearly demonstrated how seriously they
take their stewardship of the land with which they are entrusted. I
believe the money requested will be used in a cost effective manner and
will ensure that the resources are protected to the same high standards
currently maintained by Fort Polk.
The red-cockaded woodpecker is an endangered species and is protected
by Federal law. Woodpecker nesting trees are marked with a 1-meter
thick white band. The nesting trees are protected by a 62-meter buffer
zone that are marked by orange bands. Military training is restricted
within this the buffer zone. Funding will allow for the red-cockaded
woodpecker sites to be identified, cleared, marked, and 62-meter buffer
zone established.
There are Indian, archeological sites, cemeteries, and other
historical sites located on this land and we must ensure that these
sites are adequately protected. The balance of the funding will provide
sufficient resources to survey the land, identify cultural and
archeological sites, and mark them accordingly.
I also encourage the Department of the Army to identify any
incremental costs associated with managing this land and I would
support any reprogramming requests they find necessary to submit. I
further expect that their fiscal year 1998 budget submission will
include any of these recurring costs.
Mr. President, I believe the amendment is acceptable to Senator
McCain and the managers of this bill.
Mr. BREAUX. Mr. President, I rise today in support of the second
degree amendment I am offering with Senator Johnston that would give
$500,000 to the Department of the Army for environmental protection
activities at Fort Polk, LA. Earlier this month my distinguished
colleague and I were able to include a provision in the Department of
Defense authorization bill that would transfer acreage in the Kisatchie
National Forest to the Army at Fort Polk. That amendment will allow
Fort Polk to expand its training exercises while continuing its unique
mission of providing our troops the best training possible at the Joint
Readiness Training Center [JRTC]. I am pleased we were able to work
with the managers of the authorization bill to have the transfer
provision included in the bill.
On this pending amendment, I would like to thank Senators McCain,
Stevens, and Inouye who have been very cooperative in working with
Senator Johnston and me to appropriate $500,000 for environmental
protection at Fort Polk. This funding will ensure that the high
standards of land and environmental management are maintained at the
newly expanded JRTC. The Army can use this funding to continue
surveying and marking trees that are inhabited by the red-cockaded
woodpecker. In its current operations, the Army establishes a 62-meter
buffer zone around these trees to alert military personnel and the
public to stay clear of the area. The Army also posts signs to clearly
mark archeological sites, such as cemeteries and Indian burial grounds,
and other sensitive areas. This $500,000 will enable the Army to
continue providing this and other important environmental programs at
the JRTC.
I appreciate the help Senator McCain and the managers of this bill
have given Senator Johnston and me on this amendment and I urge its
adoption.
Mr. STEVENS. These are two amendments worked out with the Senators
from Louisiana. They have combined their amendments. This is an
amendment that has been on the list all day. It has been modified.
I ask unanimous consent the Breaux amendment to the McCain amendment
be adopted and the McCain amendment be adopted. I yield to my friend
from Hawaii.
Mr. INOUYE. Mr. President, I am pleased to agree.
The PRESIDING OFFICER. The question is on agreeing to the second-
degree amendment.
The amendment (No. 4448), as modified, was agreed to.
The PRESIDING OFFICER. The question is now on the first-degree
amendment, as modified, as amended.
The amendment (No. 4443), as modified, as amended, was agreed to.
Mr. INOUYE. I move to reconsider the vote.
Mr. STEVENS. I move to lay it on the table.
The motion to lay on the table was agreed to.

Unanimous-Consent Agreement

Mr. STEVENS. Mr. President, I ask unanimous consent that the cloture
vote scheduled to occur today with respect to the pending bill S. 1894
be vitiated and during the Senate's consideration of S. 1894, the
following amendments be the only first-degree amendments in order, and
limited to relevant

[[Page S7989]]

second-degree amendments, and following the disposition of the
amendments, S. 1894 be read for a third time, the Senate proceed
immediately to House companion bill H.R. 3610, all after the enacting
clause be stricken, the text of S. 1894 be inserted, H.R. 3610 be read
for a third time, and the Senate proceed to vote on the passage of H.R.
3610, all without further action or debate.
The list is a Grassley amendment we are about to vote upon; a Bumpers
F/A-18C/D amendment, on which there is a 30-minute time agreement; two
relevant Daschle amendments; a Dorgan amendment pertaining to funding
reduction, on which there is a time agreement of 30 minutes equally
divided; Senator Ford's amendment on chemical demilitarization; Senator
Harkin's amendment on defense merger, on which there is a 45-minute
agreement, 30 minutes for Senator Harkin and 15 minutes to the managers
of the bill; a Heflin amendment on pump turbines; a relevant amendment
for Senator Inouye; a Levin amendment on counterterrorism; a relevant
amendment for Senator Nunn; Senator Simon, a labor related amendment;
and one relevant amendment for myself as Senator managing. I add
Senator Feingold's amendment, on which there is a time limit of 30
minutes, if we do not work it out. He has two amendments.
I further ask that following the passage of H.R. 3610, the Senate
insist on its amendment, request a conference with the House, and the
Chair be authorized to appoint conferees on the part of the Senate, and
S. 1894 be returned to the calendar.
The PRESIDING OFFICER. Without objection, it is so ordered.

Amendment No. 4463

Mr. STEVENS. Mr. President, I regretfully disagree with the Senator
from Iowa and state again that our act does not allocate funds to the
entities of the Department of Defense by the roster, or in any way
related to the force structure. If the Senator wishes to limit the
funds so it cannot be used to support more than 68 general officers,
that is an issue for the authorization committee.
At the request of the chairman of the Armed Services Committee, I
move to table the amendment of the Senator from Iowa, and I ask for the
yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
table the Grassley amendment. The yeas and nays have been ordered, and
the clerk will call the roll.
The assistant legislative clerk called the roll.
The result was announced--yeas 79, nays 21, as follows:

[Rollcall Vote No. 196 Leg.]

YEAS--79

Abraham
Akaka
Ashcroft
Baucus
Bennett
Biden
Bond
Bradley
Breaux
Bryan
Bumpers
Burns
Byrd
Campbell
Chafee
Coats
Cochran
Cohen
Coverdell
Craig
D'Amato
Daschle
DeWine
Dodd
Domenici
Exon
Feinstein
Ford
Frahm
Frist
Glenn
Gorton
Graham
Gramm
Hatch
Hatfield
Heflin
Helms
Hollings
Hutchison
Inhofe
Inouye
Jeffords
Johnston
Kempthorne
Kennedy
Kerrey
Kerry
Kyl
Leahy
Levin
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Moseley-Braun
Moynihan
Murkowski
Murray
Nickles
Nunn
Pell
Reid
Robb
Rockefeller
Roth
Santorum
Sarbanes
Shelby
Simpson
Smith
Snowe
Stevens
Thomas
Thurmond
Warner

NAYS--21

Bingaman
Boxer
Brown
Conrad
Dorgan
Faircloth
Feingold
Grams
Grassley
Gregg
Harkin
Kassebaum
Kohl
Lautenberg
Pressler
Pryor
Simon
Specter
Thompson
Wellstone
Wyden
The motion to lay on the table the amendment (No. 4463) was agreed
to.
Mr. STEVENS. Mr. President, I move to reconsider the vote.
Mr. INOUYE. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. STEVENS. Mr. President, the Senator from Arkansas is seeking
recognition.
The PRESIDING OFFICER (Mr. Brown). The Senator from Arkansas is
recognized.

Amendment No. 4891

(Purpose: To reduce procurement of F/A-18C/D fighters to six aircraft)

Mr. BUMPERS. Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows.

The Senator from Arkansas [Mr. Bumpers], for himself, Mr.
Feingold, and Mr. Kohl, proposes an amendment numbered 4891.

The amendment is as follows:

On page 22, strike lines 3 through 4, and insert in lieu
thereof the following: ``$7,005,704,000, to remain available
for obligation until September 30, 1999: Provided that of the
funds made available under this heading, no more than
$255,000,000 shall be expended or obligated for F/A-18C/D
aircraft.''

Mr. STEVENS. Mr. President will the Senator yield to me just a
moment?
Mr. BUMPERS. I will be happy to yield.
Mr. STEVENS. Mr. President, it is the plan of the managers of the
bill to have the debate on the Bumpers amendment. We feel that
amendment will go to a vote sometime between 20 after and 25 after 6.
After that, we will have the Harkin amendment, and it will be voted on
sometime around 7 o'clock. After that time it will be my intent to ask
that all further votes be stacked until tomorrow morning commencing at
9:30, and we will have final passage following that. There will be some
few statements just before final passage. We do have a series of
amendments to debate yet tonight, but we will have no more votes after
the Harkin amendment.
The PRESIDING OFFICER. The Senator from Arkansas is recognized.
Mr. BUMPERS. Mr. President, I ask unanimous consent that I may yield
to the Senator from Iowa for a unanimous-consent request.
The PRESIDING OFFICER. Without objection, it is so ordered. The
Senator from Iowa is recognized.

Privilege of the Floor

Mr. HARKIN. Mr. President, I ask unanimous consent that Kevin
Ayelsworth, a congressional fellow on my staff, be permitted floor
privileges during debate on the DOD appropriations bill.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BUMPERS. Mr. President, I wonder if we could enter into a time
agreement on this amendment.
Mr. STEVENS. Mr. President, we entered into a time agreement, if I
may respond to the Senator from Arkansas, based upon our conversation.
There is at this time I believe 30 minutes equally divided.
Mr. BUMPERS. Parliamentary inquiry. Is that correct, Mr. President?
The PRESIDING OFFICER. That is correct, 30 minutes equally divided.
Mr. BUMPERS. Mr. President, I ask further unanimous consent that no
second-degree amendments----
Mr. STEVENS. Could we have order?
The PRESIDING OFFICER. The Senate will be in order.
There is a request from the Senator from Arkansas that no second-
degree amendments be in order. Is there objection?
Mr. STEVENS. There is no objection.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BUMPERS. Mr. President, this amendment is very simple.
While we have 30 minutes to debate it, I hope that we can yield back
some of the time.
Let me start by explaining that Senator Feingold has an amendment
that deals with the Navy's plans to purchase the E and F models of the
Navy's F-18 fighter, which is called the Super Hornet. Now, the
existing C and D models of the F-18 Hornet are the Navy's premier
carrier fighter interceptors. The General Accounting Office has just
issued a report on the Navy's plans to purchase 640 of the advanced
models which are now in development, namely the F-18E and F-18F. That
report, which is the most powerful GAO report I have ever read, says
that it is the height of foolishness to go forward with the purchase of
that many F-18E/Fs.

[[Page S7990]]

The Navy originally wanted to buy 1,000 of them, 360 of which would
go to the Marine Corps. And do you know what the Marine Corps said?
``We don't want them.''
``We don't want them.'' So that means the Navy is going to buy 640 at
a cost of roughly $53 million each. And the GAO says the present C/D
models that we are using and could continue to use through the year
2015 will do virtually everything the E/F will do. By buying C/D
models, at a cost of $28 million, almost 50 percent less, the Navy
would save $17 billion.
Now, I tell you those were prefacing remarks because my amendment
does not try to eliminate the E/F purchases of the Hornet. I am not
trying to eliminate the E/F because Senator Feingold has an amendment
he is working on trying to get accepted that would give the Pentagon
the opportunity to reconsider its plans to spend $60 billion on the E/F
models. It would fence the funds for the E/F until the Pentagon
provides Congress with a better justification for its decision. I am a
strong proponent of the Feingold amendment; I am a cosponsor. I would
have liked to do something stronger, but I know that would not have a
chance of winning a vote.
The Pentagon took the GAO study, which says you can save $17 billion
by buying F-18C/Ds instead of E/Fs, and they tried to refute every
single point the GAO said, and the GAO came back and refuted
conclusively--conclusively--Mr. President, every single point the
Pentagon made in favor of squandering $17 billion on the F-18E/F.
Here is my amendment. It is very simple. It cuts $234 million for six
F-18C/D aircraft that were not requested by the Pentagon and that were
not included in the Defense Authorization Bill.
There is, in this bill, one of the strangest things I have ever seen.
There is an appropriation for 12 of the C/D models, which the Pentagon
says they want to get rid of. What is even stranger is, of the 12, only
6 are authorized; the other 6 are not authorized. The Navy says they
want this new, premier, advanced E/F model, not the C/D. So, No. 1, the
Pentagon did not ask for them. No. 2, the Senate authorizing committee,
chaired by the distinguished Senator from South Carolina, with the
ranking member from Georgia, Mr. Nunn, did not authorize them. We just
passed the authorizing bill, and there is no authorization for these
six airplanes.
With the utmost respect to the chairman and ranking member of the
Appropriations Committee on Defense, my dear friends, they just put six
more airplanes in the bill. They cost only $234 million. If you say it
real fast, it is just nothing.
So I say, if we are going to buy the E/F, why in the world are we
going to keep buying C/Ds? And I know that we are going to buy the E/F
despite the fact that between now and 2025 we will spend at least $500
million for fighter aircraft. I have been around here 22 years, and I
can promise you I can get up on this floor and squeal like a pig under
a gate every day and it will not change two votes.
You think about it. By the year 2030 we are going to spend $500
billion for the advanced model Hornet and for the Joint Strike Fighter,
and for the F-22.
So, I wish I could stop the E/F. But I am certain in the knowledge,
the certain knowledge, that I would not prevail if I sought to stop the
Pentagon from going forward with the E/F. You know, the Senate has only
killed one weapon system that I can remember, and I cannot think what
that was. We only killed one weapons system since I have been in the
Senate. The Pentagon occasionally kills one, and they say, ``We do not
want it anymore.'' But a lot of times when they say ``we do not want
it,'' we impose it on them anyway.
And here is the GAO, which we give hundreds of millions of dollars a
year to tell us things, saying you are about to squander $17 billion
for nothing, and here I am on the floor of the Senate saying, I know
the Senate is going to ignore the advice of the GAO. So I am saying, if
we are going to go ahead and buy 640 of these high-priced, $53-million-
a-copy fighter planes, for God sakes let us not buy 6 more of the C/D
models which are neither requested by the Pentagon nor authorized by
the authorizing committee.
Mr. President, I hope Senator Nunn would come to the floor and say
that he is going to support this amendment because it was not
authorized. I have heard him talk a thousand times about how sick he
gets of the Senate appropriating money for things that are not
authorized. So here is a chance for the Senate to save a paltry $234
million.
I yield the floor and reserve the remainder of my time.
The PRESIDING OFFICER. Who seeks recognition?
Mr. STEVENS. Does Senator Feingold seek time on this amendment?
Mr. FEINGOLD. I do, Mr. President.
Mr. STEVENS. How much time is the Senator seeking?
Mr. FEINGOLD. Mr. President, 5 minutes.
Mr. BUMPERS. Mr. President, how much time do I have remaining?
The PRESIDING OFFICER. The Senator from Arkansas has 6 minutes
remaining; the Senator from Alaska, 14 minutes and 50 seconds.
Mr. STEVENS. I will not seek the floor if the Senator wishes to speak
now.
Mr. BUMPERS. Mr. President, I would like not to use up all of my time
at this point. I would like for the opponents of my amendment to use
some time.

Mr. STEVENS. I will be happy to do that, but the Senator was on his
feet. I will be glad to let him speak now if he wishes to speak.
Mr. FEINGOLD. I will be happy to defer to the Senator from Alaska.
Mr. STEVENS. Mr. President, it is true that the budget did not
request any funds to buy more F-18C's for the Navy. The Armed Services
bill included six F-18C's for the Navy. This is authorized. The
committee, our subcommittee, added and the Appropriations Committee
approved $234 million to buy six single-seat F-18C's for the Navy.
Before his untimely death, we asked Admiral Boorda to list the 10
highest priorities for the Navy this year, and Admiral Boorda listed as
the sixth priority, as the CNO, buying six more F-18C's. These replace
the less capable F-18A's that are still in the active inventory. The C
model has substantial upgrades over the A model. It has better radar
and carries more sophisticated weapons. It can fly at night and in
adverse weather.
The Navy really needs at least 30 more F-18C's to upgrade its force
and accomplish its war-fighting mission. The F-18C procurement was
ended because of financial considerations in the past. We still have
financial considerations, but these F-18C's we buy now in fiscal year
1997 will be in the inventory of the Navy through at least the year
2018.
I say to my friend from Arkansas, as a pilot, these C models give
Navy pilots the ability to fly at night, in adverse weather, with more
sophisticated weapons and the best radar in the world. I think it is a
needed addition to our Navy.
I yield the floor and reserve the remainder of our time.
The PRESIDING OFFICER. The Senator from Alaska has 12 minutes and 31
seconds; the Senator from Arkansas, 6 minutes.
Mr. BUMPERS. Mr. President, I yield the Senator from Wisconsin 5
minutes.
The PRESIDING OFFICER. The Senator from Wisconsin is recognized.
Mr. FEINGOLD. Mr. President, I would like to speak briefly in support
of the efforts of the distinguished Senator from Arkansas, who is
trying to focus attention on the cost implications of decisions that
are being made regarding the purchase of tactical aircraft for our
various services. As we all know, there is no Member of the Senate who
has been a more consistent leader in this area than Senator Bumpers,
constantly pressing for the Senate to subject our military procurement
decisionmaking to greater scrutiny.
I appreciate his support for my amendment. A modified version of it
appears to have been accepted. Of course, the motivation for that was
the GAO report that Senator Bumpers mentioned. It is entitled ``F/A-
18E/F Will Provide Marginal Operational Improvement at High Cost,'' and
as the Senator indicated, that marginal improvement is a $17-billion
difference, potentially.
We are pleased that process will go forward. The Department of
Defense

[[Page S7991]]

will respond to the GAO report, and then the GAO will respond to that.
I am very pleased and appreciative to the Senator from Alaska for being
cooperative on this.
But on the issue of the amendment of Senator Bumpers, in these times
of fiscal constraint, every item in the Federal budget has to be
subjected to intense review. The Senator from Arkansas and I and many
others are deeply concerned that the Department of Defense is embarking
on a range of military aircraft purchases that cannot be sustained in
the outyears. The downpayments on these aircraft in the short term
really represent only the tip of the iceberg, from the point of view of
the cost.
A GAO report in 1996 notes the military services plan to spend more
than $200 billion on aircraft and other interdiction weapons over the
next 15 to 20 years to add to already extensive capabilities. GAO noted
that the various services have overlapping programs, with each service
proposing upgrades or new weapons that may offer little additional
capability.
So, Mr. President, what the Bumpers amendment is all about and our
effort here is all about is the fact somewhere, somehow, there needs to
be some overview of the range of these programs. In fact, the House
defense authorization bill contains a requirement for a force structure
analysis by the Institutes of Defense Analysis which examines the
affordability, effectiveness, commonality, roles and missions and
alternatives related to the wide range of aircraft. There are good
arguments to be made that we should defer decisions on all these
procurement plans pending such a review.
In the short term, the issues relating to the F/A-18 clearly need to
be examined. On the one hand, the Navy is seeking to remove the C/D
with the E/F. Yet this bill adds funding for 12 C/D's, planes which the
Department of Defense has not requested. In fact, the DOD authorization
bill just passed by the Senate only authorized six additional C/D's,
and now the Appropriations Committee doubles that number.
Before we start adding these additional purchases, I think we ought
to know where we are going. Is the Navy going to move toward the more
expensive E/F or retain the C/D? My view is that we should rely upon
the less expensive, but highly capable, C/D. But, Mr. President, one
thing is clear, when it comes to the C/D versus the E/F, it is an
either/or choice. We either buy the C/D's or the E/F's, one or the
other. It is like going to buy a new washing machine. You find two
slightly different and you decide, what the heck, we will buy both of
them. We cannot afford to do that. We cannot afford dual purchases.
I support the amendment offered by the Senator from Arkansas which
strikes the funding for the six additional C/D's. Whatever the ultimate
decision is with regard to the future of the F-18, there is no
justification for this increase in the C/D purchases in this
appropriations bill.
I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. STEVENS. I yield to the Senator from Hawaii such time as he may
use.
The PRESIDING OFFICER. The Senator from Hawaii is recognized.
Mr. INOUYE. Mr. President, it is always difficult to speak against
the GAO. After all, that organization is a child of the Congress. But
in this case, I give great weight to the concerns and the
professionalism of the United States Navy. I also note that in recent
years, the United States Navy has suffered major aviation setbacks in
the acquisition programs. For example, the Congress canceled the A-6F
program, the Department of Defense canceled the A-12 program, the Navy
canceled the Navy ATF and F-14D program and, as a result, what we have
available for us is the F/A-18E and at the present time the C's.
If we are to maintain a production line for the F/A-18E at a
reasonable rate, then it would make sense to continue the production
even of six models of the C. It will come down to cost. The production
line will continue.
Second, there are many who will argue that the millennium has arrived
and, therefore, there is really no need for these fancy weapons
systems. But I believe that we are being constantly reminded that this
world is still very unstable, that there is a need for aircraft
carriers, and if we are to have aircraft carriers, obviously there is a
need to have planes flying off these carriers. These are carrier
planes.
So, Mr. President, on this issue, I prefer to set my vote of
confidence with the Navy. I think the Navy is correct in suggesting to
us that if they are to carry out their mission, they need this
aircraft.
Mr. BOND. Mr. President, the requirement for the additional
procurement of F/A-18C/D aircraft does not come from the industrial
community and is not a result of trying to string out a program which
has come to the end of its viable life.
The requirement comes from the Department of the Navy and its own
inventory requirements. According to the Director of Air Warfare for
the Navy, a minimum of 436 F/A-18C/D aircraft are required to fill the
10 active carrier airwings. The Navy expects that without continued
procurement, it will be 30 aircraft short of the CNO mandated and
congressionally approved requirements. If we include the normal
attrition factor into the equation, the gap grows even wider for even
though the F/A-18 is the safest aircraft in tactical Naval aviation
history, approximately eight aircraft per year are lost.
The night-strike capabilities of the C/D are critical to the fighting
effectiveness of our carriers and allow for the use of the full range
of the Navy's current weapons inventory. These aircraft improve pilot
situational awareness and survivability over their A/B model
counterparts. They are also fully compatible with shipboard maintenance
and diagnostic equipment.
The F/A-18E/F aircraft is on schedule and cost and its performance
exceeds expectations so far. So why do we need more C/D's? Because the
procurement schedule of the E/F will not produce significant numbers of
aircraft until 2009. As my colleagues know, I am a staunch supporter of
the F/A-18 E/F, for it does bring so much more warfighting capabilities
to the men and women defending us, but that does not relieve us of the
responsibility to provide our fliers with these additional C/D's which
will bridge the technological void until the E/F's hit the fleet.
Let me put it to my colleagues this way. Advances in aviation,
military aviation in particular, are a little like those experienced in
the computer world. The strategic mix of aircraft currently in our
inventory and those projected to be in our inventory are representative
steps in technological advances which will face threats from weapon
systems that are advancing as well. Much like computer systems, we can
project capabilities beyond our production abilities.
The F-18C/D represents the current cutting edge in tactical Naval
aviation, the E/F the next, JAST hopefully the next. But, we cannot in
good conscience ask our young men and women to put their lives on the
line for us and not give them the best we know we have to offer in the
hope of dramatic future improvements which are not yet developed. I
urge my colleagues to support, and support fully, the strategic growth
of Naval aviation, starting with the continued buy of the C/D's
appropriated for in this bill.
Mr. BIDEN. Mr. President, I rise in support of the Bumpers amendment
to the Defense appropriations bill. This amendment would save American
taxpayers 234 million dollars by eliminating funding for six F/A-18C
that the Pentagon has not requested.
Mr. President, the Defense appropriations bill allocates money for 12
more F-18's than the President requested. It appropriates funds for six
more F-18C's than the Senate authorized. It commits us to spend 234
million dollars on six aircraft that the Navy does not want.
Mr. President, at a time when we need to cut Government spending, how
can we justify throwing away 234 million dollars of the taxpayers'
money on these soon-to-be outdated aircraft?
Within this bill is 1.8 billion dollars to purchase the first 12 new
F-18E/F fighters for the Navy. The Navy has said that the F-18E/F will
be the backbone of its carrier-based forces in the future. This
aircraft is to replace the F-14 and older F-18's, so that by 2009, the
F-18E/F will comprise a majority of the F-18's in the Navy's inventory.
If we are worried about a future military threat, we should direct our
procurement to systems of the future, not to

[[Page S7992]]

aircraft like the F-18C/D that will be obsolete soon after they are
manufactured.
Mr. President, we cannot continue to squander our Nation's resources
on aircraft that are not needed to defend this country. We must look
for areas where we can cut spending while not jeopardizing our national
security. The Bumpers amendment represents such an opportunity. I urge
my colleagues to support it.
Mr. STEVENS. Mr. President, how much time do I have remaining?
The PRESIDING OFFICER. The Senator from Alaska has 9 minutes 53
seconds remaining. The Senator from Arkansas has 2 minutes 2 seconds.
Mr. BUMPERS. Mr. President, I wonder if the Senator will object to
adding 3 minutes to my time.
Mr. STEVENS. I add 3 minutes to the time of the Senator from Arkansas
and yield back the remainder of our time.
Mr. BUMPERS. Mr. President, I thank the Senator very much.
I made this point a while ago, but charts are always much more
graphic. Here is where we are headed. For the people around here who
are fiscally responsible and really care about the deficit, this is
what is going to happen between now and about the year 2025 or 2030. We
are going to spend $70 billion on the F-22 fighter for the Air Force;
$66.9 billion for the fighter plane that we have been talking about
here, the model E/F of the F-18 Hornet, a very, very fine airplane,
indeed. But so are the C/D models that we now use. The Joint Strike
Fighter will cost about $219 billion. And then sometime around the year
2010 we are going to start buying the replacement interdiction aircraft
whose cost we do not know. The cost in today's 1996 dollars for those
three fighter planes is $355.7 billion, according to the Congressional
Budget Office. With inflation at 2.2 percent, that will come to about
$500 billion between now and the year 2030, $500 billion.
Look at this chart. Here are the military budgets of the United
States and our potential enemies. The United States, $269 billion; add
NATO to it, $510 billion; Russia, $98 billion; China, $29 billion; and
the rogue nations, such as Libya, North Korea, a total of $17 billion.
We spend twice as much as all of the rogue nations, Russia and China
combined. When you add NATO to it, almost four times as much.
This chart shows that today, we have 3,800 fighter aircraft, and they
are all so-called fourth generation, the best there is. Look at poor
Russia, China, North Korea--not even in the game. Not even in the game.
The rogues have only 104 modern fighters divided among them. And we are
getting ready to spend $17 billion we should not spend, so says GAO.
Here is another chart. In the year 2005, we will have 3,200 fighter
planes. Look, 3,200 fighter planes that all of them will either be
fourth or fifth generation aircraft. And the rogues will be no better
off than they are today.
I agree with the Senator from Alaska on this point. He says the C/D
fighter plane, the Hornet C/D models are very fine night fighters, they
are excellent aircraft. I could not agree with him more. If it were
left up to me, that is what we would be buying. But, no, we are going
to go spend twice as much, $53 million a copy, on the E/F models which
the GAO says is an outrageous waste of the taxpayers' money.
Back to my amendment. I am saying you cannot have it both ways. You
cannot buy the E/F because it is going to be the hottest thing going
and spend $67 billion on it but say we want a few more C/D's at the
same time. As a matter of fact, the committee wants 12.
Mr. President, the Pentagon did not ask for 12, even the Navy did not
ask for 12, and the committee, chaired by the Senator from South
Carolina who is sitting on the floor, the Armed Services Committee of
the Senate chaired by Senator Thurmond, authorized six, not 12. And the
Subcommittee on Defense appropriations, on which I sit, said, ``No,
we'll put another six in,'' even though they were not requested nor
authorized. It is a paltry $234 million. It will be the only chance you
will have of this entire bill to save one single dollar and do it
sensibly.
Mr. President, I yield back the remainder of my time and ask for the
yeas and nays on my amendment.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mr. STEVENS. Mr. President, before the vote starts, I ask unanimous
consent that the time on the Ford amendment be limited to 30 minutes
equally divided. I have this agreement with the Senator from Kentucky.
The PRESIDING OFFICER. Without objection, it is so ordered.
The question is on agreeing to the Bumpers amendment No. 4891. The
yeas and nays have been ordered. The clerk will call the roll.
The legislative clerk called the roll.
The result was announced--yeas 44, nays 56, as follows:
The result was announced--yeas 44, nays 56, as follows:

[Rollcall Vote No. 197 Leg.]

YEAS--44

Akaka
Baucus
Biden
Bingaman
Bradley
Brown
Bryan
Bumpers
Byrd
Conrad
Daschle
Dodd
Dorgan
Exon
Feingold
Glenn
Graham
Grassley
Harkin
Hatfield
Hollings
Jeffords
Johnston
Kassebaum
Kennedy
Kerrey
Kohl
Lautenberg
Leahy
Levin
Lieberman
Moseley-Braun
Moynihan
Murray
Nunn
Pell
Pryor
Reid
Robb
Rockefeller
Simon
Snowe
Wellstone
Wyden

NAYS--56

Abraham
Ashcroft
Bennett
Bond
Boxer
Breaux
Burns
Campbell
Chafee
Coats
Cochran
Cohen
Coverdell
Craig
D'Amato
DeWine
Domenici
Faircloth
Feinstein
Ford
Frahm
Frist
Gorton
Gramm
Grams
Gregg
Hatch
Heflin
Helms
Hutchison
Inhofe
Inouye
Kempthorne
Kerry
Kyl
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Murkowski
Nickles
Pressler
Roth
Santorum
Sarbanes
Shelby
Simpson
Smith
Specter
Stevens
Thomas
Thompson
Thurmond
Warner
The amendment (No. 4891) was rejected.
Mr. INOUYE. Mr. President, I move to reconsider the vote.
Mr. STEVENS. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. STEVENS. Mr. President, we are awaiting an agreement on the
disposition of the final amendments of the bill.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. STEVENS. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. STEVENS. While we are waiting for the final agreement on the
amendments, I will offer an amendment on behalf of Senators Feingold,
Kohl, Bumpers, and myself.

Amendment No. 4892

Mr. STEVENS. Mr. President, I send an amendment to the desk and ask
for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Alaska [Mr. Stevens], for himself, Mr.
Feingold, Mr. Kohl, Mr. Bumpers, and Mr. Inouye, proposes an
amendment numbered 4892.

Mr. STEVENS. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
At the appropriate place in the bill, insert the following:
Sec. 8099. (a) Not more than 90 percent of the funds
appropriated or otherwise made available by this Act for the
procurement of F/A-18E/F aircraft may be obligated or
expended for the procurement of such aircraft until 30 days
after the Secretary of Defense has submitted to the
Congressional defense committees a report on the F/A-18E/F
aircraft program which contains the following:
(1) A review of the F/A-18E/F aircraft program.
(2) An analysis and estimate of the production costs of the
program for the total number of aircraft realistically
expected to be procured at each of four annual production
rates as follows:
(a) 18 aircraft.
(b) 24 aircraft
(c) 36 aircraft.
(d) 48 aircraft.
(3) A comparison of the costs and benefits of the F/A-18E/F
program with the costs and benefits of the F/A-18C/D aircraft
program taking into account the operational combat
effectiveness of the aircraft.

[[Page S7993]]

(b) Not later than 30 days after the Secretary of Defense
has submitted the report required by subsection (a), the
Comptroller General of the United States shall submit to the
Congressional defense committees an analysis of the report
submitted by the Secretary.

Mr. STEVENS. Mr. President, this amendment restricts the obligation
of 10 percent of the funds appropriated for the procurement of the Navy
F/A-18E/F fighters until the Secretary of Defense submits a report on
the F/A-18E/F program.
The amendment is similar to an amendment adopted in the defense
authorization bill, and I believe that this is acting in concert with
our colleagues on that Armed Services Committee.
This amendment is now acceptable to us. I believe I speak for my
friend from Hawaii, also. Does the Senator want to be listed as a
cosponsor?
Mr. INOUYE. Yes.
Mr. STEVENS. Mr. President, I ask the Senator from Wisconsin if he
has any comment to make.
The PRESIDING OFFICER. The Senator from Wisconsin is recognized.
Mr. FEINGOLD. Mr. President, my amendment relates to funds
appropriated under this bill for production of the F/A-18 E/F, or the
Super Hornet as it is commonly called, which I understand will be
accepted by the managers. I appreciate their willingness to work with
us on this matter.
Mr. President, this amendment is very similar to an amendment that I
offered which was adopted on the Defense authorization bill, S. 1745,
when it was considered by the Senate on June 28.
Basically, this amendment seeks to limit obligation of funds for the
production of this new aircraft until Congress has an opportunity to
review carefully the recommendations made by the General Accounting
Office in a report issued last month. The GAO report, entitled ``Navy
Aviation: F/A-18E/F will Provide Marginal Operational Improvement at
High Cost,'' outlines some very important questions that should be
considered before we proceed further with procurement of this aircraft.
The amendment directs the Department of Defense to submit a report
responding to the GAO concerns, and provides an opportunity for GAO to
comment on the DOD response. It fences 10 percent of the funds
appropriated for procurement of the new aircraft until 30 days after
this report is submitted.
At the time I offered a similar amendment to the DOD authorization
bill, I discussed extensively the issues raised by GAO. Although I do
not want to take the Senate's time today to repeat each of these
arguments, I want to highlight some of GAO's concerns.
First, GAO noted that a projected total program cost of more than $89
billion, the Super Hornet Program is one of the most costly aviation
programs in the Department of Defense.
Second, the Navy based the need for the development and procurement
of the Super Hornet on the basis of existing or projected operational
deficiencies of the current model of the F/A-18 in the following key
areas: strike range, carrier recovery payload and survivability. In
addition, the Navy noted limitations of the current C/D model of the F/
A-18 with respect to avionics growth space and payload capacity.
In its report, however, GAO concluded that the operational
deficiencies in the C/D that the Navy had cited in justifying the E/F
either have not materialized as projected or such deficiencies can be
corrected with nonstructural changes to the current C/D and additional
upgrades which would further improve its capabilities.
Mr. President, let me stress here that the GAO did not conclude that
the F/A-18 E/F is a bad plane. During the debate on this issue on the
DOD authorization, several of the proponents of this aircraft spoke
about this plane being a highly capable carrier-based tactical
aircraft, as it was intended to be. I want to stress, again, that the
issue here is whether the additional capabilities of this
aircraft justify its additional cost, or whether the current C/D
version of the F/A-18 can perform the mission at substantial cost-
savings to the Federal taxpayer.

GAO found that the C/D's are performing at higher levels than
originally contemplated. For example, the F/A-18C's operating in
support of the current Bosnia operations are now routinely returning to
carriers with operational loads of 7,166 pounds, which is substantially
greater than the Navy projected for this aircraft. In fact, when
initially procured in 1988, this aircraft had a total carrier recovery
payload of 6,300 pounds. Today, it is significantly higher. In
addition, GAO noted that while it is not necessary, upgrading F/A-18Cs
with stronger landing gear could allow them to recover carrier payloads
of more than 10,000 pounds--greater than that sought for the F/A-18E/F
which would be 9,000 pounds.
GAO made similar findings with respect to the C/D's long-range
mission capacity. GAO concluded that the Navy's F/A-18 strike range
requirements can be met by either the Super Hornet or the C/D, using
the 480-gallon external fuel tanks that are planned to be used on the
E/F.
Mr. President, I will not detail any further today the areas where
GAO noted that the differences in the capabilities of the two aircraft
were either not as significant as anticipated or could be minimized by
modifications of the C/Ds.
I do, however, want to stress the difference in the cost of these two
planes. As I mentioned at the outset, the total program cost of the
Super Hornet is projected to be over $89 billion assuming a procurement
of 1,000 aircraft--660 by the Navy and 340 by the Marine Corps--at an
annual production rate of 72 aircraft per year. However, as GAO noted,
these figures are not accurate. The Marine Corps has made it clear that
they do not intend to purchase any Super Hornets. Furthermore, an
annual production rate of 72 aircraft is not feasible. The Navy has
already been directed to calculate costs based upon a more realistic
production rate, at 18, 36 and 54 aircraft per year.
Using the overstated assumptions, the Navy calculated the unit
recurring flyaway cost of the Super Hornet at $44 million. However,
using GAO's more realistic assumptions of the procurement of 660
aircraft, at a production rate of 36 aircraft per year, the cost of the
E/F balloons to $53 million.
In comparison, the C/D's cost $28 million each at a production rate
of 36 planes per year.
GAO concluded that the cost difference in unit recurring flyaway
would result in a savings of almost $17 billion if the Navy were to
procure 660 F/A-18 C/Ds rather than 660 F/A-18 E/Fs.
At a time of fiscal constraints on all aspects of the Federal budget,
we need to look carefully at whether it is necessary to spend this
additional $17 billion on an aircraft that may produce only marginal
improvements over the current model.
Mr. President, this question is also important because there is also
a far less costly program already being developed which may yield more
significant returns in operational capability. This program is the
joint advanced strike technology or JAST program which is currently
developing technology for a family of affordable next generation joint
strike fighter [JSF] aircraft for the Air Force, Marine Corps and the
Navy.

The JSF is expected to be a stealthy strike aircraft built on a
single production line with a high degree of parts and cost
commonality. The Navy plans to procure 300 JSF's with a projected
initial operational capability around 2007. The JSF will be designed to
have superior or comparable capabilities in all Navy tactical aircraft
mission areas, especially range and survivability, at far less cost
than the Super Hornet.
The estimated unit recurring flyaway cost of the Navy's JSF is
estimated in the range from $32 to 40 million, as compared to GAO's $53
million estimate for the Super Hornet.
Mr. President, given the high cost and marginal improvement in
operational capabilities the Super Hornet would provide, it seems that
its justification is no longer clear. Operational deficiencies in the
C/D aircraft either have not materialized or can be corrected with
nonstructural changes to the plane. As a result, proceeding with the E/
F program may not be the most cost-effective approach to modernizing
the Navy's tactical aircraft fleet. A strong argument can be made that
the Navy can continue to procure the C/D aircraft while upgrading it to
improve further its operational capabilities. For the long term, the
Navy

[[Page S7994]]

can look toward the next generation strike fighter, the JSF, which will
provide more operational capability at far less cost than the E/F.
As I have indicated previously, the Navy does need to procure
aircraft that will bridge between the current force and the JSF which
will be operational around 2007. The question is whether the F/A-18C/D
can serve that function, or whether we should proceed with an expensive
new plane for what appears to be a marginal level of improvement. The
$17 billion difference in projected costs does not appear to provide a
significant return on our investment.
For these reasons, I think it would be prudent to adopt a go-slow
approach to the F/A-18 E/F program and allow Congress sufficient time
to review GAO's findings, the Defense Department's response, and GAO's
evaluation of that response.
Mr. President, there is one issue I want to specifically address
regarding the obligation of funds under this appropriations bill for
the F/A-18 E/F program. At the time the GAO report was submitted to
Congress, the Navy responded that the GAO concerns were premature
because the final procurement decision had not been made by DOD. DOD
indicated that the final decision could not be made until the Defense
Acquisition Board had made its low rate initial production [LRIP]
milestone decision in the first quarter of calendar year 1997. At that
time, DOD contended the Board would convene for a thorough program
review. It is my understanding that although there may be some
procurement funds obligated prior to the DAB decision, the bulk of the
funds would not be committed until this milestone decision is made next
year. DOD would, under this amendment, also be preparing its report in
response to this amendment during the same period of time, and
hopefully, answers to some of the questions raised by GAO would be
thoroughly examined during this process prior to the final decisions
for fiscal year 1997 funding. Congress will also have an opportunity to
review this information and halt or slow down procurement if deemed
appropriate.
Over the long term, it is important that we carefully consider all of
the issues surrounding the planned procurement of some 1000 F/A-18 E/
F's. I believe that this amendment will assist in getting the relevant
information, and I appreciate the cooperation of the managers in moving
us in that direction.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
The amendment (No. 4892) was agreed to.
Mr. STEVENS. Mr. President, I move to reconsider the vote.
Mr. INOUYE. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

aluminum metal matrix composites

Mr. D'AMATO. Mr. President, I am concerned with a project under the
Defense Production Act which is currently caught up in the Department
of Defense. On October 5, 1995, the President notified Congress that
DOD intended to utilize title III of the Defense Production Act (DPA)
to address industrial resource shortfalls for the production of
Aluminum Metal Matrix Composites (AL MMC). Funding in the amount of
$15,000,000 was to be made available for this effort. It is my
understanding that staff in the Under Secretary of Defense (Acquisition
& Technology) office are attempting to divert these funds to other
title III programs.
According to Assistant Secretary of the Army (Research, Development
and Acquisition) Gilbert F. Decker, ``the Army has valid requirements
for components manufactured with Al MMC to support its armored combat
vehicle fleet.'' In fact, Mr. Decker wrote to Under Secretary Kaminski
asking that he continue to reserve the funding for its original
purpose, adding that ``use of Al MMC material will result in both a
significant weight reduction and increase in the durability of
manufactured parts. It also promises a significant weight reduction and
increase in the durability of manufactured parts. It also promises a
significant cost savings over current materials.''
Under Secretary of Defense Kaminski approved the project as well
stating that ``Aluminum Metal Matrix Composites (Al MMC) 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.''
The funds necessary for this project are already appropriated monies
and need no further authorization or appropriation to be spent. Based
upon my understanding, it is the desire of the Army to proceed
expeditiously on the procurement of Aluminum Metal Matrix Composites
with title III funds. Unfortunately, DOD personnel on the staff level
have decided to step in the way of this project, Mr. Chairman, that is
unacceptable.
Mr. STEVENS. I thank the distinguished Senator from New York for
bringing this problem to the attention of the Committee. I can assure
the Senator that we will look into this matter and further discuss it
with our colleagues in the House when we go to Conference.

DoD NATURAL RESOURCES ASSESSMENT

Mr. WARNER. Mr. President, as you and Senator Stevens know, the
Defense authorization bill is currently in conference and I am a
conferee on that legislation. Section 248 of that bill as passed by the
House contains a provision which authorizes a natural resources
assessment and training delivery system improvement program to enhance
the Department of Defense's capabilities for complying with its own
requirements to protect and conserve the natural ecosystems on military
installations. This provision was sponsored by Representative Hansen of
Utah. I am hopeful that the Senate conferees will accept the Hansen
amendment in conference.
The purpose of this colloquy is to urge the prospective Senate
conferees on the Defense Appropriations bill to give consideration to
providing a means of funding the Hansen amendment. Specifically, it is
my understanding that $3,400,000 would be required to allow a
consortium of environmental experts, including institutions of higher
education in my State of Virginia and others, to assist the Department
of Defense to monitor natural resources in training and weapons testing
areas, to address the highest priority DOD environmental conservation
requirements as identified by the Pentagon last year. It is my
understanding that this program will help save funds in carrying out
these important military requirements.
I ask that Senator Stevens and the Senate conferees on the Defense
appropriations bill do whatever is possible to identify funding to
carry out this important military environmental initiative in fiscal
year 1997. Can the distinguished Chairman address this matter?
Mr. STEVENS. I want to thank the distinguished Senator from Virginia
for bringing this important matter to my personal attention. I am
somewhat familiar with the proposal contained in the House-passed
Defense authorization bill and it sounds reasonable. I will assure the
Senator from Virginia that I will work between now and the conclusion
of conference on this appropriations bill to find a way to provide
funding for the natural resources assessment and training delivery
system improvement program that has been identified by my colleague.
One possible avenue that will be explored is the Defense Legacy
Program.
Mr. WARNER. I thank my friend and colleague for his consideration of
this project.

DoD TRANSIT PROGRAM

Mr. WARNER. Mr. President, I would like to bring to your attention
the fact that none of the Department of Defense organizations currently
participates in a transit benefit program available to all Federal
civilian and military personnel. This is particularly significant given
the Metro facilities at the Pentagon. The program, offered by the
Washington Metropolitan Area Transit Authority (WMATA), and authorized
under the Federal Employees Clean Air Incentives Act, Public Law 103-
172, enacted in 1993, allows Federal agencies to provide a tax free
benefit of up to $65 per month in employer-provided transit passes to
help defray the costs of daily commutes by public transportation. The
Federal Government is also permitted to provide up to $165 per month
for parking costs, similarly excluded from an employee's taxable
income. These benefits are identical to

[[Page S7995]]

those enjoyed by private sector employees under the Energy Policy Act
of 1992.
This incentive program for Federal employees has been an unqualified
success. The 100 Federal agencies in this area, including the United
States Senate, that participate in the WMATA Program, called Metrochek,
have reduced parking costs, decreased employee absenteeism rates and
improved employee morale and productivity. The program also results in
significant energy conservation and environmental benefits and serves
to reduce traffic congestion, by encouraging Federal employees to take
public transit, rather than driving alone in their automobiles.
Mr. STEVENS. This certainly appears to be a worthwhile program. I
would like to join the distinguished gentleman in encouraging
Department of Defense organizations to participate. In your opinion,
what would be the most efficient method for gaining their
participation?
Mr. WARNER. First, Mr. President, the Department of Defense should
instruct its organizations to survey the area's Department of Defense
employees to accurately estimate how many employees might benefit from
this program. Additionally, I request the Chairman's support in
directing some of DOD's largest organizations to conduct a
demonstration program to test the effectiveness of this program. For
example, there are over 40,000 civilian and military Army employees in
the Washington area. WMATA estimates that approximately 6,400 employees
could utilize the Metrochek Program. Similarly, the Navy and Marines
have 58,000 employees in this area, of which 8,700 may be able to
utilize the program; and the Air Force has over 21,000 employees, of
which 3,300 could benefit.
Mr. STEVENS. I would be pleased to join the distinguished Senator in
strongly encouraging these DOD organizations to establish demonstration
programs in order to more closely examine the potential of this
program.
Mr. WARNER. I want to thank the Chairman. It seems to me that given
the substantial Federal investment made in Metrorail, we have an
obligation to utilize this extraordinary asset. More than half of the
Metro stations serve Federal installations. The Metrorail System was
built with the full partnership of the Federal Government, dating back
to the Eisenhower Administration. I appreciate the Chairman's
willingness to promote this important program which benefits Federal
employees, while reducing congestion and improving air quality in this
region.

advanced materials intelligent processing center

Ms. MOSELEY-BRAUN. Mr. President, I would like to express my
appreciation to my colleagues, the senior Senator from Alaska, Ted
Stevens, and the Senior Senator from Hawaii, Dan Inouye, for the
funding provided for the Advanced Materials Intelligent Processing
Center in the fiscal year 1997 Defense Appropriations legislation. I
believe the Center will provide returns to the American taxpayers by
enhancing the affordability of military hardware and defense readiness.
At present, the affordability of military hardware is determined in
part by the cost of fabricating components and the stockpiling of
weapons for future use. Advanced materials, which are increasingly used
in military hardware because they provide important performance
benefits, can be difficult and expensive to process. Weapons are
presently manufactured and stockpiled at great cost in part because
technologies are not yet in place that would allow a mothballed plant
to be reactivated quickly, or a commercial manufacturing plant to be
converted rapidly to military production.
The Advanced Materials Intelligent Processing Center can address both
of these cost factors by providing an integrated approach for the
fabrication of military hardware containing advanced materials. The
Center will develop processing techniques that can help to lower the
cost of fabricating military components from advanced materials, and
help to lower the cost and the need for stockpiling.
Numerous studies have shown that inadequate processing technology can
contribute to the high cost of advanced materials. In addition, the
Federal Government spends far more on product development (95 percent
of Federal research and development) than on process development, in
contrast to Japan where the breakdown of research and development
funding is exactly opposite, and where affordable advanced materials
are being developed far more rapidly than in the United States.
The Center is the culmination of more than two years of discussion
and planning with organizations such as the Army Materials Laboratory
polymer composites group, the Air Force Material Laboratory controls
group and ceramic-matrix composites group, Argonne National Laboratory,
the NIST polymer composites group and the Office of Intelligent
Processing of Materials, the IHPTET Fiber Development Consortium, and
the Navy's Center of Excellence in Composites Manufacturing Technology.
Northwestern University is uniquely qualified to establish and
operate the Center because of its international reputation in materials
science, its nationally recognized effectiveness in interdisciplinary
R&D, industrial collaboration, technology transfer, and its experience
in operating R&D consortia related to the production of advanced
military hardware. Northwestern's Department of Materials Science and
Engineering is consistently ranked among the top five such departments
in the Nation, and Northwestern's Material Science Center was among the
first of such laboratories funded by the Federal Government.

In addition, Northwestern's Institute of Learning Sciences is
nationally recognized in using artificial intelligence for adaptive
learning systems. Finally, Northwestern's industrial research
laboratory, BIRL, has successfully worked with many commercial and
military suppliers to develop and transfer new advanced materials and
processing technologies.
With the end of the cold war, the Nation's industrial capacity to
provide defense hardware has declined dramatically through the closure
or conversion to commercial use of defense manufacturing facilities.
Many U.S. defense firms may be unable to convert their operations
rapidly to large-scale military production. The funding recommended in
this year's legislation would allow for development of a center that
can help address the defense readiness of our industrial base.
In closing, Mr. President, I would like to again commend my
colleagues on the subcommittee for their efforts on behalf of this
center.
Mr. STEVENS. I appreciate the kind words of the distinguished Senator
From Illinois. I am aware that Northwestern University in Evanston, IL
would be well qualified to operate the Advanced Materials Intelligent
Processing Center and will give this program every consideration for
funding during conference of this bill.

computer emergency response system

Mr. SPECTER. Mr. President, I have sought recognition for the purpose
of engaging my good friend, the distinguished chairman of the Defense
Appropriations Subcommittee, in a colloquy regarding support for the
Computer Emergency Response Team Coordination Center [CERT/CC], located
at Carnegie Mellon University's Software Engineering Institute in
Pittsburgh, PA. CERT/CC has operated since 1988 under the sponsorship
of the Defense Advanced Research Projects Agency [DARPA]. Its mission
is to respond to computer security emergencies and intrusions on the
Internet, to serve as a central point for identifying vulnerabilities,
and to conduct research to improve the security of existing systems.
The number of computer emergencies handled by CERT/CC has grown from
132 in 1989 to nearly 2,500 in 1995. The severity of these incidents
has also increased dramatically. Finance and banking, medicine and
transportation rely heavily on computer networks. But as terrorists,
ordinary criminals, and rogue states grow more technologically
sophisticated, our vulnerability to attacks on our computer networks
has grown. In light of these vulnerabilities, it is critical for the
United States to develop networks capable of surviving attacks while
protecting sensitive data. In my view, CERT/CC can play a critical role
in ensuring the security of our computer systems.

[[Page S7996]]

The Defense Department had planned to reduce funding for this
critically important activity. However, an amendment offered by
Senators Nunn, Santorum and Kyl, and included in the fiscal year 1997
Defense Authorization bill, authorizes $2 million to the Software
Engineering Institute to continue this effort. This important provision
will enable CERT's incident-handling activity to continue through
fiscal year 1997. It is my hope that an appropriate long-term source of
funding for CERT will be identified during the coming fiscal year.
Mr. STEVENS. Mr. President, I thank my colleague from Pennsylvania
for his comments. I agree that the CERT provides a critical function
for the Defense Department at a time when our computer systems and
networks are being attacked by computer hackers. I will work to provide
an appropriate level of funding for CERT activities.
Mr. GRAMM. Mr. President. I would like to discuss with the
distinguished Chairman and ranking member of the Defense Subcommittee
an important matter that I and a number of our colleagues have been
working on. As I am sure they are aware, the Senate adopted an
amendment I offered to the fiscal year 1997 Senate Defense
Authorization bill that would require the Defense Department and the
Department of Health and Human Services to jointly submit to the
Congress no later than September 6, 1996 a detailed military retiree
Medicare subvention demonstration program implementation plan. That
amendment also authorized funds to pay for the demonstration program.
Currently, however, the fiscal year 1997 Defense Appropriations bill
does not include funding for this important effort. I would like to
bring this matter to the attention of my colleagues, and to propose
expediting a reprogramming request in fiscal year 1997 to fund the
demonstration program should the Congress authorize it for fiscal year
1997.
Mr. STEVENS. Mr. President, I am aware of the efforts of my
colleague, and understand that if the Congress authorizes the
demonstration program in fiscal year 1997 some funds may need to be
appropriated. Since we do not yet know how much funding could be
required, it is impossible for the subcommittee to act at this time. I
assure my colleague that the subcommittee supports Medicare subvention
and we would be willing to work with my colleague from Texas and the
administration to expedite the reprogramming of 1997 funds if the
Congress authorizes a Medicare subvention demonstration program in
fiscal year 1997.
Mr. INOUYE. Mr. President, I too am well aware of this issue. I am
pleased to have been a cosponsor of the amendment to the fiscal year
1997 Defense authorization bill to which my colleague from Texas
referred, as well as being an original cosponsor of his demonstration
legislation, S. 1487. I strongly support the Senate's efforts to
attempt to authorize a Medicare subvention demonstration program in
fiscal year 1997 and look forward to reviewing the joint report when it
is submitted on September 6. I assure my colleague from Texas that I
will be pleased to work with him and the administration to try to
expedite the reprogramming of fiscal year 1997 funds if the Congress is
able to authorize the demonstration in fiscal year 1997.
Mr. GRASSLEY. Mr. President, I would like to thank the chairman of
the committee, my friend from Alaska, Senator Stevens, and my friend
the ranking minority member, Senator Inouye, for doing the good work
again this year on the Defense Department's problem disbursements.
The bill includes a provision--section 8089--that makes the
Department match disbursements with obligations before payments are
made.
This measure helps to sustain the momentum we started back in 1994,
continued in 1995, and re-energized this year.
Section 8089 ratchets down payment thresholds even more as
recommended in audit reports just issued by the inspector general and
General Accounting Office.
This piece of legislation and the accompanying report language send
the right message to the Department.
We intend to keep the pressure on until this problem is fixed.
That's the message the bill sends.
I thank Senator Stevens and Senator Inouye for their willingness to
follow through on this important issue.
Mr. DOMENICI. Mr. President, this Defense Appropriations bill, S.
1894, provides $244.8 billion in new discretionary budget authority and
$243.2 in total discretionary outlays for the Department of Defense.
There are some major elements to this bill that are important for
Senators to know.
The bill, as reported, is within the Defense Subcommittee's Section
602(b) allocation and, thus, complies with the requirements of the
Budget Act.
The bill fully funds certain important initiatives that were
requested by the President, including a three percent pay raise for all
military personnel and the end strengths for all of the active and
reserve military services.
More importantly, the bill also funds needed increases in each of the
major accounts of the defense budget. Each of these accounts was left
with major underfunding problems by the administration's budget
request. The administration would have us believe that these increases
are uncalled for an excessive; following that advice would have the
following consequences:
Programmed medical care for military beneficiaries would be
underfunded by $475 million, and that care would be reduced.
The average age of military barracks that is now over 30 years would
increase.
The average age of tactical aircraft would increase to over 20 years,
and some Air Force fighters would be as old as 40 years.
Flight training for Air Force fighter pilots would decrease from 20
hours per month to an unacceptable 16 hours.
The size of Air National Guard squadrons would shrink to 12 aircraft
each from a level that was 18 to 24 just a few years ago.
In short, while the administration would have people believe that the
increases we are funding in this bill are excessive and unnecessary,
the facts are that these increases will only help to slow--not prevent,
let alone reverse--some serious deterioration in our Armed Forces.
In fact, in terms of constant--inflation adjusted--dollars, this bill
is a real-dollar decrease from last year's appropriations, and, despite
its apparent increases, it constitutes the twelfth straight year of
decline in real-dollar defense spending.
The chairman of the Defense Subcommittee, Senator Stevens, and the
Subcommittee staff deserve the thanks of the Senate for their extremely
skillful crafting of this bill. It makes the best possible use of the
limited funds available; in many respects, it does more--with less--
than other defense bills before Congress, and, most importantly, it
helps to stem the aging and shrinking in our weapons inventory and the
reduced training and readiness that the administration's anemic defense
budget would impose on our Armed Forces.
Finally, Mr. President, I ask unanimous consent that a table showing
the relationship of the reported bill to the Defense Subcommittee's
602(b) allocation be printed in the Record.
I urge the adoption of this bill.
There being no objection, the material was ordered to be printed in
the Record, as follows:

DEFENSE SUBCOMMITTEE SPENDING TOTALS--SENATE-REPORTED BILL
[Fiscal year 1997, in millions of dollars]
------------------------------------------------------------------------
Budget
authority Outlays
------------------------------------------------------------------------
Defense Discretionary:
Outlays from prior-year BA and other actions
completed.................................... ......... 80,733
S. 1894, as reported to the Senate............ 244,561 162,247
Scorekeeping adjustment....................... ......... .........
---------------------
Subtotal defense discretionary.............. 244,561 242,980
=====================
Nondefense discretionary:
Outlays from prior-year BA and other actions
completed.................................... ......... 12
S. 1894, as reported to the Senate............ ......... .........
Scorekeeping adjustment....................... ......... .........
---------------------
Subtotal nondefense discretionary........... ......... .........
=====================
Mandatory:
Outlays from prior-year BA and other actions
completed.................................... ......... .........
S. 1894, as reported to the Senate............ 184 184
Adjustment to conform mandatory programs with
budget resolution assumptions................ 12 12
---------------------
Subtotal mandatory.......................... 196 196
=====================
Adjusted bill total......................... 244,757 243,188

------------------------------------------------------------------------
Senate subcommittee 602(b) allocation:
Defense discretionary......................... 244,565 242,985
Nondefense discretionary...................... ......... 12
Violent crime reduction trust fund............ ......... .........
Mandatory..................................... 196 196
---------------------
Total allocation............................ 244,761 243,193
=====================

[[Page S7997]]

Adjusted bill total compared to Senate
subcommittee 602(b) allocation:
Defense discretionary......................... -4 -5
Nondefense discretionary...................... ......... .........
Violent crime reduction trust fund............ NA NA
Mandatory..................................... ......... .........
---------------------
Total allocation............................ -4 -5
------------------------------------------------------------------------
Note: Details may not add to totals due to rounding. Totals adjusted for
consistency with current scorekeeping conventions.

Mr. STEVENS. Mr. President, I yield to the majority leader.
Mr. LOTT. Mr. President, again, I want to thank the managers of the
bill for the good work they have done. They have done an incredible job
in working through a long list of amendments and making sure that all
the Senators' interests are protected.
It looks to me like they have reached a point here where we can bring
the DOD appropriations bill to a conclusion, with votes in the morning.
We are waiting for one final clearance. We hope to get that, and there
are calls being made now.
I thank the Democratic leader publicly for his help in working
through these amendments and on a number of other issues we are working
on.
I will not ask unanimous consent right now, but I thought I might
outline what the two managers have come up with, and that would be
this: All remaining amendments to the Department of Defense bill be
offered and all debate occur tonight, and that any rollcall votes
ordered with respect to these amendments begin at 9:30 in the morning,
with the first vote limited to the standard time, and all remaining
stacked votes be reduced to 10 minutes in length, with 2 minutes
equally divided on each before the votes so that there will be an
explanation; following the disposition of all of those amendments and
all other provisions of the bill, we would go to third reading, and
Senator Dorgan would be recognized for 5 minutes for closing debate,
and there would be 5 minutes equally divided between the two managers,
and following that, final passage.
If sounds to me like all of this could probably be done within an
hour or so, and then we would go right after that into the
consideration of S. 1956, which is the reconciliation bill. If we can
get a final clearance on that, then we would be able to officially
announce that there would be no further votes tonight. We have not
gotten that finally agreed to at this point. But I think it would be
very good if we could get that completed and go to reconciliation. Of
course, we would have to have it. The bill would have to be available,
and we believe it will be available by 10:30 in the morning.
Let me do this while we are waiting. I thought maybe we could go the
agreement at any moment now. Would the Senator from Iowa like to go
ahead and proceed? Then would he be willing to yield to me to put this
unanimous consent as soon as we get final clearance?
Mr. HARKIN. Any time.
Will the majority leader yield on the unanimous-consent request?
Mr. LOTT. Certainly.
Mr. HARKIN. Again, maybe my ears did not pick it up. Any time we have
debate in the evening and we stack votes in the morning, this Senator
feels that it is appropriate to give at least a couple of minutes in
the morning before the votes.
Mr. LOTT. That would be included in the unanimous-consent request.
Mr. STEVENS. A minute on each side.
Mr. LOTT. I yield the floor, and hopefully we can get the final word
momentarily.
Mr. HARKIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Iowa is recognized.

Amendment No. 4492

(Purpose: Relating to payments by the Department of Defense of
restructuring costs associated with business combinations)

Mr. HARKIN. Mr. President, I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The bill clerk read as follows:

The Senator from Iowa [Mr. Harkin], for himself, and Mr.
Simon, proposes an amendment numbered 4492.

Mr. HARKIN. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

On page 88, between lines 7 and 8, insert the following:
Sec. 8099. (a)(1) Not later than February 1, 1997, the
Comptroller General shall, in consultation with the Inspector
General of the Department of Defense and the Director of the
Office of Management and Budget, submit to Congress a report
which shall set forth recommendations regarding the revisions
of statute or regulation necessary--
(A) to assure that the amount paid by the Department of
Defense for restructuring costs associated with a business
combination does not exceed the expected net financial
benefit to the Federal Government of the business
combination;
(B) to assure that such expected net financial benefit
accrues to the Federal Government; and
(C) in the event that the amount paid exceeds the actual
net financial benefit, to permit the Federal Government to
recoup the difference between the amount paid and the actual
net financial benefit.
(2) For purposes of determining the net financial benefit
to the Federal Government of a business combination under
this subsection, the Comptroller General shall utilize a 5-
year time period and take into account all costs anticipated
to be incurred by the Federal Government as a result of the
business combination, including costs associated with the
payment of unemployment compensation and costs associated
with the retraining of workers.
(b) No funds appropriated or otherwise made available for
the Department of Defense by this Act may be obligated or
expended to process or pay any claim for restructuring costs
associated with a business combination under the following:
(1) Any contract, advance agreement, or novation agreement
entered into on or after July 12, 1996.
(2) Any contract, advance agreement, or novation agreement
entered into before that date unless the contract or
agreement specifies that payment for costs associated with a
business combination shall be made under the contract using
funds appropriated or otherwise made available for the
Department by this Act.

Mr. HARKIN. Mr. President, I ask unanimous consent that Senator
Simon's name be added as a cosponsor of the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. LOTT. Mr. President, if the Senator will yield, I believe we have
this agreement.

Unanimous-Consent Agreement

Mr. President, I ask unanimous consent that all remaining amendments
to the Department of Defense appropriations bill be offered, that all
debate occur today, and that the rollcall votes ordered with respect to
these amendments begin at 9:30 a.m., on Thursday, July 18, with the
first vote limited to the standard time, and all remaining stacked
votes reduced to 10 minutes in length with 2 minutes equally divided
prior to each vote for explanation.
I further ask unanimous consent that, following disposition of the
amendments, all other provisions of this consent agreement apply; and,
following third reading of H.R. 3610, that Senator Dorgan be recognized
to be followed by 5 minutes equally divided between the two managers;
and, following the conclusion or yielding back of time, the Senate
proceed to vote on final passage of H.R. 3610, as amended, without
further action or debate; and following disposition and passage of H.R.
3610, the Senate turn to consideration of S. 1956, the reconciliation
bill.
Mr. DASCHLE. Reserving the right to object, I suggest the absence of
a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. DASCHLE. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DASCHLE. Mr. President, I have no objection.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. LOTT. Mr. President, for the information of all Senators, there
will be no further votes this evening. However, Members who have
amendments will have to remain to offer and debate their amendments.
Those votes, including passage, will occur beginning at 9:30 a.m. Also,
following passage of the DOD appropriations bill, the Senate will begin
reconciliation.
Therefore, a number of votes will occur during Thursday's session of
the Senate.
Again, I thank Senator Daschle, Senator Stevens, and Senator Inouye

[[Page S7998]]

for the great work they have done here, and all Senators because it
takes a lot of cooperation to get a unanimous-consent agreement.
We will continue to try to move bills that we get agreement on, and
judges that we have agreement on, so that we can continue to work
together and do the business of the Senate.
I thank Senator Harkin for yielding this time.

Amendment No. 4492

The PRESIDING OFFICER. By previous agreement, the proponents of the
Harkin amendment have 30 minutes under the control of the Senator from
Iowa, and the opponents have 15 minutes.
The Senator from Iowa is recognized.
Mr. HARKIN. Mr. President, this is a very simple amendment. Let me
try to explain it by beginning this way. If you remember the $600
toilet seats, and the $500 hammers in the Department of Defense, well,
what is going on right now is going to make those look like a real
bargain. What has happened since 1993, due to a policy change that was
never debated on the Senate floor, never published in the Federal
Register, is that taxpayers are now paying for mergers and acquisition
costs of defense contractors.

Yes. You heard me right. Any defense contractor that merges--acquires
other companies--the taxpayers get to pick up the bill. I know it is
hard to believe. But it is actually happening.
The cost estimated so far of doing this just since 1993 is over $300
million. There is somewhere in the neighborhood of about $2 billion in
costs pending that the taxpayers will have to pick up unless we do
something about it and stop this nonsense--this egregious attack on the
taxpayer dollars.
In 1993 the DOD, at the request of defense contractors, changed its
policy on reimbursing companies for corporate mergers without
adequately notifying Congress. This change in the interpretation of the
Federal acquisition rules is far reaching. Every department and agency
of the Government is affected. Yet, the Senate has not had one hearing
nor significant floor debate on this issue.
Mr. President, this amendment simply seeks to assure that what
proponents of this form of corporate welfare claim--that it will lead
to rational downsizing of the defense industry and result in net
savings to the taxpayer--is actually realized. As of now both of those
claims do not seem to be supported by the facts.
Let me read a couple of passages from a recent DOD inspector general
report dated June 28, 1996, on page 9. ``Contractors''--meaning defense
contractors--``are submitting cost proposals for activities called
concentration, transition, economic planning, and other terms that do
not immediately suggest restructuring and make the cost issues
difficult for the Government to review, administer, and resolve.''
On page 10 of the same IG report,

One contractor's restructuring proposal projected savings
over 10 years. The contractor's projections are highly
speculative since the volume of Government business is not
guaranteed. The same contractor also proposed savings based
on ``synergies in the work force'' [how about that one?] a
term that is not defined in the existing procurement
regulations, and is difficult at best to monetize and
evaluate.''
Another contractor proposed keeping subcontract profits [listen to
this one] in its prime contract price, although it now owned the
subcontractor and would be receiving a profit on top of a profit.

Another example:

A contractor voluntarily deleted costs to win a competitive
program and subsequently identified those costs as
restructuring.

And billed the taxpayers for it.
On page 16, the same IG report, which just came out about 3 weeks
ago:
Amortization based on the projection of extended savings
can almost make a marginal acquisition appear attractive by
spreading costs over a long period, and comparing them to the
projected savings to determine savings. In all cases,
amortization periods were selected for arbitrary reasons,
such as the length of time needed to achieve restructuring
savings, or to meet available funding otherwise not supported
by generally accepted accounting principles.

There is more, but I will leave that for right now.
As I said earlier, Mr. President, proponents also say the policy is
going to save taxpayers' money. How many times have we heard that old
song? The record is spotty at best.
According to a GAO study of one business combination, ``The net cost
reduction certified by DOD represents less than 15 percent of the
savings projected to the DOD 2 years earlier when they sought support
for the proposed partnership.''
Less than 15 percent of the projected savings were actually being
achieved. That alone proves the need for my amendment.
Clearly, projected savings are not being realized. Yet, there is
absolutely no mechanism for DOD to recoup actual losses to the
Government. As a result, the American taxpayer is being asked to pick
up the tab.
In addition, the current practice is to measure only cost to the
Department of Defense when contractors merge and lay off thousands of
hard-working Americans. The costs associated with Government-subsidized
social services like worker retraining are not tallied. Neither are the
costs associated with lost payroll tax revenue. My amendment would fix
that by requiring the Comptroller to include all costs to the
Government in his recommendations.
Although I believe this practice must stop, maybe this is too much to
do right now, but that is why I am offering this very modest amendment.
What this amendment does is it merely puts a 1-year moratorium on these
payments so the Comptroller General can give us the tools we need to
take a close look at the policy and to ensure that taxpayers recoup any
payments in excess of realized benefits. It will also allow us to have
hearings on this far-reaching policy change.
Mr. President, this amendment is very similar to one adopted in the
House on June 13. On June 13--get this--the House of Representatives,
by voice vote, adopted an amendment even more stringent than mine. It
would be retroactive. It would go back even on the contracts that are
held right now.
When I first proposed my amendment on the defense authorization bill,
some of the Members came to me and said, ``Oh, my gosh. This is going
to open up the Government to all kind of lawsuits--breach of
contract.'' Well, all right, I took that into account. This amendment
that I offer is not like that amendment. This amendment is only
prospective. It allows the Government to pay the costs for which it is
currently obligated, but it prevents any further obligation.
Let me be very clear about this, especially to the managers of the
bill. This amendment allows the Government to pay costs for which it is
currently obligated but prevents any further obligation.
Let me just discuss this policy in more detail. Lawrence Korb, the
Under Secretary of Defense under President Reagan, supports this
amendment. According to an article by him in the summer 1996 issue of
the Brookings Review, this wasteful practice was initiated by the
Pentagon in July 1993. The Pentagon claims that this was not a change
of policy but merely a clarification of existing policy. However, no
one can come up with examples of such corporate welfare before the 1993
decision. And there are several examples of such requests being denied.
So it was a policy change, a serious and costly one.
If this was not a policy change and merely a clarification of
existing policy, then you better look out, because we have got mergers
and acquisitions going back to the late 1970's, and they are all going
to be marching up here and saying, well, it was existing policy.
I hope the managers of the bill and their staffs will think about
this and respond to this. You cannot have it both ways. If this is a
change in policy, then it was not published in the Federal Register. It
did not follow the rules, Federal rules. There were no hearings held in
the Senate. We never debated it. If, however, as the Pentagon claims,
this was not a change in policy but only a clarification of existing
policy, then the taxpayers of this country ought to have to pay for
every merger and acquisition going all the way back, and so the ones
that were denied in the past will now come back to haunt us because
they will come back and say, by your own words, this was existing
policy.

That is why even the $2 billion we are looking at that is pending now
is going to mushroom to $3 billion, $4 billion, $5 billion. Who knows
when it will all end?

[[Page S7999]]

Let me read a little bit from Mr. Korb's article. First of all, from
his letter to me dated July 11.

As I testified in July 1994 before the House Armed Services
Committee, and as I have written in Foreign Affairs, the
Brookings Review and the Baltimore Sun, I do not believe that
such payments are necessary to promote the rational
downsizing of defense industry. Moreover, by its policy of
subsidizing defense mergers and acquisitions, the Clinton
administration has already created mega-companies that will
stifle competition and wield tremendous political power.
The conditions that the amendment places on paying the
subsidy will ensure that Federal money will not go towards
mergers that would have occurred without the subsidy or
before the policy change. In addition, your amendment--

Talking about my amendment--

Will guarantee that there will be real savings to the
taxpayer and that these savings are documented.

In the article that he had in the Brookings Review in the summer
issue, Mr. Korb pointed out how this happened. He said:

To date, the Pentagon has received 30 requests for
reimbursement for restructuring. Lockheed Martin alone
expects to receive at least $1 billion to complete its
merger.
How did it happen? In July 1993, John Deutch, then the
undersecretary of defense for acquisition, responded to
pressure on his boss, William Perry, from the chief executive
officers of Martin Marietta, Lockheed, Loral and Hughes by
deciding to allow defense companies to bill the Pentagon for
the costs of mergers and acquisitions.
According to Deutch . . . the move was not a policy change
but a clarification of existing policy.
Deutch is wrong . . . This is a major policy change. It is
not necessary. And it will not save money.

Mr. Korb goes on in his article. He says:

Indeed, during the Bush administration, the Defense
Contract Management Agency rejected a request by the Hughes
Aircraft Corporation to be reimbursed for $112 million in
costs resulting from its acquisition of General Dynamics'
missile division.
But on July 21, 1993, Deutch wrote a memorandum stating
that restructuring costs are indeed allowable and thus
reimbursable under Federal procurement law.
Deutch's position that he was merely clarifying rather than
making policy is not supported by anyone, even those who
favor the change. The procurement experts in his own
department disagreed vehemently. On June 17, 1993, the career
professionals at DCMA told him that the history of the FAR
argues against making the nonrecurring organization costs
associated with restructuring costs allowable and noted that
they had disallowed these costs in the past.
The DCMA position was also supported by Don Yockey, the
undersecretary of defense for acquisition in the Bush
administration, the Aerospace Industries Association, the
American Bar Association's Section on Public Contract Law,
and the American Law Division of the Congressional Research
Service. * * *

In Luckey's opinion, Deutch's position is based on semantics, not
legality.
Mr. President, I ask unanimous consent the cover letter to this
Senator and the article that appeared in the Brookings Review, summer
1996, be printed in the Record.
There being no objection, the letter and article were ordered to be
printed in the Record, as follows:

The Brookings Institution,

Center for Public Policy Education,

Washington, DC, July 11, 1996.
Hon. Tom Harkin,
U.S. Senator,
Washington, DC.
Dear Senator Harkin: As you requested, I am writing to give
you my opinion on your amendment to S. 1894, that would
prohibit the secretary of defense from paying the
restructuring costs resulting from a merger or acquisition in
the defense industry after July 11, 1996, and permits the
Federal government to recoup funds from those companies that
merged prior to this date if the net federal benefit does not
exceed the amount paid to the companies.
As I testified in July 1994 before the House Armed Services
Committee, and as I have written in Foreign Affairs, the
Brookings Review, and the Baltimore Sun, I do not believe
that such payments are necessary to promote the rational
downsizing of defense industry. Moreover, by its policy of
subsidizing defense mergers and acquisitions, the Clinton
administration has already created mega-companies that will
stifle competition and wield tremendous political power.
The conditions that the amendment places on paying the
subsidy will ensure that federal money will not go toward
mergers that would have occurred without the subsidy or
before the policy change. In addition, your amendment will
guarantee that there will be real savings to the taxpayer and
that these savings are documented.
I appreciate your asking for my opinion on this matter and
would be happy to answer any questions you might have.
Sincerely,
Lawrence J. Korb,
Director.

[From the Brookings Review, Summer 1996]

Merger Mania

(By Lawrence J. Korb)

McDonnell Douglas, Martin Marietta, Ling-Temco-Vaught
(LTV). As the telltale compound names signal, mergers and
acquisitions have long been a staple of the U.S. defense
industry. But since the Clinton administration took office in
1992, the number of mergers has increased dramatically.
In 1991, military mergers were valued at some $300 million.
by 1993, the value had climbed to $14.2 billion. It will top
$20 billion in 1996. In 1993 Martin Marietta purchased
General Electric's defense division and General Dynamics'
space division. At about the same time Lockheed purchased
General Dynamics' aircraft division, while Loral purchased
LTV, Ford Aerospace, and Unisys. Then in 1994 Lockheed merged
with Martin to become Lockheed Martin, and a year later
Lockheed Martin purchased Loral to produce a $30 billion
giant known as Lockheed Martin Loral, which now controls 40
percent of the Pentagon's procurement budget.
During this same period. Northrop outbid Martin for the
Grumman aircraft company, and the new company in turn bought
the defense division of Westinghouse. On a somewhat smaller
scale, Hughes bought General Dynamics' missile division and
Raytheon purchased E-Systems. Among the true defense giants,
only McDonnel Douglas has not yet made a major purchase.
Spokesmen for the defense industry cite two reasons for
this sudden rush of mergers. First, merger mania is sweeping
U.S. industry generally. Second, with the end of the Cold
War, defense spending has fallen so dramatically that excess
capacity in the defense industry can be eliminated only
through consolidation. As Norman Augustine of Lockheed Martin
has observed, for the defense industry this is 1929.
Superficially these reasons seem quite plausible. Merger
mania has certainly hit many areas of American industry, such
as banking and communications. In 1992 Chemical Bank merged
with Manufacturers Hanover, and in 1995 they combined with
Chase Manhattan to form a single company. In the past year,
Time, which had merged with Warner Communications in 1990,
purchased Turner Broadcasting; Capital Cities/ABC merged with
Pacific Telesis; and Bell Atlantic merged with NYNEX.
And defense spending has indeed fallen since the end of the
Cold War. In current dollars, projected defense spending for
fiscal year 1997 is about 40 percent below that of a decade
ago, and procurement spending is about one-third what it was
at its peak in the 1980s.
But what industry spokesmen fail to note is that the
decline in defense expenditures has been greatly exaggerated
and that, unlike the private-sector restructuring, the
government is subsidizing defense mergers.
Remember the $600 toilet seats and the $500 hammers that
had taxpayers up in arms during the mid-1980s? Today's
subsidized mergers are going to make them look like bargains.
The outrageously priced toilet seats and hammers were the
result of defense companies taking advantage of a loophole in
acquisition regulations. This time, the taxpayers are being
fleeced at the hands of the Pentagon's civilian leadership,
whose secret reinterpretation of the regulations has rained
hundreds of millions of dollars upon the defense industry. To
date the Pentagon has received 30 requests for reimbursements
for restructuring. Lockheed Martin along expects to receive
at least $1 billion to complete its merger.

how did it happen?

In July 1993, John M. Deutch, then the undersecretary of
defense for acquisition, responded to pressure on his boss,
William Perry, from the chief executive officers of Martin
Marietta, Lockheed, Loral, and Hughes by deciding to allow
defense companies to bill the Pentagon for the costs of
mergers and acquisitions. According to Deutch, who has since
been promoted to deputy secretary of defense and then to
director of Central Intelligence, the move was not a policy
change but a clarification of existing policy. In Deutch's
view, not only was the clarification necessary to promote the
rational downsizing of the defense industry, it would also
save taxpayers billions in the long run.
Deutch is wrong on all three counts. This is a major policy
change. It is not necessary. And it will not save money.
A commonsense reading of the Federal Acquisition
Regulations (FAR) would lead a reasonable person to conclude
that organization costs are not allowable. The regulations
state that since the government is not concerned with the
form of the contractor's organization, such expenditures are
not necessary for or allowable to government contracts.
Indeed, during the Bush administration, the Defense Contract
Management Agency (DCMA) rejected a request by the Hughes
Aircraft Corporation to be reimbursed for $112 million in
costs resulting from its acquisition of General Dynamics'
missile division. As far back as the Nixon administration,
during the post-Vietnam drawdown of defense spending, which
was as severe as the current drawdown, the Defense Department
rejected a similar request from General Dynamics.
But on July 21, 1993, Deutch wrote a memorandum stating
that restructuring costs are

[[Page S8000]]

indeed allowable and thus reimbursable under federal
procurement law. Because Deutch regarded the memo as merely a
clarification of existing policy, he saw no need for a public
announcement. Indeed, he did not discuss his
``clarification'' with the military services or Congress or
even inform them of it. Congress found out about it
accidentally nine months after the memo was written when
Martin Marietta tried to recoup from the Pentagon about $60
million of the $208 million it paid for General Dynamics'
space division. A somewhat astonished Senator Sam Nunn (D-
GA), then chairman of the Senate Armed Services Committee,
remarked, ``Why pay Martin Marietta [60] million?''
Deutch's position that he was merely clarifying rather than
making policy is not supported by anyone, even those who
favor the change. The procurement experts in his own
department disagreed vehemently. On June 17, 1993, the career
professionals at DCMA told him that the history of the FAR
argues against making the nonrecurring organization costs
associated with restructuring costs allowable and noted that
they had disallowed these costs in the past.
The DCMA position was also supported by Don Yockey, the
undersecretary of defense for acquisition in the Bush
administration; the Aerospace Industries Association (AIA),
the trade association for aerospace companies; the American
Bar Association's Section on Public Contract Law; and the
American Law Division of the Congressional Research Service.
Yockey, who was Deutch's immediate predecessor as
procurement czar and who is both a retired military officer
and former defense industry executive, argued in a July 13,
1994, letter to the professional staff of the House Armed
Services Committee that by definition, structure means
organization, and that the FAR does not allow the
reimbursement of organization costs. Indeed, it was Yockey
himself who told DCMA to reject Hughes' request for
reimbursement for its purchase of General Dynamics'
missile division.
In a September 28, 1993, letter to Eleanor Spector, the
director of defense procurement, Leroy Haugh, vice president
of procurement and finance of AIA, stated that the Deutch
memo constituted a significant policy decision and an
important policy change. Therefore, Haugh asked Spector to
promptly publish notice of this policy change in the Federal
Register and to consider amending the regulations. In a May
3, 1994, letter to Deutch, Donald J. Kinlin, the chair of the
ABA Section on Public Contract Law, urged Deutch to modify
the FAR since at that time it did not reflect the changes
made in Deutch's July 1993 memorandum. What is significant
about the AIA and ABA positions is that both groups support
Deutch's change.
Finally in a June 8, 1994, memorandum John R. Luckey,
legislative attorney for the Congressional Research Service,
stated that while formal amendment of the FAR could make
restructuring costs allowable, the argument that they are
allowable under the current regulations appears to contradict
their plain meaning. In Luckey's opinion, Deutch's position
is based on semantics, not legality.
In short, the political leadership of the Clinton defense
department made a significant policy change that as a minimum
should have been published in the Federal Register and, as
Secretary Perry later admitted, cleared in advance with
Congress.

The Substance of the Issue

This end run around the administrative and legislative
processes by the Pentagon is unprecedented, but even more
important is whether the Defense Department and the Taxpayers
should be giving the defense industry a windfall by allowing
a write-off of substantial parts of restructuring costs. For
four reasons, the answer to that question should be an
emphatic ``No.''
First, like Mark Twain's death, the decline of the defense
industry in this country has been greatly exaggerated. As
Pentagon and industry officials endlessly point out, defense
spending in general, and procurement spending in particular,
have declined over the past decade. They note that between
fiscal year 1985 and fiscal year 1995, the defense budget
declined 30 percent in real terms and procurement spending
fell 60 percent. But that comparison ignores the fact that
between fiscal year 1980 and fiscal year 1985, the defense
budget grew 55 percent and the procurement budget grew a
whopping 116 percent. Defense spending in real terms is still
at about its Cold War average, and the defense budget for
fiscal year 1996 was higher than it was for fiscal year 1980.
In inflation-adjusted dollars, Bill Clinton spent about $30
billion more on defense in 1995 than Richard Nixon did in
1975 to confront Soviet Communist expansionism. Using fiscal
year 1985, the height of the Reagan buildup, as a base year
distorts the picture. It would be like comparing spending in
the Korean and Vietnam wars to the level of World War II and
concluding we did not spend enough in Korea and Vietnam.
Moreover, procurement spending will rise 40 percent over the
next five years, and the pentagon is now soliciting bids for
the $750 billion joint strike fighter program.
Similarly, while defense employment has fallen 25 percent
over the past eight years, it grew 30 percent in the five
years before that. More people work in the defense sector now
than at any time in the decade of the 1970s. Moreover, much
of the decline in the defense industry is attributable to the
reengineering or slimming down that is sweeping all American
industries, even those with an increasing customer base.
Finally, if one adds the $266 billion worth of U.S. arms
sold around the world since 1990 (a scandal in itself) to the
$300 billion in purchases by the Defense Department, American
defense industry sales are still at historic highs. Defense
is still a profitable business--which explains why defense
stocks are still quite high despite the jeremiads of industry
spokesmen. Over the past year Lockheed Martin stock has
increased 48 percent in value. Northrop Grumman is up 50
percent and McDonnell Douglas a whopping 80 percent.
Second, taxpayer subsidization is no more necessary today
to promote acquisitions and mergers than it has ever been.
Just about every major defense company today is the product
of a merger, some of them decades old. For example, General
Dynamics acquired Chrysler's tank division in the early
1980s, and McDonnell acquired the Douglas Aircraft Company in
the late 1960s. Even today in the supposed ``bull market,''
plenty of bidders vie for the available companies. Three
years ago, several companies engaged in a fierce bidding war
for LTV. And Northrop outbid Martin Marietta for Grumman. It
is hard to believe that if taxpayer subsidies were not
available, companies would not buy available assets if it
made good business sense. If they paid a little less for
their acquisitions, the taxpayers rather than the
stockholders would benefit. In the bidding war for Grumman,
both Martin and Northrop offered significantly more than
market value, thus giving Grumman's shareholders a financial
bonanza of $22 a share (a bonus of nearly 40 percent).
Raytheon paid a similar premium to acquire E-Systems in April
1995. Should the government allow Northrop's and Raytheon's
stockholders to reap a similar bonanza by subsidizing those
sales?
Over the past five years, William Anders, the former CEO of
General Dynamics, made himself and his stockholders a fortune
by selling parts of his company to Hughes, Martin, and
Lockheed. Since 1991 General Dynamics' stock increased 550
percent and the company has stashed away $1 billion. Should
we also help the stockholders and executives of the buying
companies? Did defense companies offer the taxpayers a rebate
during the boom years of the 1980s when their profits reached
unprecedented levels?
Third, the Defense Department has no business encouraging
or shaping the restructuring of defense industry, or as
Deutch puts it, ``promoting the rational downsizing of the
defense industry.'' Who is to determine what is rational? A
government bureaucrat or the market? While government
shouldn't discourage restructuring, it should stay at arm's
length. If the deal does not make good business sense, the
company will not proceed, As Martin did not when the price
for Grumman became too high. Moreover, might not these
mergers create megacompanies that will reduce competition and
may be very difficult for the political system to control?
The Lockheed Martin Loral giants, for example, is larger than
the Marine Corps. With facilities in nearly every state and
200,000 people on its payroll, its political clout is
enormous. And it presents problems over and above its sheer
size. For example, Loral sells high-tech components to
McDonnell Douglas for its plane, which is competing with
Lockheed Martin for the $750 billion joint strike fighter
program. How can Loral be a partner in promoting the McDonnel
Douglas plane against the Lockheed Martin entry?
Fourth, past history indicates that these mergers end up
costing rather than saving the government money. Both the
General Accounting Office and the Department of Defense
Inspector General have found no evidence to support
contentions by Deutch and defense industry officials that
previous mergers had saved the government money. Indeed, on
May 24, 1994, the Inspector General found that the claim of
Hughes Aircraft that its 1992 purchase of General Dynamics'
missile division saved the Pentagon $600 million was
unverifiable. Moreover, under the Deutch clarification,
contractors can be reimbursed now for savings that are only
projected to occur in the distant future. And if these
savings do not occur as projected, how will the Pentagon get
its (our) money back?

bring back the merger watchdogs

Mergers always have been and always will be a feature of
the U.S. defense industry. And the government has a role in
those mergers. But that role--as exemplified by the
successful 1992 Bush administration challenge of Alliant
Techsystem's proposed acquisition of Olin Corporation's
ammunition division--is to ensure that they preserve
sufficient competition to enable the Pentagon to get the best
price for the taxpayer. It is definitely not to increase
company profits and limit competition by subsidizing the
merger. Not only should the Defense Department abolish the
new merger subsidy, it should follow the lead of its
predecessors and scrutinize the anticompetitive aspects of
all future mergers.
Mr. HARKIN. So this practice is clearly an abuse of taxpayers' money.
If these companies are compelled to merge for business reasons, why do
they need a handout from the taxpayer? If the business deals are good,
the mergers will happen anyway and the taxpayers will receive any
savings without paying anything out. If the deals are bad, then we
should not gamble taxpayer funds on them.

[[Page S8001]]

You would think we would have learned from the savings and loan
debacle. You would think we would have learned from the $600 toilet
seats and $500 hammers, too. I just do not think it is right to make
taxpayers absorb the business costs of an industry capable of paying
its own merger expenses.
Mr. Korb points out defense is still a profitable business. Over the
past year, Lockheed Martin stock increased 48 percent in value,
Northrop Grumman is up 50 percent, McDonnell Douglas, a whopping 80
percent.
Anyway, right now we have a situation where we give an up-front
payment, hopefully for some savings that come down the line. But we do
not know whether those savings are going to accrue. One analysis we
have shows that only about 15 percent of the savings actually accrued.
Here is what other groups have to say on the subject.
The Cato Institute: ``The costs associated with mergers should not be
absorbed by federal taxpayers. This is an egregious example of
unwarranted corporate welfare in our budget.''
Taxpayers for Common Sense: ``It is time for the Pentagon to drop
this ridiculous `Money for nothing' policy.''
The Project on Government Oversight: ``The new policy is unneeded,
establishes inappropriate government intervention in the economy,
promotes layoffs of high-wage jobs, pays for excessive CEO salaries,
and is likely to cost the government billions of dollars.''
Mr. President, I ask unanimous consent these letters from Taxpayers
for Common Sense and the Project on Government Oversight be printed in
the Record.
There being no objection, the letters were ordered to be printed in
the Record, as follows:

Taxpayers for Common $ense,

July 15, 1996.
Senator Tom Harkin,
U.S. Senate,
Washington, DC.
Dear Senator Harkin: Taxpayers for Common $ense supports
your amendments to the Defense Appropriations Bill that would
place a moratorium on payments by the Department of Defense
to defense contractors for restructuring costs associated
with corporate mergers. Your amendment would also require
proof for the taxpayers, in the form of a report to Congress,
that there is a net savings when defense contractors merge.
As you know, a similar amendment recently passed the House
during consideration of the Defense Appropriations.
Under existing policy, the Pentagon can spend appropriated
funds to reimburse defense contractors for expenses related
to corporate mergers. Proponents will argue that in the end
these mergers could save U.S. taxpayers money. However, the
recent merger of the Lockheed company and Martin Marietta for
form Lockheed-Martin provides disturbing evidence of the cost
to the taxpayer. Lockheed-Martin may be eligible for up to
$1.6 billion in reimbursements. Until there is proof that
mergers by defense contractors save taxpayer money, we should
no longer be blindly handing out ``several billions of
dollars'' as estimated by GAO (GAO/T-NSIAD-94-247).
Taxpayers for Common $ense believes no tax dollars should
be spent subsidizing a business cost of a mature industry. We
support your amendment as a step in the right direction
toward common sense spending by the Pentagon and urge all
members of the Senate to support your amendment.
Sincerely,
Jill Lancelot,
Legislative Director.
____

Project on Government Oversight,

Washington, DC, July 11, 1996.
Attn: Kevin Aylesworth.
Senator Tom Harkin,
U.S. Senate,
Washington, DC.
Dear Senator Harkin: The Project on Government Oversight
strongly endorses the Harkin Amendment to the Fiscal Year
1997 Defense Appropriations bill, S. 1894, to ban payments to
defense corporations for post-merger ``restructuring'' costs,
and to improve assurances that past agreements on mergers do
in fact lead to actual savings for the public treasury.
The government should not be in the business of promoting
and subsidizing defense mergers, which are already happening
at a record pace. The defense industry is already dangerously
concentrated--the newly-formed Lockheed Martin Loral accounts
for an astounding 40% of the defense procurement budget. The
subsidy payments thrust the government inappropriately into
free market decision making, and will serve to further reduce
the economic competition that is the ultimate basis for low-
cost production.
The payments are also exacerbating two highly disturbing
trends in U.S. industry--widespread layoffs in high-wage
jobs, and the parallel explosion of outrageously high CEO
salaries. By subsidizing the costs of restructuring, which
usually means laying off tens of thousands of workers, and
reimbursing corporations for lavish executive salaries, this
unfortunate policy accelerates rather than restrains these
trends.
The defense industry continues to be awash in profits,
``pork'' contracts, and federal subsidies. At a time when
government resources are severely constrained, this wasteful
corporate welfare program subsidizing mergers should be
halted immediately.
We applaud your efforts to reverse the damage caused by the
Defense Department's misguided policy on merger payments, and
appreciate the leadership you have shown in exposing and
correcting this waste, which will otherwise end up costing
the government billions of dollars.
Sincerely,
Danielle Brian,
Director.

Mr. HARKIN. Mr. President, how much time do I have remaining?
The PRESIDING OFFICER. The Senator from Iowa has 12 minutes 15
seconds.
Mr. HARKIN. I would like to address some issues that may be bothering
some of my colleagues. I know some representatives of defense
contractors have visited with my colleagues. They have told them my
amendment will hurt workers because the companies are relying on the
taxpayer money to help them. This is completely and totally untrue.
According to the rules of this subsidy, DOD cannot reimburse
companies for helping fired workers unless the companies were already
obligated to do that. Understand, under the subsidy rules, Government
money cannot go to a company to help fired workers unless the companies
were already obligated to do that under existing contracts with the
workers. In other words, the taxpayers' subsidies will never reach the
laid-off workers.
Mr. President, if you do not believe me, let me read a letter from
James Carroll, directing business representative of the International
Association of Machinists, Lodge 709, Marietta, GA. He says:

I am the Directing Business Representative and President of
. . . Local Lodge 709, based in Marietta, Georgia. Our Local
represents workers at Lockheed Martin's assembly plant. Over
the past five years, many thousands of our members have been
laid off because of these cutbacks in defense and cost
cutting measures by Lockheed Martin. Contrary to the facts of
an increasing stock value and skyrocketing executive
compensation, our members did not receive any compensation or
retraining assistance from the Lockheed Martin Corporation.

Mr. President, I want to make it very clear that, under the present
subsidy arrangement, these workers will not get any Government money
regardless of what representatives of the defense industry may have
told my colleagues. ``Our Members did not receive any compensation from
Lockheed Martin Corporation.''
If they did not under the company's agreement, they will not get any
from the Government. They will only get the money from the Government
if the company already helped them.
Mr. President, I ask unanimous consent the letter from James Carroll
of the International Association of Machinists be printed in the
Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

Aeronautical Machinists

Lodge No. 709, IAMAW--AFL-CIO,

Marietta, GA, June 13, 1996.
Hon. Bernie Sanders,
House of Representatives,
Washington, DC.
Dear Mr. Sanders: Following up on the letter sent by our
International President George Kourpias on May 15, I would
like to bring to your attention the urgent need of defense
industry workers who have been and continue to be displaced
during this time of reduced defense spending and cost cutting
by America's private defense companies.
I am the Directing Business Representative and President of
the International Association of Machinists and Aerospace
Workers Local Lodge 709 based in Marietta, Georgia. Our Local
represents workers at Lockheed Martin's assembly plant. Over
the past five years, many thousands of our members have been
laid off because of these cutbacks in defense and cost
cutting measures by Lockheed Martin. Contrary to the facts of
an increasing stock value and skyrocketing executive
compensation, our members did not receive any compensation or
retraining assistance from the Lockheed Martin Corporation.
In fact, during this last round of negotiations which
concluded only two months ago, we proposed several innovative
ideas to Lockheed Martin which would provide for retraining
assistance to displaced aerospace workers. However, we were
unable to reach agreement on any of these innovative ideas.
We certainly hope that you are successful in your attempts
to bring some fairness and

[[Page S8002]]

equity to these workers and workers in the future who have
dedicated years of service to building America's defense
products.
With best regards,

James M. Carroll,

Directing Business Representative,
IAM Local Lodge 709.

Mr. HARKIN. Some colleagues have said the contractors are going to
sue the Government for breach of contract. I do not know what they are
talking about. If a company has a contract with the DOD that specifies
that payment must be made from fiscal year 1997 funds, it will be paid
under my amendment. If there is no such clause in the contracts, then
they will not be paid from 1997 funds. There is no breach of contract
here. What my amendment is, is simply a 1-year moratorium on payments
we are not obligated to pay in 1997.
I know there was an amendment adopted earlier today of Mr. Bradley.
It called for a study. That amendment makes the best case for my
amendment. It is a clear recognition we do not know how to assure that
any payments for merger claims are purely waste. What my amendment does
is it says we are going to have a moratorium for 1 year. If you had in
your contract you would be paid out of fiscal year 1997 funds, you will
be paid. If there is no such existing agreement, then there is a 1-year
moratorium until we can get the study done that I call for.
I might add, that is a study done by GAO in concert with OMB and the
inspector general, not some internal study done by the Department of
Defense. So we can get the study back early next year, we can take a
look at it and we can address this a year from now.
But mind you, if we do not put in a 1-year moratorium, you mark my
words, they are going to rush in and they are going to sign these
things in the next few months and they are going to lock it in. Then
the arguments will be true that if we attempt to stop it, they will sue
for breach of contract. Now is the time to put the 1-year moratorium
on. Now is the time to stop this nonsense.
I know, I remember when the $600 toilet seats and $500 hammers came
up, people scoffed. The people of this country understood it. The
taxpayers of this country understand this, too. They understand it is
not right for them to pay compensation for executives, board members
getting $200,000-and-some a year bonuses when they merge, and the
workers being fired and not getting any retraining or compensation
whatsoever. This money will not help the workers one bit.
It is egregious. I cannot think of anything in my 22 years here in
the Congress that I have seen to be this egregious. All I can say is
those in the defense industry--and not all of them --but those who have
propounded this, those who came to Secretary Perry and Under Secretary
Deutch and got this changed, all I can say is: Don't you have any shame
at all? None whatsoever? It is time to end this practice.
I reserve the remainder of my time.
The PRESIDING OFFICER. Who seeks recognition? The Senator from Alaska
is recognized. The Senator has 15 minutes. The Senator from Iowa has 6
minutes 45 seconds.
Mr. STEVENS. Mr. President, we have faced a dilemma. As we have
reduced defense procurement by more than 60 percent in the last 10
years, that has led to significant overcapacity in the defense
industry. But at the same time, we have had the difficulty of trying to
ensure the preservation of an industrial base capable of maintaining
the strongest military power in the world. Now, without restructuring
this industry, that overcapacity would have led to higher overhead
costs that would have increased the price of defense goods and services
and continued the downward spiral, really, of the amount actually
available for acquisition of systems that we need to assure our men and
women of the armed services that they have the best in the world to be
prepared to defend us with.
Restructuring of this defense industry, in my judgment, has reduced
the unit prices. We have lower unit prices, and we now have long-term
savings for the Department of Defense and the taxpayers as a result of
the restructuring. Our committee has urged and fostered that
restructuring.
A contractor must negotiate restructuring costs with the Department.
Not all costs of restructuring are paid by the Department. The
Department of Defense policy that has been laid down by the Congress
and the Department is such that if the restructuring plan, and its
allowable costs, do not save the taxpayers money, the Department of
Defense will not agree to pay any of the restructuring costs.
In the past 3 years, the Department of Defense has reimbursed
contractors $300 million in these restructuring costs, and we estimate
that will save $1.4 billion in defense costs. That is a 450 percent
return on the contribution of the Department of Defense to the
restructuring plans.
I might add that if there are plans that are approved, restructuring
costs that benefit employees would not be allowed if the amendment of
the Senator from Iowa is adopted. It would not allow severance pay for
employees. It would not allow early retirement incentive payments for
employees. It would not allow employee retraining costs. It would not
allow relocation expenses for retained employees, and many times they
are moved to different locations. I know several significant examples
of very long movements for those who have retained. Those clearly ought
to be a cost to be repaid by the Department when it results in a lower
cost to the Government.
The amendment of the Senator from Iowa would not allow the repayment
of outplacement services for employees helping them find new jobs.
Above all, it would not allow continued medical, dental, life insurance
coverage for terminated employees for the period of time involved.
We believe the amendment of the Senator from Iowa goes in the wrong
direction. We have adopted now by consent the Bradley amendment, which
the Senator from Iowa mentioned. It does require the comptroller
general to give us a study by early next year--I believe it is by April
1--on the analysis of these restructuring costs.
Under current procedure, the costs that are not allowed are
incorporation fees of the new entity, the merged entity; attorney,
accountant, broker, promoter, organizer, management consultant,
investment banker, or investment counselor fees cannot be paid, and
those are the substantial costs of restructuring; interests or other
costs of borrowing to finance an acquisition or merger are not
recoverable from the Department of Defense; any payment to employees of
special compensation in excess of the contractor's normal severance pay
practice are not recoverable; any payment to employees of special
compensation which is contingent upon the employee remaining with the
contractor for a specified period of time following a change in
management control are not payable by the Department of Defense; and
any cost deemed unreasonable or excessive by the Department are not
repayable.
Mr. President, as I said, in my judgment, we face a very difficult
task. We look forward to the report that we will get from the Bradley
amendment. But in other areas, we are actually paying money to maintain
industrial base. We had the President, contrary to my judgment, decided
to buy the Seawolf. Why? Because we had to maintain the industrial base
to build submarines. We have had other instances where we actually paid
industries to keep going in order to maintain the industrial base for
the future.

The restructuring process brings together and merges industrial parts
so that the successor entity is capable of producing for the Government
at a lower cost under the circumstances that we are buying smaller
amounts and we are buying different types of equipment.
I really do believe restructuring is in the best interest of the
taxpayers of this country. I look forward to the study, but I oppose
the Senator's amendment. This is not a question of a hammer or toilet
seat or coffee pot. This is a question of maintaining the industrial
base of the United States so that we can continue to be the leader of
the world.
We are exporting, as we said this morning, some 14 billion dollars'
worth of industrial products that are made by these industries. They
are sold overseas. The fact that they are constructed by these
industries and produced by these industries and sold overseas yields us
a lower unit price for the taxpayers of this country to allow

[[Page S8003]]

us to continue to replace, I do not care what it is, tanks or ships or
aircraft. We need to maintain those to maintain the defense of this
island Nation.
I say to the Senator from Iowa, with all good will to him and what he
is trying to do, it is wrong to put this concept of restructuring costs
in the same category as those fees which we all condemned which were
wasteful. These are not wasteful costs, Mr. President. They are the
costs of downsizing the production units that we built up during the
cold war in order to maintain our freedom. Now we are downsizing those
units so that we can continue to be able to defend our freedom in the
future.
I spent a lot of my personal time going over some of these plans to
try to assure that they are, in fact, in the public interest. We have
had conversations with the Department of Justice on them and with other
entities, industry and Government, to make sure it is on the right
course, because of the fact that we know there are going to be
increased costs down the line in the future because we are, in fact,
going to acquire fewer units for our own use. Our policy should be to
assure the survival of an industrial base that is capable of meeting
demands throughout the world in order that we, too, may continue to
have the advantage of prices based upon substantial production and not
the limited production to meet our own needs.
Does the Senator from Hawaii have any comments? I yield the remainder
of my time to the Senator from Hawaii.
The PRESIDING OFFICER. The Senator from Hawaii is recognized.
Mr. INOUYE. Mr. President, it is always very difficult to speak in
opposition to my friend, Senator Harkin, but I am certain all of us
will agree that corporate restructuring and corporate mergers are part
of the daily business world. It is not the exception, it is the rule.
These mergers are carried out for a very simple reason, and that is
to reduce the cost of operations. In recognition of this, the
Department of Defense has adopted a policy that not only allows but
encourages defense contractors to enter into restructuring or corporate
mergers in order to save money for our Department and, in turn, save
money for our taxpayers.
These costs, Mr. President, have to be certified by auditors of the
Department of Defense.
And these auditors will have to determine that the cost to be offset
must be lower than the savings accrued to the Government through
efficiencies.
As a result, having encouraged industry to consolidate and to have
lower costs, obviously industry responded. Based upon that
anticipation, many companies have entered into restructuring. This
amendment, though it may appear to be meritorious, would not allow
defense contractors to charge the restructuring costs as legitimate
overhead costs on DOD contracts.
I believe logic will lead us to conclude that if industry cannot
consolidate, if industry cannot merge, if it cannot restructure, it
will not become more efficient and thereby lower overall costs. This
will simply mean that the taxpayers of the United States will have to
pay additional sums to support an inefficient industrial base.
So, Mr. President, I concur with the current policy of the Department
of Defense that encourages contractors to restructure and merge, and
that this amendment would be contrary to that policy. So I join my
chairman in opposing the Harkin amendment. I yield back the balance of
my time.
Mr. HARKIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Iowa is recognized. The
Senator has 6 minutes, 43 seconds. The Senator from Alaska has 2
minutes, 22 seconds.
Mr. HARKIN. Mr. President, I listened to my two good friends--and
they are just that--responding to my remarks. I am wondering if they
are talking about my amendment. My friend from Hawaii says that this
amendment would not allow them to restructure and reorganize. There is
nothing in my amendment that says that, not one thing in my amendment,
I say to my friend from Hawaii.
My amendment simply says, No. 1, we get a report by next spring, the
inspector general and OMB and GAO to submit a report to set out just
what is happening here and what kind of savings.
It says then that no funds appropriated in this bill can be used this
year. This is this year's bill, fiscal year 1997. No funds in this bill
can be used to pay for a merger acquisition unless it has already been
contracted to do so. So if there is an existing contract right now,
that specifies that we are to pay merger and acquisition costs out of
this bill. That is OK.
What we say in this amendment is that we are going to put a 1-year
moratorium on signing any new ones, just signing any new ones. As I
said, Mr. President, mark my word, if we do not adopt this amendment,
in the next few months you will have a rush by these companies to sign
them, lock themselves in, and then they will raise the specter of, uh-
oh, it is a breach of a Government contract if you do not ante up and
pay it. That is why we need the 1-year moratorium. That is all it is.
I say to my friend from Alaska, my amendment does not say that we
cannot pay all of these attendant costs that he mentioned. He mentioned
housing costs. He mentioned all these kinds of things, severance pay,
retraining, relocation.
He said my amendment would not allow for that. My amendment does not
mention that. My amendment says a 1-year moratorium. That is all, a 1-
year moratorium. But if they have gotten contracts that say they should
be paid this year, they will be paid.
Further, I again reply to my friend from Alaska with the letter from
the head of the Machinists Union at Martin Marietta, who said that over
the last 5 years members have been laid off because of cutbacks. ``* *
* our members did not receive any compensation or retraining assistance
from the Lockheed Martin Corporation.''

The way the subsidy is now structured, I say to my friends, under the
Department of Defense, they still will not get anything. They will only
get it if, in fact, there was an agreement by those companies to
provide it in the first place. So, again, I hope that they would look
at my amendment and read it for what it is.
Let me just say one other thing. We talked about two other things.
The industrial base--we have heard about, well, we are going to erode
the industrial base. I say to my friend from Alaska, profits are at an
all-time high in the defense industry. I do not think we have to worry
about eroding the industrial base of this country.
Again, I refer to the article by Lawrence Korb that appeared in the
Brookings review where he pointed out that they are making record
profits, that Grumman shareholders got a bonanza of $22 a share, a
bonus of 40 percent when they merged. Since 1991, General Dynamics'
stock increased 550 percent, and the company has stashed away $1
billion. We are not eroding the industrial base of this country. If it
is good business practice, they are going to merge.
That brings me to my final point, I say to my two good friends. We
asked representatives of the defense industry, I say to my friend from
Hawaii, we asked them--you know, these industries do not just deal with
the Government. They have private industries that they deal with and
that they contract with. We asked them, in any of your contracts with
the private sector, do you have a clause like this in your contract
that they will help pay? Not a one. Not a one. Just for the Government.
So I say to my friends, this is not an overburdensome amendment.
I know the first amendment I offered--maybe the managers of the bill
think this is the first amendment I offered back under the
authorization bill. It is not. I recognized that there might be a
problem with breach of contract. That is why we put a clause in there
that said if they have an existing contract, that they are to be paid
those out of this bill--we are only talking about fiscal year 1997--
they must be paid. I am only talking about those who did not have that
kind of an agreement. Then there is a 1-year moratorium. We get the
report back. We find out what we are talking about. That gives us some
time.
I say to my friends from Alaska and Hawaii, please do not put us in a
position where, over the next several months, companies will come in,
lock in their contracts, and there is not a darn thing we will be able
to do about

[[Page S8004]]

it because then it will be a breach of a Government contract. Let us
stop it right now, put a moratorium for 1 year, get the report, and
then figure out what we want to do. Let us figure out--maybe the
defense authorizing committee or the Appropriations Committee might
want to spell out in more detail what it is that will be reimbursable,
what is the period of time that we will take into account, and should
we have a recoupment clause.
Mr. President, what if they project all these savings, the taxpayers
rush in, give them hundreds of millions of dollars for mergers and
acquisitions, and then the savings are not realized? What do we do?
Nothing. Perhaps we need a policy of recoupment that if, in fact, those
savings are not realized over, say, 5 years, that we should have a
policy of recoupment so that we can recoup back to the taxpayers the
money that was spent out if, indeed, the savings do not accrue.

So I think it is a logical and a reasonable amendment with just a 1-
year moratorium. I think the facts are on our side. I think the people
are on our side on this issue, too. This does not go as far as the
House bill. The House bill was retroactive, and there may be some--
The PRESIDING OFFICER. The Senator's time has expired.
Mr. HARKIN. Mr. President, I ask unanimous consent for 2 minutes.
The PRESIDING OFFICER. Is there objection for an additional 2
minutes? Without objection, it is so ordered.
Mr. HARKIN. I think there may be some problems with that House bill
in terms of breach of contract, so that is why we took it out of here.
I hope the managers will take another look at this amendment and how
it is written and hopefully be able to support and include it in this
bill, because I think it will go a long way towards, again, letting
companies restructure, if in the marketplace--if in the marketplace--
that is the best thing for them to do. Let it happen. But the
Government should not be an active player in it one way or the other.
That is all this amendment seeks to do.
Mr. President, I ask unanimous consent that a document by the
Congressional Research Service, the Library of Congress, be printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Congressional Research Service,

The Library of Congress,

Washington, DC, June 8, 1994.
From: American Law Division.
Subject: The allowability of restructuring costs in Federal
procurement.
This memorandum is furnished in response to your request of
June 2, 1994, for a legal analysis of the position of the
Department of Defense (DOD) stated in the memorandum of July
21, 1993 \1\* and supported in subsequent DOD documents that
restructuring costs are allowable costs and thus reimbursable
under Federal procurement law. Specifically you have
requested an opinion as to whether this represents a change
in policy from that set out in the Federal Acquisition
Regulations (FAR) so as to call for amendment of the FAR and
the accompanying administrative procedures or is merely a
clarification of existing practice.
---------------------------------------------------------------------------
* Footnotes are at the end of the letter.
---------------------------------------------------------------------------
The FAR does not use the term restructuring costs.
Therefore, while it is quite correct to say, as DOD does,
that there are no cases or regulations which make
restructuring costs unallowable,\2\ it is equally true that
there are no cases or regulations which do allow their
reimbursement. ``Restructuring cost'' is not a term which has
been used in this area, and therefore, it is misleading to
draw a conclusion from this lack of mention.
DOD would define restructuring costs as: ``Restructuring
costs result from changes to a contractor's organization in
an effort to address a declining base or to enhance business
efficiencies. Restructuring represents events driven by
internal change such as downsizing or external changes such
as acquisitions, mergers divestitures, etc. This implementing
guidance addresses restructuring costs which result from
nonroutine nonrecurring, or extraordinary events.
Restructuring efforts are expected to result in a current or
future economic benefit for the Government.'' \3\ These costs
would include such costs as ``facilities consolidation,
facilities shut down, severance pay, relocation, equipment
write-off, and information system conversion.'' \4\
To find restructuring cost to be allowable, DOD has
attempted to distinguish or exempt these costs from two types
of costs which the FAR states are unallowable. First, the FAR
does not allow reimbursement of organization costs. Part 31
of the FAR states:
``(a) Except as provided in paragraph (b) of this
section,\5\ expenditures in connection with (1) planning or
executing the organization or reorganization of the corporate
structure of a business, including mergers and acquisitions,
(2) resisting or planning to resist the reorganization of the
corporate structure of a business or a change in controlling
interest in the ownership of a business, and (3) raising
capital (net worth plus long-term liabilities), are
unallowable. Such expenditures include but are not limited to
incorporation fees and costs of attorneys, accountants,
brokers, promoters and organizers, management consultants and
investment counselors, whether or not employees of the
contractor. Unallowable reorganization costs include the cost
of any change in the contractor's financial structure,
excluding administrative costs of short term borrowings for
working capital, resulting in alterations in the rights and
interests of security holders, whether or not additional
capital is raised.'' \6\
The guiding principle behind this regulation appears to be
that the Government is not concerned with the form of the
contractor's organization and so therefore such expenditures
are not necessary for (or allocable to) Government
contracts.\7\
The history of this regulation as set out in the DCAA memo
of June 17, 1993 seems to argue against, not for, the use of
the non-recurring nature of these costs or the potential
savings to the Government as reasons for allowing
reimbursement. The memo states that ``the intent of the
subject cost principle was to make non-recurring organization
costs unallowable'' and quotes the subcommittee responsible
for the section as stating: ``The subcommittee does not
believe that the allowability of organization and
reorganization costs, including merger and acquisition costs,
should depend on benefits. . . . the benefits to the
government are normally too remote to form a valid basis for
the allowability of costs.'' \8\
DOD has attempted to avoid the unallowability described in
Sec. 31.205-27 in two ways. First, it has stated that
restructuring costs are not organization costs even though by
their own definition restructuring costs are costs resulting
from changes in the contractor's organization such as
acquisitions mergers and divestitures.\9\ This appears to be
less a legal argument than a semantic one, i.e. an
unallowable cost is allowable because it is given a new name.
Second, DOD argues that these costs are not costs of the
organization or reorganization event, but rather costs which
arise subsequent to the organization or reorganization event,
and while they would not have arisen ``but for'' the event,
the costs, are not part of that event.\10\ This argument
might be persuasive especially for some of the restructuring
costs more removed from the actual reorganization, merger, or
acquisition, but it does appear to severely limit any purpose
for the words ``in connection with'' or ``executing the
organization or reorganization'' of Sec. 31.205-27.\11\
The second type of unallowable cost which DOD has tried to
distinguish in order to find restructuring costs allowable
are those which are unallowable under a novation agreement. A
novation agreement is often required in the situation which
would give rise to what DOD calls restructuring costs. The
Government may, when it is in the best interests of the
Government, agree to recognize a successor in interest to a
contract (a novation agreement) but the agreement must
include the following clause:
``The Transferor and the Transferee agree that the
Government is not obligated to pay or reimburse either of
them for, or otherwise give effect to, any costs, taxes, or
other expenses, or any related increases, directly or
indirectly arising out of or resulting from the transfer of
this agreement, other than those that the Government in
absence of this transfer or Agreement would have been
obligated to pay or reimburse under the terms of the
contracts.\12\''
DOD appears to have accepted that reimbursement of
restructuring costs would be prohibited by this provision of
the novation agreement. The solution is provided by the
memorandum in the form of an exception to the provision which
states:
``The Government recognizes that restructuring by the
Transferee incidental to the acquisition/merger may be in the
best interests of the Government. Restructuring costs that
are allowable under part 31 of the Federal Acquisition
Regulation \13\ may be reimbursed under flexibly-priced
novated contracts, provided that the Transferee demonstrates
that the restructuring will (1) reduce overall costs to DOD
and/or NASA, or (2) preserve a critical capability that might
otherwise be lost to DOD.\14\''
It can be argued that DOD has attempted to alter the policy
embodied in these two FAR provisions without going through
the administrative formalities and requirements, such as
notice and comment periods and notification of Congress,
necessary to amend these regulations. While formal amendment
of the FAR could make these restructuring costs allowable,
the argument that they are allowable under the current
regulations appears to contradict their plain meaning.
John R. Luckey,
Legislative Attorney.

footnotes

\1\ This memorandum was issued by John M. Deutch, Under
Secretary of Defense Acquisition.
\2\ See, Defense Contract Audit Agency (DCAA), Memorandum for
Director, Defense Procurement, Analysis Paper on the
Allowability of Restructuring Costs Under FAR 31.205-27,
Organization Costs, dated June 17, 1993.

[[Page S8005]]

\3\ DCAA, Memorandum for District Commanders, Guidance Paper
on Restructuring Costs, dated January 14, 1994.
\4\ DCAA Memorandum of June 17, 1993.
\5\ Paragraph (b) exempts the cost of certain activities
primarily intended to provide compensation such as employee
stack option plans. FAR Sec. 31.205-27(b).
\6\ FAR Sec. 31-205-27(a).
\7\ L.K. Anderson, Accounting for Government Contracts,
Sec. 5.06[10] (1989).
\8\ DCAA Memorandum of June 17, 1993, See, discussion of DAR
Case 68-153. See also, Dyanalectron Corp., 77-2 B.C.A. para.
12,835 (Oct. 26, 1977).
\9\ DCAA Memorandum of January 14, 1994. See, sections
entitled Definition of Restructuring Costs and Allowability
of Restructuring Costs.
\10\ Id. at 4.
\11\ See, Dyanalectron Corp., 77-2 B.C.A. para. 12,835 (Oct.
26, 1977).
\12\ FAR Sec. 42.1204(e), novation agreement paragraph
(b)(7).
\13\ Therefore, the cost may not be an organizational cost
under FAR Sec. 31.205-27 for this new provision to be
effective.
\14\ DCAA Memorandum of Jan. 14, 1994, Novation Agreement
Language.

Mr. HARKIN. Mr. President, I yield my time, and I thank the managers.
The PRESIDING OFFICER. The Senator yields back his time. The Senator
from Alaska has 2 minutes, 22 seconds.
Mr. STEVENS. Mr. President, I regret the disagreement with the
Senator from Iowa. It appears to me the process we are following is one
that has been worked out by the authorization committees, by the
Appropriations Committees, and by the administration. It is really a
nonpartisan area we are dealing with of trying to assure the survival
of the defense industrial base and maintain that at the lowest possible
cost to the taxpayers.
I do believe they have had some profits and there are profits that
are coming back, primarily because they are writing off a lot of
losses. They are abandoning a lot of buildings, selling buildings at a
lot less than they paid for them. I expect we will see a period of time
where there is some recouping of losses through tax advantages. That is
another subject. I do think that is one of the incentives toward the
restructuring, to try and take the losses and take advantage of them
while there is still income from existing contracts.
I can reassure the Senate when we are paying 60 percent less than we
were 10 years ago for procurement, we are not expanding the industrial
base. This restructuring is reducing it. It is downsizing it. I hope we
will end up by maintaining what we need.
I move to table the amendment of the Senator from Iowa, and I ask for
the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. A vote will take place at 9:30 tomorrow
morning.
Under the previous agreement, further amendments to the bill were to
be offered this evening. Are there additional amendments?
Mr. STEVENS. Mr. President, I believe there are still some
amendments.
The PRESIDING OFFICER. The Chair will mention under the previous
agreement, if Members do not appear to offer their amendments their
right to offer additional amendments will be extinguished.
Mr. LEVIN. Mr. President, I will offer an amendment which is a fairly
straightforward amendment to transfer funds for two F-16's which the
Air Force did not request either in its original budget request or in
the so-called wish list, and to transfer that to antiterrorism
initiatives of the Defense Department and specifically to a fund which
was added this morning by an amendment authored by Senator McCain and
myself.
We have a pressing need in the antiterrorism area. The number of F-
16's which were funded by the appropriations bill exceeds the request
of the Air Force, again, both in its original budget request and in its
supplemental request, the so-called wish list.
Here is the way this is actually working, Mr. President. The
appropriations bill would add four F-16's to the Air Force's budget
request of four. That is a total, then, of eight aircraft. Now, what
happened during the Armed Services Committee consideration of the
defense authorization bill was that each of the armed services was
asked to provide a list of items that they would like to have funded by
Congress if more money became available. These have been described in
many ways and titled in many ways, but the service wish list is one of
the ways they have been entitled it, and perhaps they are known best by
that.
The Air Force, in its wish list, the list of items that it would like
to have if it was given more money than was in the original budget
request, asked for two extra F-16's. That is in the wish list above the
budget request, but the bill before us provided four extra F-16's. So
there is no urgent requirement for these two extra F-16's. The Air
Force fighter force structure is fully protected. Even if we do not add
any of the four extra F-16's, the Air Force needs roughly 1,250 F-16's
to protect its fighter force structure.
We currently own more than 1,800 F-l6 aircraft, including over 260 F-
16's that are parked in long-term storage in the desert. Now, while
these stored aircraft are not as modern as the brand new aircraft that
we would buy in this year's budget, they would prevent the Air Force
from needing to retire any squadrons in the near term because not
enough aircraft would be available.

Amendment No. 4893

(Purpose: To strike out funding for new production of F-16 aircraft in
excess of six aircraft, and to transfer the funding to increase funding
for antiterrorism support)

Mr. LEVIN. Mr. President, I send an amendment to the desk and ask for
its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Michigan [Mr. Levin] proposes an amendment
numbered 4893.

Mr. LEVIN. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

On page 26, line 10, strike out ``$6,630,370,000'' and
insert in lieu thereof ``$6,582,370,000''.
Sec. 8100. None of the funds appropriated under title III
of this Act may be obligated or expended for more than six
new production F-16 aircraft.
Sec. . The $48,000,000 reduction of funds for F-16
aircraft in excess of six new production aircraft shall be
made available for funding for the emergency anti-terrorism
program element established in Sec. 8099 of this Act.

Mr. LEVIN. Mr. President, the Air Force budget continues to buy F-
16's because the service feels that they need to buy more F-16's to
prevent a force structure reduction sometime around the turn of the
century. But I do not see that anyone could really argue that having a
couple more modern F-16's in a force structure of more than 1,200
aircraft is nearly as important as taking an immediate step to reduce
our vulnerability to terrorist activities.
What this amendment would do would be to shift $48 million from
aircraft that we do not need now, that was in neither the Air Force
budget request nor in its wish list, and instead of spending that $48
million on the additional two F-16's not requested, would fund higher
priority antiterrorist activities. We are familiar with a recent report
of the Joint Chiefs that show that antiterrorism funding in this budget
reflects a reduction over the past several fiscal years. We have heard
that referred to today in an amendment that was offered by Senator
McCain and myself.
These antiterrorist efforts have fallen short by some $56 million
over this period. There were mitigating circumstances that may have led
the Defense Department to make these reductions, such as changes in the
number of bases, completion of construction projects, or other changes.
But, surely, this recent attack in Saudi Arabia makes it abundantly
clear that there is much more that we should be doing in our effort to
address the terrorism problem. And those of us that were able to be at
breakfast with Secretary Perry and General Shalikashvili this morning,
I think, were given a very detailed list of the kind of efforts that we
have to make if we are going to truly carry the war against terrorism
to the terrorists. Spending $48 million more for antiterrorism instead
of spending it on aircraft that we do not need right now surely makes
good sense to me, and I hope it does to my colleagues, as well.
The amendment that I am offering tonight is an amendment that I said
I would be offering during the authorization bill debate. At that time,
I indicated an interest in trying to remove from the authorization bill
these additional two F-16's above the original

[[Page S8006]]

budget request in the supplemental wish list of the Air Force. I did
not do it at that time. We were in a great hurry to address the issues
in that bill at that time, and I did not do it.
But given the fact that this is now really the last chance that we
will have to address this issue, and given the current need to put some
resources into our antiterrorist activity, I thought that this would be
an opportune moment to offer an amendment to transfer the money from
the two F-16's not requested by the Air Force into the antiterrorism
efforts that the Defense Department must engage in.
So I offer this amendment in that spirit and hope that it commands
broad support in the Senate.
Mr. STEVENS. Mr. President, I must express some surprise at the
Senator, in view of his position on the Armed Services Committee, and
in view of the fact that today we have already, at the request of
Senator McCain and Senator Levin, transferred, subject to
authorization, $14 million to the Department of Defense for the purpose
of antiterrorism activities. Now, that is subject to authorization.
The effect of Senator Levin's amendment now would be to transfer
money that is authorized for F-16's to more money for the antiterrorism
activities, and it is not authorized either. They have not received
authorization for the first $14 million we put up for this
antiterrorism program. That is not even defined yet. It is not defined
by the authorization committee or by the Department.

Now, we did that in the spirit of bipartisanship and cooperation with
the Armed Services Committee members. I find it very difficult to
understand this amendment now, when the Chief of Staff of the Air Force
came to see me, General Fogleman. He listed to me personally, as one of
his highest priorities, getting these F-16's. The F-16's--all four of
them, not just two--really are our weapons system for cooperation
between the Air Force and the Army now, which is the close air support
fighter that works in conjunction with ground troops in combat.
I say to my friend from Michigan that nowhere in the world can you
see that so vividly as in the joint training exercises in my State of
Alaska. We use the F-16's along with our Army forces there, and army
forces from throughout the world come to participate in the training in
my State in order to develop the ability to really use these new close
air support fighter and ground troop accommodations. This is really one
of the great things about our Defense Department now. This is a team.
The Air Force and Army are now a team because of the F-l6. I think this
is the message General Fogleman brought to us.
These F-16's are needed. As a matter of fact, we have gone from the
concept of trying to meet the Soviets anywhere in the world--a
worldwide concept of defense to a concept of two major regional
contingencies being what we will plan for. We plan for our ability to
meet two major regional contingencies. If we carried out the plans that
were previously approved by the authorization committee to do so, to
meet two major regional contingencies, the Air Force would need 114
more F-16's. The Air Force is not fully supplied with aircraft to meet
the plans to carry out their missions in the event of two major
regional contingencies. Now, we are trying to move along in this way as
best we can.
The Senate passed an authorization bill that included eight F-16's.
Our committee has funded that request from the Armed Services
Committee. We have not added funds for unauthorized F-16's. As a matter
of fact, if you want to talk to the budget, we have $10 billion more
money in this bill than was requested in the budget, and that is a
battle we are going to have to face later with the administration to
see whether they really want to maintain that figure.
Our bill, I point out once again, is $1.2 billion over last year's
bill, but in terms of actual items covered, last year we did not fund
the contingencies. This year we did fund the contingencies.
So, if you look at our bill fairly, we are below the level of 1996.
This bill, despite the fact we have increased more than $10 billion
over the budget, is less than we are spending now for defense. I think
the recent events in Saudi Arabia, the fact that we have troops in
Bosnia, and we have the crises that we are facing in the Pacific, God
knows. I hope we are right. We believe we can get by with what we have
in this bill. But I fear for the future of this country if we are
wrong.
The Department budgets approximately $1 billion for military security
forces. Antiterrorism is their primary mission. We have added $14
million to the $1 billion already budgeted, and the Senator wants to
add more before there is even a plan to spend what we have budgeted
now.
I say, with all good grace, to my friend that I am just surprised at
this, after we have already agreed to the amendment that he and Senator
McCain already delivered to us on the subject of antiterrorism. I can
just state categorically that I oppose the amendment of the Senator
from Michigan.
I yield the remainder of my time to the Senator from Hawaii.
The PRESIDING OFFICER. The Senator from Hawaii is recognized.
Mr. INOUYE. Mr. President, Chairman Stevens has most adequately
articulated the position of the subcommittee, and I join my chairman in
opposing the Levin amendment.
Mr. LEVIN addressed the Chair.
The PRESIDING OFFICER. The Senator from Michigan.
Mr. LEVIN. Mr. President, I will make two brief points.
First, to buy more F-16's now, we are going to be parking F-16's in
desert storage. We already have more F-16's than the force structure
needs. They need 1,250 F-16's to support the current fighter force
structure. There are 1,370 currently available.
But the main point that I want to make here this evening is that the
Air Force in its budget request asks for four more--for four F-16's
this year.
Then the Armed Services Committee submitted to the Air Force, as well
as to the other services, a request. ``If you had more money, how would
you spend it?'' The Air Force came up with almost a $3 billion wish
list. How many F-16's are on that wish list? Two. How many are on the
appropriations bill extra? Four. At the same time that there has been
criticism of a shortage of antiterrorism funds, and at the same time
that we know we are going to have to invest more in antiterrorism, we
are providing the Air Force in this appropriations bill with eight F-
16's when the budget request of the Air Force is for four and the wish
list would add two to that.
I think we have a greater priority than to be doing that. I hope that
the Senate will support the transfer of this money from F-16's that
have not been requested in either request of the Air Force, and to put
it into an area where we know there is going to be a growing and
critical need.
I, at this point, ask unanimous consent that a letter from Secretary
Perry to Senator Daschle describing the money which is going into the
antiterrorist effort be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

The Secretary of Defense,

Washington, DC, July 17, 1996.
Hon. Tom Daschle,
Minority Leader,
U.S. Senate,
Washington, DC.
Dear Senator Daschle: As you know, last week the Department
was sharply criticized for cutting its budget for anti-
terrorism. Citing a report by the Joint Staff, critics
claimed that we cut anti-terrorism funding by as much as 82%
and implied that this contributed to the tragic bombing in
Saudi Arabia. I think it is critical to correct this
misperception, put this study in context, and explain the
Department's funding for anti-terrorism.
The JCS report was commissioned by myself and CJCS
Shalikashvili following the Riyadh bombing. Its purpose was
to identify and assess all of the anti-terrorism programs,
actions and preparedness of the DoD and possible areas for
additional action. A portion of the report did describe some
program funding reductions, specifically the cut in an Air
Force program from $10.6 million in FY 1994 down to $1.9
million in FY 1996--the 82% cut seized upon by some as
evidence on lack of attention to anti-terrorism. The report
notes, however, that these cuts resulted from personnel
reductions, domestic base closings, completed construction
projects or program completions, and the programs themselves
were just a minor portion of the overall DoD expenditures on
anti-terrorism.
The reality is that the Department of Defense spends
billions annually on anti-terrorism efforts. There are two
categories normally associated with Defense activities to

[[Page S8007]]

combat terrorism: anti-terrorism and counter-terrorism.
Anti-terrorism activities deal with traditional defensive
measures such as barriers, fences, detection devices and
Defense personnel who have as part of their mission
protecting DoD personnel and facilities against the threat of
terrorism. The Defense Department spends nearly $2 billion
annually on such anti-terrorism activity overall.
Traditionally we have not budgeted anti-terrorism activities
in a single program because force protection is part of each
individual commander's responsibility and is therefore
budgeted by every installation in, for example, their
operation and maintenance accounts.
In the area of counter-terrorism, DoD has many programs and
activities which are more often associated with proactive
activities undertaken to neutralize the terrorist threat or
respond to terrorist acts. All combatant forces in Defense
potentially have as part of their mission a counter-terrorism
function; however, these activities are more commonly
associated with special operations forces, which have annual
budgets in excess of $3 billion. Further, that amount is in
addition to the considerable sums spent from our intelligence
portion of the budget to counter terrorism.
The JCS report did fault DoD procedures for funding
unanticipated contingencies, and urged the establishment of a
special annual contingency fund for anti-terrorism
emergencies. Currently, when a crisis emerges, we have to put
together a special team and borrow funds from other accounts.
The JCS report argued that we needed a separate contingency
account, controlled centrally by OSD. I accepted that
recommendation and directed the Comptroller to proceed
accordingly.
It is unfortunate that a minuscule portion of the JCS
review is now being used to draw wider, and inappropriate,
conclusions in light of the Dhahran bombing. I have
concluded, however, that the Department does need more
systematic insight and control over its widely-dispersed
anti-terrorism and counter-terrorism efforts. That could very
well mean a reassignment of priorities and additional funding
to reflect that reassignment. To this end, the Defense
appropriations floor amendment proposed by Senators McCain
and Levin providing targeted anti-terrorism spending can help
facilitate this effort. Further, I have specifically directed
that Deputy Secretary John White head up a comprehensive
effort for systematic programming and budgeting in this area.
I will keep you and all members of Congress informed of our
plans as they unfold.
Sincerely,
William J. Perry.

Mr. STEVENS. Mr. President, is there a time limit?
The PRESIDING OFFICER. There is a time limit on this amendment.
Mr. STEVENS. Mr. President, I am constrained to say that if the
Senator's amendment were to be adopted, our bill would be subject to a
point of order. I hope that will not happen. So I move to table the
Senator's amendment, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The vote will follow the Harkin amendment.

____________________