[Congressional Record Volume 149, Number 136 (Tuesday, September 30, 2003)]
[Senate]
[Pages S12206-S12208]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             DEFENSE PRODUCTION REAUTHORIZATION ACT OF 2003

  Mr. McCONNELL. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of S. 1680, an original bill 
reported by the Banking Committee.
  The PRESIDING OFFICER. The clerk will state the bill by title.
  The assistant legislative clerk read as follows:

       A bill (S. 1680) to reauthorize the Defense Production Act 
     of 1950, and for other purposes.

  There being no objection, the Senate proceeded to consider the bill.

[[Page S12207]]

  Mr. SHELBY. Mr. President, I rise today in support of passage of the 
Defense Production Reauthorization Act of 2003. This bill will 
reauthorize the Defense Production Act of 1950 for an additional 5 
years.
  Mr. President, the Defense Production Act of 1950 was originally 
passed in response to the outbreak of war on the Korean Peninsula. The 
U.S. defense industrial base that had provided the fighter planes, 
tanks and ships that were so crucial to the outcome of World War II had 
been largely scrapped following the end of that horrific conflict. The 
prevailing view, of course, was that such an industrial base was no 
longer needed in light of the defeat of Nazi Germany and Imperial Japan 
and the introduction into the American arsenal of atomic weapons.
  As we learned literally within hours of the crossing of the 38th 
Parallel by the first North Korean Army units, that view was 
catastrophically wrong. The Defense Production Act was the recognition 
by the executive and legislative branches of Government that a large 
industrial base oriented toward national defense was still vital to our 
national security and that the usual process by which weapons and other 
equipment are procured would not suffice in a genuine crisis.
  As in June 1950, the United States remains dependent upon the ability 
to respond to crises in a manner appropriate to the circumstances. That 
is where the Defense Production Act of 1950 continues to play a vital 
role in providing for the national defense. Its authorities allow the 
President to prioritize and reallocate contracts when the United States 
is confronted by an imminent threat to its well-being, and to respond 
to those threats after they've materialized. It provides the authority 
for the Department of Defense to go into factories that can not afford 
to maintain a critical capability due to insufficient demand and 
provide the means for that factory to continue to produce the required 
item. It indemnifies contractors against legal actions taken as result 
of U.S. Government directives issued under Defense Production Act 
authorities, as was needed during the first Persian Gulf War when Civil 
Air Reserve commercial aircraft were drafted into the war effort at the 
expense of their commercial obligations.
  Over time, the Defense Production Act has been expanded to include 
natural disasters as well as man-made events like terrorist attacks, 
and disasters resulting from accidents and equipment failures that can 
result in large sections of the United States being blacked-out by a 
major utility failure. In short, it is an emergency capability that we 
keep in our back pocket and hope it is never needed.
  But the Defense Production Act is routinely needed. I have alluded to 
the Transportation Security Administration's use of it in the wake of 
the terrorist attacks of September 11, 2001. It has also been used by 
the Department of Defense in support of Operation Enduring Freedom in 
Afghanistan to procure vital military equipment like Predator UAVs and 
military satellite communications technology vital for the conduct of 
joint operations. And with the scale of contraction in the U.S. defense 
industrial base over the past decade, the act's authorities will remain 
as vital as ever for the foreseeable future.
  In drafting reauthorizing legislation, it was the committee's intent 
to modernize the Defense Production Act to take into account the 
dramatic changes that occurred since the act's last update in 1994. The 
emergence of terrorism, evident in the U.S. Embassy bombings in East 
Africa, the attack on the USS Cole in the Gulf of Aden, and the tragic 
events of 9-11, as the central focus of U.S. national security planning 
has created an imperative that the Defense Production Act be adapted to 
that reality. That is why the Banking Committee-passed bill includes 
new findings and a declaration of policy: because the war on terrorism 
and the growth in scale of threat to the nation's critical 
infrastructure of telecommunications, transportation, energy, banking, 
and other sectors of society the security of which are vital to our 
national security and our economic and social well-being.

  The committee-passed bill, in line with the recommendations of the 
President's Report to Congress on the Modernization of the Defense 
Production Act and the Report of the President's Commission on Critical 
Infrastructure Protection, included in its findings and declaration of 
policy this emphasis on the war on terrorism and critical 
infrastructure protection. In addition, language was added intended to 
further strengthen the linkage between critical infrastructure and the 
authorities provided by the Defense Production Act during committee 
consideration of this bill.
  Unfortunately, this modernization of the act was more than the other 
chamber could swallow right now. That is why the ranking member of the 
Banking Committee, Senator Sarbanes, and I will offer an amendment in 
the nature of a substitute. Because the Defense Production Act expires 
today, there would be no time for a protracted conference. 
Consequently, the Banking Committee and its House counterpart have 
agreed to a more modest update of the Act. The amendment by the ranking 
member and me does the following:
  Reauthorizes the Defense Production Act for five years, as requested 
by the Defense Department;
  Provides funding the department requested for hardening electronics 
against the effects of radiation;
  Clarifies the President's authority to obtain information needed for 
the performance of assessments of the U.S. defense industrial base--a 
provision requested by the Department of Commerce; and
  Formally incorporates the concept of critical infrastructure 
protection under Defense Production Act authorities by including it 
under the definition of ``national defense.''
  Mr. President, I cannot emphasize enough the importance of the Senate 
passing the amendment in the nature of a substitute and then voting on 
final passage as soon as possible. The minute the Defense Production 
Act lapses, vital authorities for the conduct of military operations in 
Afghanistan and Iraq disappear. I urge my colleagues' support for the 
amendment and for final passage of the bill.
  Mr. SARBANES. Mr. President, I rise in support of the Defense 
Production Act Reauthorization of 2003.
  The Defense Production Act provides the President with important 
authorities to ensure the availability of industrial resources to meet 
national security needs and to deal with domestic civil emergencies. 
This is obviously a period in which the authorities of the DPA are 
being actively utilized. The DPA expires today, September 30. The 
Administration has made clear that the reauthorization of the DPA is a 
high priority.
  The Committee on Banking, Housing, and Urban Affairs marked up and 
reported out this bill last week by unanimous consent. The House 
Financial Services Committee, our counterpart Committee, has also 
reported out a reauthorization of the DPA that is pending on the House 
floor. Both bills are essentially simple extensions of the DPA with 
minor changes requested by the Administration. The imminent expiration 
of the authorities of the DPA led the staff of the two committees to 
meet last week to reconcile the few differences between the two bills. 
That has been accomplished, and Senator Shelby and I will shortly offer 
an amendment in the nature of a substitute reflecting that agreement.
  Both bills contained provisions requested by the Administration to 
correct the industrial resource shortfall for radiation-hardened 
electronics, and to clarify the President's authority under the DPA to 
obtain information in order to perform industry studies assessing the 
capabilities of the United States industrial base to support the 
national defense.
  The Senate bill also contained a provision sponsored by Senator 
Bennett, which makes explicit that the authorities of the DPA can be 
used to protect and restore critical infrastructure. This authority 
takes on a heightened sense of importance in the aftermath of 9/11, and 
is retained in the substitute amendment with the strong support of the 
Administration. The Senate bill provides for a 5 year authorization, as 
requested by the Administration, and the House bill provides for a 4 
year authorization. Senator Dodd has raised a concern about the need to 
address the issue of offsets, which falls under the authority of the 
DPA. As a result, the

[[Page S12208]]

substitute will provide for a 1 year authorization. This is essentially 
the package.
  I would like to commend Chairman Shelby and his staff for working 
cooperatively to bring this bill and the substitute amendment before 
the Senate today. I hope the Senate can act promptly to pass this 
legislation and send it over to the House. I believe the House will 
then be in a position to take up the Senate bill, pass it, and send it 
to the White House for the President's signature. That would ensure the 
continued availability of the important authorities of the Defense 
Production Act.
  Mr. DODD. Mr. President, I thank the distinguished chairman of the 
Banking Committee for all his efforts to bring the reauthorization of 
the Defense Production Act to the floor. It is excellent legislation, 
and I support it wholeheartedly. I particularly want to express my 
appreciation for the agreement that was reached to reconsider this 
piece of legislation in 1 year. That will allow the Defense Production 
Act to continue uninterrupted, while also providing us with the 
opportunity to address the very grave concerns that are shared by many 
Senators about the issue of foreign offset arrangements over the next 
year.
  According to the General Accounting Office and Department of 
Commerce, these arrangements serve no positive purpose. And yet, 
offsets are displacing 9,500 American workers annually. In 2000, the 
Commerce Department reports that out of $5.6 billion exported by the 
U.S. aerospace and defense industries, $5.1 billion was ``offset'' by 
these arrangements. In other words, offset arrangements imposed on 
contracts with American firms amounted to nearly 90 percent of their 
export value. And in the years 2002 and 2003, the total value of 
offsets are projected to be close to 100 percent of the value of those 
contracts--virtually eliminating any gains from U.S. exports of these 
goods.
  Once again, I appreciate the willingness of the chairman and ranking 
member of the Banking Committee for agreeing to work with me on this 
issue as we assess additional reauthorization legislation for the 
Defense Production Act in the coming months.
  Mr. SHELBY. Mr. President, I appreciate the words of the 
distinguished Senator from Connecticut and look forward to continuing 
work with my colleagues on these important issues concerning the needs 
of our military industrial base. The Defense Production Act is an 
important piece of legislation that provides vital authorities to the 
Departments of Defense, Homeland Security, Commerce, and Energy to 
prepare for and respond to crises. These provisions are particularly 
important during this time as the nation prosecutes its war on terror. 
The act's authorities allow government agencies to allocate contracts 
and re-prioritize contracts to meet emergency requirements. And it also 
provides authority to these agencies, especially the Defense 
Department, to work with private industry to ensure they have the 
industrial capabilities required to meet national security requirements 
that economics alone would otherwise allow to atrophy.
  I am pleased the Senate will act on this legislation before it 
expires at midnight tonight. My hope is that it will be passed by the 
other body and signed into law by the President shortly.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the 
substitute amendment at the desk be agreed to, the bill, as amended, be 
read the third time and passed, the motion to reconsider be laid upon 
the table, and that any statements relating to the bill be printed in 
the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 1792) was agreed to, as follows:

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Defense Production Act 
     Reauthorization of 2003''.

     SEC. 2. REAUTHORIZATION OF DEFENSE PRODUCTION ACT OF 1950.

       (a) In General.--The 1st sentence of section 717(a) of the 
     Defense Production Act of 1950 (50 U.S.C. App. 2166(a)) is 
     amended--
       (1) by striking ``sections 708'' and inserting ``sections 
     707, 708,''; and
       (2) by striking ``September 30, 2003'' and inserting 
     ``September 30, 2004''.
       (b) Authorization of Appropriations.--Section 711(b) of the 
     Defense Production Act of 1950 (50 U.S.C. App. 2161(b)) is 
     amended by striking ``through 2003'' and inserting ``through 
     2004''.

     SEC. 3. RESOURCE SHORTFALL FOR RADIATION-HARDENED 
                   ELECTRONICS.

       (a) In General.--Notwithstanding the limitation contained 
     in section 303(a)(6)(C) of the Defense Production Act of 1950 
     (50 U.S.C. App. 2093(a)(6)(C)), the President may take 
     actions under section 303 of the Defense Production Act of 
     1950 to correct the industrial resource shortfall for 
     radiation-hardened electronics, to the extent that such 
     Presidential actions do not cause the aggregate outstanding 
     amount of all such actions to exceed $200,000,000.
       (b) Report by the Secretary.--Before the end of the 6-month 
     period beginning on the date of the enactment of this Act, 
     the Secretary of Defense shall submit a report to the 
     Committee on Banking, Housing, and Urban Affairs of the 
     Senate and the Committee on Financial Services of the House 
     of Representatives describing--
       (1) the current state of the domestic industrial base for 
     radiation-hardened electronics;
       (2) the projected requirements of the Department of Defense 
     for radiation-hardened electronics;
       (3) the intentions of the Department of Defense for the 
     industrial base for radiation-hardened electronics; and
       (4) the plans of the Department of Defense for use of 
     providers of radiation-hardened electronics beyond the 
     providers with which the Department had entered into 
     contractual arrangements under the authority of the Defense 
     Production Act of 1950, as of the date of the enactment of 
     this Act.

     SEC. 4. CLARIFICATION OF PRESIDENTIAL AUTHORITY.

       Subsection (a) of section 705 of the Defense Production Act 
     of 1950 (50 U.S.C. App. 2155(a)) is amended by inserting 
     after the end of the 1st sentence the following new sentence: 
     ``The authority of the President under this section includes 
     the authority to obtain information in order to perform 
     industry studies assessing the capabilities of the United 
     States industrial base to support the national defense.''.

     SEC. 5. CRITICAL INFRASTRUCTURE PROTECTION AND RESTORATION.

       Section 702 of the Defense Production Act of 1950 (50 
     U.S.C. App. 2152) is amended--
       (1) by redesignating paragraphs (3) through (17) as 
     paragraphs (4) through (18), respectively;
       (2) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Critical infrastructure.--The term `critical 
     infrastructure' means any systems and assets, whether 
     physical or cyber-based, so vital to the United States that 
     the degradation or destruction of such systems and assets 
     would have a debilitating impact on national security, 
     including, but not limited to, national economic security and 
     national public health or safety.''; and
       (3) in paragraph (14) (as so redesignated by paragraph (1) 
     of this section), by inserting ``and critical infrastructure 
     protection and restoration'' before the period at the end of 
     the last sentence.

     SEC. 6. REPORT ON CONTRACTING WITH MINORITY- AND WOMEN-OWNED 
                   BUSINESSES.

       (a) Report Required.--Before the end of the 1-year period 
     beginning on the date of the enactment of this Act, the 
     Secretary of Defense shall submit a report to the Committee 
     on Banking, Housing, and Urban Affairs of the Senate and the 
     Committee on Financial Services of the House of 
     Representatives on the extent to which contracts entered into 
     during the fiscal year ending before the end of such 1-year 
     period under the Defense Production Act of 1950 have been 
     contracts with minority- and women-owned businesses.
       (b) Contents of Report.--The report submitted under 
     subsection (a) shall include the following:
       (1) The types of goods and services obtained under 
     contracts with minority- and women-owned businesses under the 
     Defense Production Act of 1950 in the fiscal year covered in 
     the report.
       (2) The dollar amounts of such contracts.
       (3) The ethnicity of the majority owners of such minority- 
     and women-owned businesses.
       (4) A description of the types of barriers in the 
     contracting process, such as requirements for security 
     clearances, that limit contracting opportunities for 
     minority- and women-owned businesses, together with such 
     recommendations for legislative or administrative action as 
     the Secretary of Defense may determine to be appropriate for 
     increasing opportunities for contracting with minority- and 
     women-owned businesses and removing barriers to such 
     increased participation.
       (c) Definitions.--For purposes of this section, the terms 
     ``women-owned business'' and ``minority-owned business'' have 
     the meanings given such terms in section 21A(r) of the 
     Federal Home Loan Bank Act, and the term ``minority'' has the 
     meaning given such term in section 1204(c)(3) of the 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989.
  The bill (S. 1680), as amended, was read the third time and passed.




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