[Congressional Record (Bound Edition), Volume 148 (2002), Part 8]
[Senate]
[Pages 11272-11282]
[From the U.S. Government Publishing Office, www.gpo.gov]




        NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2003

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will now resume consideration of S. 2514, which the clerk will 
report.
  The assistant legislative clerk read as follows:

       A bill (S. 2514) to authorize appropriations for fiscal 
     year 2003 for military activities of the Department of 
     Defense, for military construction, and for defense 
     activities of the Department of Energy, to prescribe 
     personnel strengths for such fiscal year for the Armed 
     Forces, and for other purposes.

  Pending:

       Kennedy amendment No. 3918, to provide for equal 
     competition in contracting.

  Mr. REID. I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Madam President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mrs. Carnahan). Without objection, it is so 
ordered.
  Mr. REID. Madam President, the two managers of the bill have asked 
that I propound a unanimous consent request.
  I ask unanimous consent that the pending Kennedy amendment be 
temporarily set aside and that the Senate

[[Page 11273]]

resume its consideration at 12 today and that at that time there be 30 
minutes of debate equally divided on the Kennedy amendment. That would 
terminate at 12:30 when we recess for the party conferences. The time 
would be equally divided in the usual form prior to a vote in relation 
to the amendment at 2:30 today. The time from 2:15 to 2:30 would also 
be equally divided in the usual form. Further, there would be no 
amendments in order prior to the Kennedy amendment at 2:30 with the 
exception that Senator Warner be recognized for a motion to table the 
Kennedy amendment.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. REID. There will now be general debate on the bill. From 12 to 
12:30, the time will be spent on the Kennedy amendment equally divided. 
When we come back from the party conference at 2:15, there will be an 
additional 15 minutes equally divided, with the vote occurring at 2:30 
on the Warner motion to table the Kennedy amendment.
  Mr. WARNER. No objection on this side.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Michigan.
  Mr. LEVIN. Madam President, very briefly, we are making progress on 
the national Defense authorization bill. We have the pending amendment 
of Senator Kennedy which will now be voted upon with a motion to table 
at 2:30. We expect we will at that point begin a debate on missile 
defense, but the process is not yet worked out for the amendments 
relative to that as to the order and how they will be offered. There 
will be some discussion on that matter between now and then. We are 
working with Senators on the amendments to see if we can act on 
amendments later today and possibly clear amendments. I continue to be 
optimistic, with our leader's assistance, with the cooperation of all 
Senators, that we can complete action on this bill in a timely manner 
this week.
  My good friend from Virginia, the ranking member of our committee, is 
working hard to achieve that same result.
  Mr. WARNER. I have worked with my leader with regard to the unanimous 
consent that was adopted. I will not send my amendment to the desk, but 
I intend to initiate debate.
  As I understand from the chairman, there will be a rejoinder on the 
other side and we will proceed on this issue until the hour of 12 
o'clock. It is also my expectation that the chairman and I, with our 
respective leaders, Senators Daschle and Lott, will meet prior to the 
caucuses for the purpose of establishing a procedure by which my 
amendment is to be sent to the desk and considered by the Senate. Am I 
correct?
  Mr. LEVIN. There is an intention, as I have shared with my colleague 
from Virginia, to offer a second-degree amendment to that amendment. 
That is what we will be discussing with the leaders between now and 12 
o'clock.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WARNER. I don't know that that was in the form of a unanimous 
consent request.
  Mr. LEVIN. No.
  The PRESIDING OFFICER. It was not a unanimous consent request.
  Mr. WARNER. I simply stated for the convenience of the Senate the 
procedure we will follow between now and the hour of 2:30, at which 
time I will be recognized for the purpose of tabling the Kennedy 
amendment.
  I encourage colleagues on my side to come forward. I know Senator 
Allen is anxious to speak to the Kennedy amendment, as are Senator Bond 
and Senator Fred Thompson. There will be concluding remarks by our 
distinguished colleague from Wyoming. That will take place from 12 to 
12:30 and again from 2:15 to 2:30.
  At this point in time, I will address the question of missile defense 
in the amendment I intend to submit to the Senate. Since I will not now 
send it to the desk, I will read it. This is an amendment proposed by 
myself, Mr. Lott, Mr. Stevens, Mr. Cochran, Mr. Allard, Mr. Kyl, Mr. 
Smith of New Hampshire, Mr. Inhofe, Mr. Thurmond, Mr. Sessions, Mr. 
Roberts, Mr. Hutchinson, Mr. Bunning, Mr. Helms, Mr. McCain, and Mr. 
Nickles.
  I read the amendment as follows:

       On page 217, between lines 13 and 14, insert the following:

     SEC. 1010. ADDITIONAL AMOUNT FOR BALLISTIC MISSILE DEFENSE OR 
                   COMBATING TERRORISM IN ACCORDANCE WITH NATIONAL 
                   SECURITY PRIORITIES OF THE PRESIDENT.

       (a) Authorization of Appropriations.--In addition to other 
     amounts authorized to be appropriated by other provisions of 
     this division, there is hereby authorized to be appropriated 
     for the Department of Defense for fiscal year 2003, 
     $814,300,000 for whichever of the following purposes the 
     President determines that the additional amount is necessary 
     in the national security interests of the United States:
       (1) Research, development, test, and evaluation for 
     ballistic missile defense programs of the Department of 
     Defense.
       (2) Activities of the Department of Defense for combating 
     terrorism at home and abroad.
       (b) Offset.--The total amount authorized to be appropriated 
     under the other provisions of this division is hereby reduced 
     by $814,300,000 to reflect the amounts that the Secretary 
     determines unnecessary by reason of a revision of assumptions 
     regarding inflation that are applied as a result of the 
     midsession review of the budget conducted by the Office of 
     Management and Budget during the spring and early summer of 
     2002.

  In simple language, it is annually the function of the Department of 
Defense to make certain assumptions with regard to those moneys that 
they require for purposes of, for example, pay, and other large cash 
expenditures in a fiscal year, the amount that inflation may erode the 
ability to pay those sums.
  In this case, fortunately, this country has experienced a low 
inflation rate, lower than anticipated, and therefore there is 
remaining within the 2002 budget sufficient cash, in my judgment and 
the judgment of others working in the Department of Defense, to cover 
this amendment. Therefore, this amendment will not dislodge any of the 
programs or authorizations as now exist in the bill before the Senate. 
I make that clear. No Senator should think his or her programs which 
they have fought hard for as part of this bill will be reduced in 
amount as a consequence of this amendment.
  The amendment I will submit, hopefully this afternoon, with the 
concurrence of the leadership, on behalf of myself and other Members 
whom I enumerated, is an important step to work directly on problems in 
the Defense authorization bill for fiscal year 2003 as reported out of 
the committee which have led many Republican committee members, 
including this one, to have no other possibility than to vote against a 
bill on which we had worked for the better part of a year.
  That is a very difficult decision, when members of a committee, large 
numbers of members in our committee, working in a bipartisan fashion, 
chairman and ranking member together, formulate a bill, and then when 
it is brought to a markup session, we are faced with a realization that 
an element of that bill is so totally in opposition to what the 
Commander in Chief of the United States, namely the President, has sent 
to the Congress for the purposes of fulfilling his rights as Commander 
in Chief in the defense of this country. That decision faced by us, and 
a significant number of Members, forced members to vote against that 
bill that we worked on for a year. We did so because of the drastic 
cuts and the restrictions made to missile defense by a narrow margin of 
the majority in the markup session.
  I recognize the importance of passing a Defense authorization bill 
during times of war with broad bipartisan support. It sends a clear 
signal of support to our men and women in uniform and expresses the 
commitment of the Senate to fighting the global war against terrorism 
in defending our homeland.
  In order to have such broad bipartisan support, we have to pass a 
bill that supports our President--again, our Commander in Chief--and 
his fundamental priorities for defense. In its current form, this bill 
fails that test. The Secretary of Defense confirmed by a letter to the 
chairman that he will advise the President to veto the Defense 
authorization bill if the missile defense provision contained in our 
bill is adopted by the Congress.

[[Page 11274]]

  This view is strongly reiterated in the statement of administration 
policy on our bill which notes that:

       The administration's missile defense program is a carefully 
     balanced effort to defend the American people, our deployed 
     forces, and our friends and allies, against a growing missile 
     threat. The provision of S. 2514 would undermine this 
     critical defense effort.

  What a tragedy for our Nation, what a tragedy for the Armed Forces, 
to see this precisely at this time, with our Nation at war, when we 
need to demonstrate consensus and support. Now is not the time to send 
a signal that we are lessening our resolve in defending this Nation 
from all known and recognized threats. We must be prepared as a nation. 
History will be our judge.
  The amendment I will offer would restore the funding reductions to 
missile defense made during the committee's consideration of the bill. 
This amendment would provide an additional $814 million-plus to restore 
the funding taken from the President's request for missile defense 
during markup and allow the President the flexibility to spend the 
money for missile defense and activities of the Department of Defense 
to counter terrorism both at home and abroad.
  That is very important. This is basically parallel to what we did 
last year on the Defense authorization bill. I will address that in 
greater detail momentarily, but it gives the flexibility to the 
President of the United States and his Secretary of Defense to allocate 
the $814 million-plus in accordance with those two objectives.
  This is a reasonable compromise, I believe, to the position taken by 
the majority during the course of the markup. Again, it is identical in 
form to the compromise we reached last year on this issue.
  At the outset of this discussion, I want to remind Senators present 
of a measure we passed in 1999 by a vote of 97 to 3, a measure that was 
subsequently signed into law by President Clinton, the National Missile 
Defense Act of 1999, referred to as the Cochran Act, as he was the 
principal drafter and sponsor of that very important law. The act is 
short and not very complicated. It does two things very clearly.
  First, the Cochran Act establishes a policy of deploying, ``as soon 
as is technologically possible,'' an effective defense of the territory 
of the United States--that is all 50 States and the U.S. territories--
from limited ballistic missile attack.
  Madam President, 97 Senators are on record supporting that policy.
  A second part of that law reiterates a longstanding policy that the 
United States will seek further reduction in Russian nuclear forces.
  During the debate on this act, some contended that its two policy 
declarations have equal stature and status. Equal or not, I think all 
would agree both are important statements of policy. The amendment to 
include a statement of policy on arms reduction was offered because 
some Senators feared that deployment of a missile defense could lead to 
a new offensive arms race. But President Bush did not see any 
inconsistency in these two goals and has pursued both vigorously. He 
has made missile defense one of his top national security priorities, 
and he has dramatically--and, I would add, appropriately--expanded 
funding to expedite the development and deployment of those important 
defenses.
  At the same time, he sought to restructure this Nation's relationship 
with Russia. He outlined this policy in a landmark speech at the 
National Defense University in May of 2001:

       Today's Russia is not yesterday's Soviet Union. We need a 
     new framework that allows us to build missile defenses, and 
     that encourage still further cuts in nuclear weapons.

  President Bush has since engaged Russian President Putin on a regular 
and intensive basis to move the Russian-American relationship beyond 
cold war hostility to one built on openness, shared goals, and shared 
responsibility. President Bush has been extraordinarily successful in 
this effort.
  Last December, the President announced his intent to withdraw from 
the 1972 Anti-Ballistic Missile Treaty. This is a treaty which 
specifically prevented both Russia and the United States from 
developing and deploying effective missile defenses. Critics feared 
that President Bush's action would lead to a harsh Russian 
denunciation. In fact, Russia reacted hardly at all.
  President Putin announced that the U.S. move was a mistake, but it 
would not affect the improved United States-Russian relationship.
  Many missile defense critics feared that withdrawing from the Anti-
Ballistic Missile Treaty would trigger a new arms race. Yet on May 24, 
at the summit in Moscow, President Bush and President Putin signed a 
landmark arms control agreement.
  This breakthrough treaty, negotiated in a period of just several 
months, will reduce nuclear arsenals from their present levels of about 
6,000 strategic warheads to 1,700 to 2,200 strategic warheads over the 
next decade. This is the most dramatic reduction in strategic weapons 
history.
  Far from disrupting the United States-Russian relationship, 
withdrawing from the ABM Treaty and developing missile defenses have 
allowed us to develop defenses for the United States, its allies and 
friends, and its deployed troops, against the real and increasing 
threat of missile attack, while at the same time our relationship with 
Russia appears to grow in a positive manner.
  So President Bush has taken to heart both policy statements in the 
National Missile Defense Act of 1999. He has made missile defense a 
high priority and is doing all he can to expedite the development and 
deployment of missile defenses. And he has achieved the goal of further 
reductions in Russian nuclear forces.
  Now it is up to us, the Senate and the Congress, to do our part. The 
President has made a reasonable and balanced request for missile 
defense this year. The request of $7.6 billion is smaller than last 
year's request and smaller than last year's appropriated level.
  The House of Representatives fully funded this request level. In 
fact, they have increased it slightly. Yet the bill of the Senate Armed 
Services Committee cuts over $800 million from the effort to develop 
and deploy missile defenses. Yes, against that background, our 
committee went ahead and cut $800-plus million.
  This bill would impose reductions that impede progress, increase 
program risk, and undermine the effort to provide for the rapid 
development and deployment of missile defenses for our Nation, our 
allies and friends, and our soldiers, sailors, marines, and airmen 
deployed overseas. The administration asserts quite accurately, in my 
view, that the committee bill undercuts missile defense efforts:

     . . . by severely reducing the program's workforce, 
     significantly impairing DOD's ability to effectively 
     integrate components currently under deployment, delaying 
     boost-phase defense efforts, hindering early deployment 
     contingent capability, undermining efforts to address 
     countermeasures, and slowing key sensor programs.

  That is the assessment of the Secretary of Defense.
  The bill before the Senate would cut hundreds of millions of dollars 
from theater missile defense, programs to defend against short-, 
medium- and intermediate-range missiles.
  That is the threat that is most identified as impairing the ability 
of our forward-deployed forces to pursue their missions without the 
threat of missile attack. These are the very missiles our troops faced 
in the Persian Gulf war over a decade ago, and we know well of the 
casualties that our forces, U.S. forces and indeed those of our allies, 
took as a consequence of the short-range Scud missiles fired 
indiscriminately by Saddam Hussein.
  Today we have some improved defenses but not adequate defenses 
against these short-range weapons.
  Last September we suffered a grievous attack on our Nation. Many 
lives and much property were lost in that attack. On that terrible day 
we also lost our uniquely American feeling of invulnerability. Homeland 
security is now, without a doubt, our top priority. Missile defense is 
an integral part of homeland defense.
  The most recent national intelligence estimate on missile threats--
that is January of this year--states:


[[Page 11275]]


       The probability that a missile with a weapon of mass 
     destruction will be used against U.S. forces or interests is 
     higher today than during most of the cold war, and will 
     continue to grow as the capabilities of potential adversaries 
     mature.

  George Tenet, head of the CIA, during his testimony to the Armed 
Services Committee earlier this year, made the point that missile 
threats have sometimes evolved much faster than predicted and confirm 
the view expressed in the national intelligence estimate that I just 
quoted that both terrorism and missile threats must be taken very 
seriously.
  I understand and respectfully disagree with those who argue that 
every dollar we spend on missile defense is one dollar we don't spend 
protecting our shores and harbors.
  That is precisely what the defense of our Nation against missile 
attack does--protects our shores. It protects our harbors, our cities, 
our towns, our villages, and our people from the world's most terrible 
weapons.
  As we did last year, this amendment would provide flexibility for the 
President to use the additional funds as he sees fit to defend this 
Nation from missile defense and the Department of Defense activities in 
counterterrorism. It is a discretion that is very much needed by the 
President and the Secretary of Defense. And it parallels exactly what 
we did last year.
  I say to my colleagues that this amendment offers a reasonable 
compromise on an issue that has divided the Armed Services Committee 
for the past 2 years, and continues, regrettably, to divide the Senate. 
This is the same formula that we used last year to heal a serious rift 
in the committee and the Senate, and thereby bring the bill to the 
floor on a bipartisan basis.
  I note that this amendment differs in one important aspect from the 
one we passed last year. Last year, we simply added $1.3 billion to the 
defense top line. This year, the amendment does not increase the 
administration's budget request. It does not put money on top. Rather, 
it takes advantage of the fact that the administration will conduct its 
annual midyear review of inflation assumptions, including those used to 
craft the defense budget request.
  I have been assured that the new inflation savings that will result 
from this abuse will be more than adequate to cover this added amount 
for homeland defense. The amendment provides an offset based on these 
anticipated inflation savings.
  I commend Chairman Levin for the statesmanship he displayed on the 
issue last year at the time I brought the amendment up which closed the 
rift between the aisles. Our bill came to the floor last September. The 
Pentagon and the World Trade Center were still burning, and we were 
about to embark on a war against the forces of international terrorism. 
Our distinguished chairman, Mr. Levin, used these eloquent words during 
the debate last year on this amendment:

       As important as the funding that we provide is, there is 
     something else that is critically important. That is the 
     unity of purpose that we showed as we entered into the 
     current struggle. Debate on a bill such as this is an 
     inherent part of our democracy. But, in one regard, we 
     operate differently in times of national emergency. We set 
     aside those differences we cannot reach.

  I think the spirit of that very important statement by our chairman 
prevails today, and should be the guideline--the guiding factor--when 
each Senator eventually votes on this measure. Today, we remain at war, 
and that unity is just as important today as it was last September.
  I urge my colleagues to vote for this amendment. It is a fair, 
balanced compromise offered in the same spirit of unity that moved us 
forward last year, and which can be the basis for moving us forward 
again today.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. LEVIN. Madam President, I wonder if my friend from Virginia would 
clarify a few factual parts of his proposed amendment.
  The Senator from Virginia said that he has been assured that the 
inflation savings which will result from the midterm review will be 
sufficient to cover $814 million. I am wondering where that assurance 
came from, because whichever approach we adopt, that is an important 
part. Where was that assurance? Who gave the Senator that assurance?
  Mr. WARNER. Mr. President, I thank the distinguished chairman. I went 
to the Department of Defense early one morning around 7:30 or quarter 
to 8 and spent the better part of an hour with the Secretary of Defense 
and his top budget people. I wanted to make certain that if I were to 
formulate this amendment along those lines--I concede to the chairman 
that it was my idea, and it caught them a little bit by surprise--the 
Secretary said he would like to consider it. That he did. He went back 
in his own internal system and eventually he conveyed to me the message 
that the amendment as I have given him in draft form would be 
acceptable to him and the administration.
  I did concur that the calculations to be performed by the President's 
Office of Management and Budget would enable this amendment to 
authorize those funds.
  Mr. LEVIN. The $814 million that the Senator assumes in his amendment 
may or may not materialize, if the midterm review is not completed. But 
has the Senator from Virginia, as I understand it, been assured at this 
point prior to the midterm review that those savings will be 
forthcoming in inflation review?
  Mr. WARNER. Mr. President, these are very good questions. I want to 
answer them very precisely.
  The midyear review to which the Senator referred conducted by OMB is 
in progress. He is correct. While the review is not formally complete, 
we have been assured--that is, this Senator has been assured by the 
administration--that the revision of the inflation assumptions will--I 
repeat ``will''--provide ample funds to cover the additional allocation 
for missile defense and DOD activities to combat terrorism as framed in 
the amendment.
  Mr. LEVIN. One further clarification: That came directly from the 
Secretary of Defense.
  Mr. WARNER. That is correct.
  Mr. LEVIN. If it turns out otherwise when the midterm review is 
completed, despite that best estimate on the part of the Secretary of 
Defense, will the amendment still authorize the expenditure of that 
$814 million in the ways specified? In other words, if it turns out to 
be inaccurate and there is only $600 million in savings, am I not 
correct that the amendment would nonetheless authorize the $814 
million?
  Mr. WARNER. Yes. On its face, it would do so. In the interim, I say 
to the chairman, the appropriations process will have a chance to 
review the midterm OMB analysis.
  Mr. LEVIN. But the Senator's amendment, as I understand it, is not 
contingent on that amount of inflation savings being available. Is that 
correct?
  Mr. WARNER. It is not contingent; that is correct.
  Mr. LEVIN. And if the net savings turned out to be $400 million 
instead of $814 million, then would the Secretary be required to make 
cuts in other programs?
  Mr. WARNER. Madam President, that is a question that I would reserve 
for the moment. But I am confident that option will not occur. If I 
may----
  Mr. LEVIN. Because the Senator from Virginia is confident?
  Mr. WARNER. That is correct.
  Mr. LEVIN. The savings----
  Mr. WARNER. Are going to be sufficient.
  Mr. LEVIN. But my question is--if it turns out otherwise, there have 
to be cuts made somewhere, under the Senator's amendment, as he has 
just responded. He is not adding any money, so there must be cuts made 
somewhere. And those cuts, of course, could then come in areas that we 
have tried to protect, including operations and maintenance, readiness, 
and a number of other areas of which this committee has been very 
protective.
  One of my concerns about the language of this amendment is that it is 
not contingent upon savings being available. It assumes those savings 
are available. And whether or not they are forthcoming, this money is 
authorized,

[[Page 11276]]

as I understand it. So that is one of the concerns I have about this 
amendment.
  Mr. WARNER. Madam President, I want to be extremely careful in my 
response. I will be meeting with the Secretary of Defense in about an 
hour's time. I want to clarify the chairman's question by asking it 
directly to him and providing the Senate, this afternoon, as this 
debate continues, a clear response to the chairman's question.
  If I might add a bit here about this process, the administration uses 
certain inflation assumptions in building its budget, including its 
defense budget, to assure that the Government can buy the goods and 
services it needs. If inflation is lower than anticipated, the budget 
request is a little higher than needed to buy the required goods and 
services.
  When a midyear review determines the inflation rate is lower than 
anticipated, the Secretary of Defense identifies budgeted funds that 
are no longer required as a result of the inflation--they refer to it 
as a bonus. Since they are deemed to be excess, there is no 
programmatic impact resulting from the inflation savings being used.
  What happens if the new inflation assumptions are wrong and savings 
do not materialize? This borders on the Senator's question. Won't 
programs be affected then? Inflation assumptions are just that: 
assumptions made based on the best information available at the time. 
The information used during the midyear review is more recent and 
provides a better basis for inflation assessments than those made 
almost a year ago when the 2003 budget was being built.
  The same question can be asked about any budget at this time. What 
happens to programs if inflation is higher than expected? I would note 
that the Department of Defense routinely takes advantage of inflation 
savings, as do the authorization and Appropriations Committees in both 
the markup and conference process. So this is not a new source of 
funds.
  I would also note that the path taken by the House on missile defense 
is quite different than that of the Senate. The use of this source will 
be debated and resolved in the context of our conference, if adopted by 
the Senate.
  Mr. LEVIN. I thank my friend and I yield the floor.
  The PRESIDING OFFICER (Mrs. Clinton). The Senator from Rhode Island.
  Mr. REED. Madam President, as the chairman of the Subcommittee on 
Strategic Systems, I have had the opportunity, over the course of many 
hearings and many briefings, to look closely at our missile defense 
program, and also to recommend to the committee that we make these 
reductions.
  All of these recommendations were based upon careful scrutiny of the 
programs. They were based upon an evaluation of the effectiveness of 
the programs going forward, and, in addition, a sense of trying to 
avoid duplicative costs, ill-defined programs, those areas in which 
money might be spent but there is no clear indication of the product 
that was going to be purchased. In fact, some purchases seem to be 
premature because the testing of the products had not been 
accomplished. So this process has been a long one, and it has resulted 
in specific recommendations that today we are considering on the floor 
of the Senate.
  I will make some general points about what is in this bill because it 
represents a significant commitment to missile defense, both theater 
missile defense and national missile defense, which now have been 
amalgamated in the administration's approach which they describe as a 
layered defense: the boost phase, midcourse phase, and terminal phase.
  We have made a significant commitment of dollars in this bill to 
missile defense, and those points should be made.
  First, the Department of Defense estimates that in this year they 
will spend about $4.2 billion. They expect to spend that for missile 
defense, leaving $4 billion of funds to be carried over to the next 
fiscal year.
  We recommend, in this bill before us today, $6.8 billion of new 
funding for fiscal year 2003, giving the Department of Defense more 
than $10 billion available for spending next year on missile defense. 
That is a significant commitment to missile defense, and one that is 
supported by this Senator and, I am sure, by others. It is probably 
twice what will be spent this year.
  To characterize $10 billion of available resources for missile 
defense next year as deep and damaging cuts to missile defense is 
somewhat inaccurate.
  I should say at this juncture, the proposed amendment by my colleague 
from Virginia suggests that we add about $800 million and give the 
President the option of spending it on missile defense or antiterrorism 
activities. But it seems clear to me this debate is about missile 
defense and not about terrorism. Terrorism is something we are 
concerned about, but I think the impetus for this amendment is the 
overarching concern of the administration for missile defense.
  So I think, first, we have, in fact, included within this bill before 
us robust funding for missile defense. We also have to respond to the 
reality that today we are engaged in a war on terror.
  In fact, the National Intelligence Estimate for December 2001 stated:

       U.S. territory is more likely to be attacked with [weapons 
     of mass destruction] . . . from nonmissile delivery means--
     most likely from terrorists--than by missiles, primarily 
     because nonmissile delivery means are less costly, easier to 
     acquire, and more reliable and accurate. They can also be 
     used without attribution.

  That is the National Intelligence Estimate for December 2001. So we 
do recognize there are threats to us from weapons of mass destruction, 
but we have to put it in context that the most immediate threats are 
either short-term theater missile threats by nation states or 
clandestine operations of terrorists entering the United States.
  So with that recognition, I think this proposal we bring to the floor 
makes a great deal of sense. We have looked hard at individual 
programs. We are cognizant of the threats, particularly the theater 
missile threats. And we are also trying to do what we can to ensure 
that we protect this country from terrorist threats. So we have 
deliberated carefully and thoroughly on all of these issues.
  Let me talk for a moment about the threats because they should be 
often mentioned because our strategy has to respond to these threats.
  First, I think we should point out how we are going forward with the 
PAC-3 system which is a theater missile defense system. It is in 
operational testing. It is strongly supported in this bill. It counters 
those threats that are often mentioned here on the floor.
  I know colleagues have talked about the potential access to short-
range missiles by terrorist groups in the Middle East. I think they 
have also talked about the developments which are ongoing in countries 
such as Iran and Iraq and North Korea for missile systems, short-range 
tactical systems.
  We have a system that is in operational testing, the PAC-3 system 
that counters those threats. We support that system. It is supported in 
this budget. We hope it is fielded at the first possible moment, 
deployed with troops in the field. There are other systems, too, that 
we support.
  We continue to develop the THAAD system, which is another theater 
missile system. That is supported in this budget. We are supporting the 
Navy theater-wide system. We are considering, and very carefully 
supporting, a whole range of missile systems that are important to our 
defense. So to suggest that this legislation is not supportive of 
missile defense is to miss the details of the legislation.
  We are also looking very carefully, as I mentioned, at specific 
adjustments to the systems that are being considered today.
  That is our role, our responsibility. We are not here simply to say 
whatever the Defense Department sends over is something we will support 
without any question or scrutiny. Our job is to look carefully at 
systems and to make critical decisions about scarce resources, and we 
have done that.
  Let me suggest some of the recommendations we have made in the 
context of the missile systems I mentioned. First, the sea-based 
midcourse, which was formerly Navy theater-wide.

[[Page 11277]]

We fully fund the development and test program, $374 million. In fact, 
we add $40 million for new shipboard radar for robust theater missile 
defense. We are adding money to these programs because we believe it is 
important, and we believe this type of additional expenditure should be 
included within the budget.
  We do, however, look at the program carefully, and we have made the 
recommendation that $52 million should be reduced because it is for a 
very vaguely defined concept development study. We believe that study 
is unjustified, undefined, but we are supporting vigorously the Navy 
midcourse program, sea-based midcourse, as we should.
  From what I have seen of the Navy theater-wide system, the sea-based 
midcourse, the Missile Defense Agency is engaged in something which 
might be described as an ad hoc approach. Let me suggest why.
  In our authorization bill last year, we asked the Secretary of 
Defense to submit a report to the congressional defense committees no 
later than April 30, 2002, on the Department's ultimate plans for the 
Navy theater-wide system. That was last year's language. We asked them: 
Give us your plan.
  We received a letter back from General Kadish which essentially said: 
Here is some information, but we can't give you any of the definitive 
information, particularly the life cycle costs of the system. What he 
said was, basically, while the questions posed in this request are 
relevant, a response will not be available until the SMD element of the 
BMDS is defined, and he suggested that the SMD definition will be 
completed by December 2003.
  That is interesting. Then just a few weeks ago--approximately 10 days 
ago--I read in the Wall Street Journal where General Kadish was saying 
there will likely be a contingent deployment of this system in the year 
2004. So the program will be defined by December 2003, and then we will 
have contingency deployment in 2004. That suggests to me a lack of a 
clear-cut plan, a lack of meaningful communication to this committee 
and to this Senate.
  That shaped a lot of our deliberations in the sense of these ill-
defined programs and the significant requests for money.
  One area which is most relevant in this regard is the request for 
systems engineering money. Systems engineering money is generally the 
hiring of engineers, contractors, and software engineers to talk about 
designing and integrating systems. It is a very important part of the 
development of any system, particularly one as complicated and 
technologically challenging as national missile defense. We had 
included within this budget $500 million in systems engineering and 
other Government support and operations funding in individual missile 
program accounts: More than $170 million in systems engineering for the 
midcourse program element: the sea-based and the ground-based, the Navy 
system and the system in Alaska; more than $100 million for program 
management operations funding in individual program lines in the 
midcourse element; more than $70 million of Government support in the 
boost program element; more than $20 million in the sensor program 
element; and more than $80 million in the THAAD program element.
  These are all systems engineering or program management costs. It 
adds up to a half a billion dollars. There is another category of 
systems engineering which has been developed in the last 2 years called 
the BMD system, the system of systems.
  First, let me suggest that there are some practical time problems in 
spending all this money. The presumption for BMD systems engineering is 
that you are going to integrate all these systems that are being 
deployed. The reality is, it is very unclear at this juncture what 
systems will be deployed, what radars will be used, what types of 
sensors, what combinations of missiles and sensors. It is very unclear. 
But still the request was for a significant amount of money for systems 
engineering for the entire BMD system.
  We looked carefully at this. We concluded that $736 million for this 
category was more than sufficient, together with the $500 million that 
is already embedded in each of the program elements of the existing BMD 
program.
  As a result, we were able to reduce this request for BMD system money 
by $330 million. But let me also point out that as of this juncture, it 
appears that BMD will only spend $400 million of last year's money, and 
this will leave about $400 million for the next fiscal year. Together 
with the $736 million and the $400 million carryover, BMD systems 
engineering has over $1 billion, hardly a draconian, drastic cut in 
their ability to continue to do these programs of integration and 
systems engineering.
  Again, we looked carefully. We determined what they were doing. We 
determined that they would have more than enough resources to continue 
their efforts into the next fiscal year, and we were able to move some 
of this money into the shipbuilding accounts which everyone in this 
Chamber, I would say without hesitation, will support enthusiastically, 
an immediate need for our Navy for additional ships.
  In addition, we were able to move some of this money into programs 
for the protection of Department of Energy nuclear facilities. We did 
that in response to published reports, which we have all seen, that the 
Office of Management and Budget turned down the Department of Energy 
for a significant increase in security funds at a time when the 
threat--at least if you believe the last few weeks from the media--is 
not the long-range missile, the threat is the terrorists coming in here 
on an airplane, landing in Chicago with a plan or at least an idea to 
seize radiological material someplace in the United States, construct a 
``dirty'' bomb here, and detonate it. Yet the administration said: No, 
DOE, you don't need this extra money to secure the nuclear facilities.
  We think DOE needs this money, and it is a higher priority than 
excessive systems engineering money for the ballistic missile defense 
program.
  So as we have looked at all of these programs, we have tried to take 
a very careful, considerate look, tried to make tough decisions, and 
they are tough decisions because we don't have unlimited, infinite 
resources. As the Senator from Michigan said, I question sincerely the 
availability next year of the inflation savings assumed in the proposed 
Warner amendment. This seems to be one of those fudge factors that is 
put in, an estimate. You might realize it, you might not realize it. I 
await, as the Senator from Michigan does, eagerly, Senator Warner's 
response from the Secretary of Defense with respect to these questions.
  The reality is that these resources may not be realized through 
inflation savings. If we authorize the spending, which, for political 
reasons, the administration seems to be absolutely committed to, we may 
end up using operational maintenance money to fund missile defense, to 
fund these ill-defined areas of systems engineering and other programs.
  We will find ourselves, in that case, coming back here and wondering 
why our flying hours are down for the Air Force and Navy pilots, why we 
can't provide the sort of resources we need for ongoing operations 
maintenance at a time when we have forces in the field engaged today, 
trying to destroy these terror networks, and succeeding in many cases 
because of their skill and courage and the support they are receiving.
  We have brought to the floor a bill that robustly supports missile 
defense but asks very tough questions about specific programs that are 
not adequately justified or are redundant. Let me give an example of 
that. The THAAD missile system is well on the way toward the 
engineering phase to get to a point where it can be part of our theater 
missile defense system in the next several years, we hope. They are 
asking for $40 million to purchase 10 unproven missiles.
  Our concept is fairly straightforward and simple. We provide that 
$895 million for the test development and for the first flight test of 
the missile in this budget. A simple proposition: Let's fly one of 
these missiles first before we buy 10 missiles. Maybe we can save 
resources. The THAAD Missile Program

[[Page 11278]]

is a good example of a program that was once forced to accelerate 
beyond its technical means. It was, as General Welch described it, 
rushing to failure, and it failed--program course out of sight, product 
not adequate, not meeting the requirement set out for the system. It 
was a program in such distress that it was virtually on the chopping 
block. General Welch's report said: Listen, you have to go back to a 
careful, deliberate, thorough development process. The program is back 
on track. And now our sense is they are trying to get off track again--
let's just buy these 10 extra missiles today.
  That is an example, I believe, of the robust support--$895 million. 
But the very careful and appropriate question is: Why do you need to 
buy 10 missiles today when your first flight test is going to be in 
fiscal year 2005? Due to time constraints, I must yield the floor but 
will take time later to continue this discussion.


                           Amendment No. 3918

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
resume consideration of the amendment by the Senator from 
Massachusetts, and the time until 12:30 will be equally divided. Who 
yields time?
  Mr. LEVIN. Madam President, with apologies to our friend from Rhode 
Island, that was the unanimous consent request. I can assure him that 
there is no time limit on the missile defense amendment that Senator 
Warner will be offering. So we can return to him at that time. The time 
was to be divided. Senator Kennedy has returned.
  Let me ask the Chair a question. Is the time divided, under the 
unanimous consent agreement, until 2:30?
  The PRESIDING OFFICER. Yes, the time is divided equally.
  Mr. LEVIN. Is there anybody in control of the time here?
  The PRESIDING OFFICER. Senator Kennedy controls 14 minutes and 
Senator Levin controls 14 minutes.
  Mr. LEVIN. I yield my time to Senator Warner so that there is equal 
division between the proponents and opponents.
  Mr. WARNER. It seems to me it was Senator Kennedy and myself. I have 
delegated that to my colleague from Wyoming.
  Mr. LEVIN. I ask unanimous consent that it be divided in that way.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Massachusetts is recognized.
  Mr. KENNEDY. I yield myself 7 minutes.
  Madam President, the record is clear. When there is real competition, 
public workers will show their strength. According to the DOD's 
numbers, when Government agencies have competed for contracts, they 
have won the bid 60 percent of the time fair and square. When public 
workers win these competitions, the taxpayers save money and good 
workers keep their jobs.
  This amendment is about competition--competition for the Defense 
Department.
  Our amendment will ensure that a framework is established for 
competition for various goods and services in the Defense Department. 
We provide a framework, where if there are national security items, 
they can be exempt. If there are requirements for emergency, they can 
be exempt. If there are certain needs in terms of the high-tech areas, 
they are exempt. But for the broad range of different contracts, this 
amendment will ensure that the American taxpayers' interests are going 
to be preserved. But, more importantly, we are going to get the best in 
terms of performance for the DOD.
  The public-private competitions that have taken place have saved, on 
average, over 30 percent, according to the Defense Department.
  The Republicans claim that this amendment is in conflict with the GAO 
Panel on Commercial Activities. In fact, this amendment is based on the 
principle unanimously articulated by that panel, which calls for 
greater public-private competition, which gives DOD the power to design 
the framework for that competition consistent with the sourcing 
principles laid out by the GAO panel.
  The Republicans claim this amendment takes away flexibility from the 
Department of Defense. Nothing could be further from the truth. When 
national security so demands, DOD is given the power to waive public-
private competition. The amendment exempts many categories of work, 
including almost all high-tech work, from public-private competition. 
The amendment even provides a waiver to DOD for functions that must be 
performed urgently.
  It remains in the discretion of DOD to determine how many jobs should 
be subject to the public-private competition and which jobs are subject 
to this competition. The DOD retains enormous flexibility under this 
amendment.
  The Republicans claim this amendment will cost money. That is a sign 
of their shortsightedness when it comes to the value of competition. 
The DOD recognizes that public-private competition consistently yields 
savings of over 30 percent on contracts. Any short-term transition 
costs, which the CBO has estimated at one-tenth of what they are 
claiming for the substance of this amendment, will be more than made up 
for in long-term savings to the taxpayers.
  The Republicans claim that we are moving too quickly with this 
amendment and that the Senate should not act now to promote expanded 
competition. I only ask that my Republican opponents listen to the 
advice of Mitch Daniels, the Director of the Office of Management and 
Budget, when it comes to these matters. Earlier this month, he said:

       We cannot afford to wait. . . . The objective is to get the 
     taxpayers the best deal.

  While we wait, the administration is moving ahead with shifting 15 
percent of all eligible jobs to the private sector without any adequate 
competition.
  The passage of this amendment will lead to a smarter and more 
efficient procurement policy for the Department of Defense. Just as no 
private company would reasonably outsource jobs without a hard-headed 
analysis showing cost savings, Government procurement should be based 
on what is best for taxpayers and our national defense. The 
consequences will be savings for taxpayers and improved dependability 
for our courageous men and women in uniform.
  We are surely facing great challenges in terms of our Nation's 
security in this new era. More than ever, we are relying on the 
Department of Defense and its dedicated employees. As we expand our 
Nation's military budget, we must ensure that taxpayers and our men and 
women in uniform are reaping all of the benefits possible. True 
competition is more critical today than ever before.
  Only if we give public workers the opportunity to compete in public-
private competition will we have true competition.
  This is what the GAO has said on the question of the Commercial 
Activities Panel, which has been quoted yesterday:

       Competitions, including public-private competition, have 
     shown to produce significant cost savings for the Government, 
     regardless of whether a public or a private entity is 
     selected.

  Angela Styles, senior officer at OMB, a procurement official, 
testified on the House Armed Services Military Readiness Subcommittee 
on March 13, 2002:

       No one in this administration cares who wins a public-
     private competition. But we very much care that Government 
     service is provided by those best able to do so. Every study 
     on public-private competition that I have seen concludes that 
     these competitions generate significant cost savings.

  What is it about our friends on the other side that they refuse to 
permit the competition to take place?
  Now, we heard estimates just yesterday that, according to DOD, the 
amendment will cost $200 million. The years of experience and the 
statements of the administration's officials clearly demonstrate that 
public-private competitions save money rather than cost. The Deputy 
Under Secretary of Defense for Acquisition Technology and Logistics 
testified that the public-private competitions save the Government 
$11.2 billion, a savings of $11.2 billion. The administrator of OMB's 
Office of Federal Procurement Policy said the

[[Page 11279]]

use of the public-private competition consistently reduces the cost of 
public performance by more than that. Even in the short term, the core 
of this amendment would cost about a tenth of what the critics and DOD 
claim.
  Those opposed to it say the amendment would prevent the 
implementation of the GAO panel recommendation. The amendment is based 
on the unanimous principles of the GAO panel that call for public-
private competition. The GAO recommended:

       A process that, for activities that may be performed by 
     either the public or private, would permit public-private 
     sources to participate in competitions for work currently 
     performed in house, work currently contracted in the private 
     sector, and new work consistent with these guiding 
     principles.

  That was a quote.
  The amendment also provides for a pilot program to test the 
effectiveness of the best value approach that is endorsed by the 
opponents of this amendment. Furthermore, arguments are made by the 
opponents that the amendment goes against the principle held for 50 
years: The Government should not compete for noninherently Government 
functions. For the first time, the amendment would mandate that the 
Government compete with the private sector.
  The proponents of that statement left out a key clause in the 
longstanding U.S. procurement policy. According to OMB, ``the 
Government shall not start or carry on any activity and provide a 
commercial product or service if the product or service can be procured 
more economically from a commercial source.''
  We are not asking that work be given to the private sector if indeed 
the Federal Government agency can do it more efficiently. The 
Government personnel system is not nimble enough to accommodate this 
amendment and move on short notice. That is an argument that is made 
against this amendment.
  There is no reason to believe the Government cannot adequately 
accommodate the need for qualified personnel. In the face of pending 
base closures, OMB outsourcing quotas, the DOD civilian workforce will 
continue to downsize. As a result of this process, over 300,000 DOD 
civilian personnel have lost their jobs due to outsourcing in recent 
years. There is an excess of potential qualified personnel.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. KENNEDY. I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. THOMAS. I yield 5 minutes to the Senator from Virginia.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. ALLEN. Madam President, I rise today in opposition to the Kennedy 
amendment, which would arbitrarily require Federal Government agencies, 
particularly the Department of Defense, to compete with the private 
sector for the performance of inherently nongovernmental services 
within the Department of Defense. As chairman of the Republican Senate 
High Tech task force, I believe that contracting with the private 
business entities helps drive innovation and indeed save the taxpayers 
money.
  This amendment would reverse the progress that has already been made 
in this area and obviously create damage to important initiatives such 
as e-government. In fact, many of the information technology companies 
across this country believe they would no longer seek Federal contracts 
with DOD under the provisions of this amendment, thereby, 
unfortunately, creating job losses in the private sector.
  This view has been shared by my colleagues, Senators Ensign, Warner, 
Gramm, Smith, Collins, Hutchison, Burns, Bennett, Hatch, and Brownback.
  This amendment would mandate that every new Department of Defense 
contract, modification, task order, or contract renewal undergo a so-
called public-private competition, whether or not the Government even 
has the requisite skill, competence, or personnel to perform the work.
  The changes in this current process by this amendment will: (1) 
weaken and delay Government performance; (2) could devastate small 
business; and (3) have a harmful effect on our important, creative, 
high-technology industry.
  First, the anti-private-enterprise exercise that would be caused by 
this bill would result in delays in performance of Government 
contracts. The Department of Defense would lack the capacity to quickly 
procure and adopt innovative solutions to enhance safety, security, and 
effectiveness. It would be an undesirable bureaucratic impediment that 
could harm the ability of the Defense Department to perform its duties, 
especially now during a national crisis.
  Secondly, the added costs associated with the A-76 program, in 
comparison to competitive procurement practices, traditionally would 
exclude most small businesses from participating in service 
contracting. This would have a particularly detrimental impact on 
women, minority, and veteran-owned companies.
  Finally, the amendment will have a devastating impact on the high-
tech industry, an industry that is so important to the competitive 
vitality of the American economy. This amendment is opposed by the 
high-tech industry, including the Information Technology Association of 
America (ITAA). The exemptions for technology are ambiguous and do not 
cover the full range of activities conducted by the exempted industry. 
Moreover, ITAA notes the information technology exemption herein covers 
only 3 percent of total IT service contracting. This is also opposed by 
the Chamber of Commerce and various unions.
  I will close with the views of the Secretary of Defense, who says:

       We have made a top priority of finding efficiencies and 
     savings within the Department of Defense to enable us to 
     improve our tool-to-tail ratio. An important element of that 
     effort is to adapt business and financial practices to make 
     the best warfighting use of the resources the American 
     taxpayers provide us. The draft Kennedy amendment would 
     increase Department cost by requiring public-private 
     competitions for new functions and for previously contracted 
     work already subjected to market competition. It would also 
     adversely impact mission effectiveness by delaying contract 
     awards for needed services.

  The Secretary of Defense, Mr. Rumsfeld, closes:

       The proposed amendment would increase Department costs and 
     dull our warfighting edge.

  I suggest that no Member of this body should support legislation that 
dulls our warfighting edge. I therefore urge my colleagues to vote 
against this amendment.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. KENNEDY. Madam President, I yield myself 30 seconds to respond.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. I am still waiting to hear the reason from the other 
side that competition does not work. We are told that we cannot have 
competition in the Defense Department because it is going to take time 
to set up a process and procedure; we cannot have it because it is 
going to work against small business.
  We have a million-dollar exemption so that anybody below a million 
dollars, a small business, can compete. Perhaps someone on the other 
side can tell us why competition cannot work. We have not heard the 
answer to that. What we have heard is all of the accountants, Mitch 
Daniels, the GAO, say that competition can work, and when it does work, 
we get the best in terms of our fighting men and women and we get the 
best in terms of taxpayers.
  I cannot understand the opponents saying we cannot set up a process 
and procedure in order to deal with this; it is going to be too 
complicated and costly. That is baloney. Competition can work, and I am 
so surprised, from the party that allegedly is for more competition, 
that they cannot support this amendment.
  I yield 3 minutes to the Senator from Wisconsin.
  The PRESIDING OFFICER. The Senator from Wisconsin.

[[Page 11280]]

  Mr. FEINGOLD. Madam President, I rise in strong support of the 
amendment offered by the Senator from Massachusetts, Mr. Kennedy, of 
which I am an original cosponsor.
  I have long been concerned about the costs and benefits associated 
with the process by which the Federal Government contracts out work. In 
particular, I am concerned about the lack of data on whether these 
contracts actually achieve real savings for the taxpayers, and about 
the effects of outsourcing on the pay and benefits of Federal workers.
  I do not automatically oppose contracting out. Such a process is 
often appropriate. I am concerned, however, that the Department of 
Defense is currently able to circumvent the public-private competition 
process for contracting out work that is employed by other Federal 
agencies. Contracting out affects the jobs of thousands of dedicated 
Government employees each year. These men and women deserve the chance 
to compete for this work, as the Senator from Massachusetts was 
pointing out. They deserve the right to compete for their jobs, and 
they have a right to do it on a level playing field. The Kennedy 
amendment would help to provide a level playing field by ensuring that 
true public-private competition actually occurs.
  This amendment does not prohibit the Department of Defense from 
contracting out. It does not stipulate which categories of jobs may or 
may not be subject to public-private competitions. In fact, a number of 
job categories are exempted. This amendment is broadly worded to give 
DOD flexibility on which and how many positions to subject to 
competitions. The amendment also includes a national security waiver.
  Some have argued that this amendment would spell the end of 
contracting out by the Department of Defense. Again, that is not true. 
This amendment simply requires DOD to comply with four broad goals 
aimed at bringing a measure of fairness and equity to the contracting 
out process.
  First, the amendment would ensure that public-private competition 
actually occurs before work currently performed by Federal employees is 
contracted out. The DOD would be able to use any cost-based process to 
carry out this competition, including the Circular A-76 process. This 
process would give DOD employees the opportunity to present their best 
bid and to compete on a level playing field with bids from contractors. 
The goal of contracting out is to get the highest quality work at the 
best price for the taxpayers. We should not continue to shut the 
civilian DOD workforce out of this process.
  Second, this amendment would help to ensure that Federal civilian 
employees are given the opportunity to compete for a fraction of what 
is called ``new work'' to be performed at DOD. This provision would be 
phased in over several years.
  Third, this amendment would require DOD to use ``contracting in'' as 
well as ``contracting out'' to make sure that Federal taxpayers are 
getting the best deal. It only makes sense to periodically compete work 
that has been awarded to contractors to ensure that the Federal 
taxpayers are continuing to get their money's worth. Work being 
performed by contractors should be subject to the same scrutiny as work 
being performed by Government employees. In the interest of fairness, 
the amendment requires that DOD opens to competition similar numbers of 
contractor and civilian employee jobs.
  Finally, the amendment would require DOD to establish an inventory to 
track the cost and size of its contractor workforce. This inventory 
would be compiled using the same procedures that the Department of the 
Army recently adopted to track its own contractor workforce. I share 
the concerns of some of my constituents, who have told me that they 
believe that contracting out simply shifts jobs from the Federal 
Government to the private sector without any real savings. I also share 
their concern that part of any savings that is achieved may actually 
come from reduced salaries and benefits that are paid to contractor 
employees. It is important that DOD and Congress have an accurate 
picture of the true size and cost of the contractor workforce.
  In sum, this amendment does not prohibit the Department of Defense 
from contracting out. It would ensure basic public-private competition 
that will allow DOD employees to compete with contractor bids on a more 
level playing field. It will also help to ensure that the DOD 
contracting process is achieving the best result for taxpayers.
  I urge my colleagues to support this amendment.
  The PRESIDING OFFICER. Who yields time?
  Mr. THOMAS. I yield 5 minutes for the Senator from Missouri.
  Mr. BOND. Madam President, I appreciate the time.
  I am very much concerned that the Kennedy amendment takes us 
backward. Under the Federal Activities Inventory Reform Act of 1998, 
the FAIR Act, agencies are examining activities to find what they do 
that duplicates activities done in the private sector. This would be 
done to see if these activities can be contracted out, to do those 
activities more cheaply and effectively. This would prevent the Federal 
Government from competing with the private marketplace. When the job is 
done in the private marketplace, not only do we avoid having to carry 
an additional Federal bureaucracy, we get to tax them if they make a 
profit and we get the benefits of the competition, the innovation, that 
small business brings.
  As the ranking member of the Senate Small Business Committee, I 
focused a lot of time and attention on what small businesses are able 
to do. We find there are some tremendous innovations and new ideas 
coming from small business. Whenever some action can be done 
effectively in the private sector, I believe the private sector should 
have the opportunity to do it. Functions that are inherently 
governmental, clearly no one disagrees, should be done by Federal 
employees. We are not talking about those. We are talking about 
functions that are commercial in nature.
  The current process for evaluating these functions for a possible 
contracting out is the so-called A-76 process. OMB Circular A-76 calls 
for competition to take place wherever commercial activity currently 
performed by a Government agency is proposed to be contracted out. The 
Federal employees of that agency describe how they would organize 
themselves into the most efficient organization and compete against the 
proposals submitted by private contractors.
  The Kennedy amendment would bar contracting out of these functions, 
unless the private contractor's proposal to provide cost savings of at 
least 10 percent over the Federal employee's MEO. This is intended to 
make contracting out as difficult as possible. This is a direct shot at 
small businesses. This is meant to cripple the ability of small 
businesses which are now providing vital products and services in our 
Defense Department.
  The Kennedy amendment purports to implement the recommendation of the 
Commercial Activities Panel convened by Comptroller General David 
Walker. However, the sole emphasis on cost savings--also, the Kennedy 
amendment puts in a 10-percent additional savings--the sole emphasis of 
the sponsor of this measure is saying that the deciding criteria in 
that should be cost actually conflicts with the Walker panel 
recommendations. The Walker panels calls for the standard of best 
value, what generates the overall best value to the taxpayer.
  Cost savings is clearly one factor being considered. But best value 
contracting also includes other factors, such as higher quality, faster 
delivery, innovative processes, reliable past performance, or other 
criteria that might justify a higher cost.
  Best value contracting is what most of us do every day when we go out 
to buy goods and services. When you buy lunch, you do not always buy 
the lowest price item on the menu every day. When you go to the 
department store, you do not always purchase the cheapest item on the 
shelf. You may deliberately buy an item that is more expensive because 
you expect the quality to be better. The best value approach puts 
Government contracting on par

[[Page 11281]]

with how average, intelligent, informed consumers make their purchases 
in the marketplace.
  That is one reason the Government is increasingly relying on best 
value contracting and why the Walker panel recommends it for analyzing 
contracting out proposals. The Kennedy amendment's exclusive emphasis 
on costs savings, and the additional unworkable requirement the savings 
must be more than 10 percent, is a step backward from the Walker 
recommendations.
  The sponsor of the amendment has cited OMB and other statements made 
by this administration, when, in fact, the President, speaking for this 
administration on March 19, emphasized the vitally important role that 
small business plays in meeting the needs of the Federal Government. He 
talked about taking a major effort, launching a major effort, to stop 
the bundling of contracts to prevent their being awarded to small 
businesses.
  There is currently underway a study in OMB under Angela Styles on how 
to get more contracts unbundled so small business can provide a 
workable and economic role.
  I urge my colleagues to oppose the Kennedy amendment.
  Mr. THOMAS. I yield our final 5 minutes to the Senator from 
Tennessee.
  Mr. THOMPSON. Madam President, there has been a lot of discussion 
concerning the Commercial Activities Panel. As has already been stated, 
this is a panel that was set up with the distinguished citizens to 
consider this complex problem. One of their recommendations, No. 9, is 
to ensure that competitions involve a process that considers both 
quality and cost factors.
  My understanding is that the amendment of the Senator from 
Massachusetts addresses only the cost factors in determining the best 
value to the Government. On that, in and of itself, we clearly have a 
deviation, to say the least, from the Commercial Activities Panel.
  That is not as significant a point as the one following, and that is 
the Armed Services Committee simply has not reviewed the panel's 
recommendations, and we on the Governmental Affairs Committee have not 
had the opportunity to review and consider the panel's recommendations. 
This is certainly an area of some complexity and controversy that 
should go through the committee process.
  We have a bill before the Senate now on the Governmental Affairs 
Committee similar to the Kennedy amendment but it applies to all 
agencies in the Federal Government. We have had one hearing on that 
bill to date. We are in the middle of that process. This amendment will 
clearly increase the costs to the Government and distract the 
Department of Defense from its war fighting mission.
  The Senator asked, why are we against competition? The answer is, we 
are not. We have plenty of competition. What we have is competition in 
the private sector competing for the jobs. The Senator would interject 
the Federal unions into the middle of that competition where there has 
been no such injection in times past. The Department of Defense points 
out it will cost more money and it will delay contracts at a time when 
we neither need higher costs nor delays in the issuing of contracts.
  The DOD and the OMB Director opposes this amendment, as well as small 
and minority-owned businesses and major labor unions. This is no time 
to be shifting massive jobs from the private sector to the public 
sector labor unions. Private labor unions have been losing membership 
over the past several years while membership in the public labor unions 
have been rising. Many labor unions oppose this amendment as well as 
taxpayer groups.
  I urge my colleagues to vote against the Kennedy amendment.
  I yield the floor.
  Mr. KENNEDY. How much time remains?
  The PRESIDING OFFICER. Three minutes.
  Mr. KENNEDY. I yield a minute and a half.
  Mr. DURBIN. I am happy to be a cosponsor of this amendment.
  I rise today to speak in support of the Kennedy amendment, which will 
help ensure real competition between the public and the private sectors 
for the work performed by the Department of Defense. I am pleased to 
join my colleagues, Senator Jack Reed, Daniel Akaka, and Russ Feingold 
as a cosponsor of this important amendment.
  Let me review what this amendment does. This amendment addresses the 
need for more competition and more information by requiring an analysis 
of the costs of maintaining work in the public sector. The amendment 
defines broad and flexible principles to guide a public-private 
competition process. It allows the Defense Department wide flexibility 
in setting up a competition consistent with these broad principles. The 
amendment provides discretion to the Defense Department to waive the 
public-private competition requirements when national security demands 
and exempts a number of activities from the requirements. It also 
permits DOD the discretion to determine which jobs and how many jobs 
should be subject to public-private competition.
  The amendment will also provide Congress the information it needs to 
exercise important oversight by watching the level of managed 
competitions, since there is currently no requirement that agencies 
conduct them. And by granting DOD ``pilot program'' authority to 
explore alternatives to the OMB Circular A-76 process that will yield 
the same projected cost savings, we can gain some practical experience 
with some of the reforms recommended in the recently published report 
of the Commercial Activities Panel.
  Nine months ago, our Nation's collective consciousness was jolted 
when heinous acts of terrorism were committed on American soil. As a 
result of those horrific acts, we are not--and never will be--the same. 
We are stronger in our response, more steeled in our resolve, more 
vigilant about identifying and eliminating our vulnerabilities. 
Overnight, that life-altering experience forced us to seriously 
evaluate the workings of our Government from a new and different 
perspective. We now view ``homeland security'' in completely different 
ways. Protecting our borders, our ports, nuclear power plants, chemical 
plants, water supplies, and other critical infrastructure has taken on 
a new and urgent imperative. The Department of Defense is reorganizing 
itself for homeland security, and functions that may not have seemed 
essential to DOD's mission may now, in fact, be essential; and 
conversely, there may be functions that could be better performed in 
the private sector, allowing DOD to focus on its mission.
  I would like to share an example to illustrate this point. After 
September 11, I asked that my staff secure a briefing on the security 
of a chemical munitions storage depot that sits 30 miles from the 
Illinois border. The United States is in the process of destroying 
these deadly munitions, which could kill hundreds of thousands of 
people, pursuant to the Chemical Weapons Convention. I learned that the 
depot had only one uniformed military officer--the commander--to 
protect it, because security was provided by private contractors. About 
a week after that, National Guard troops joined the private contractors 
in protecting this site.
  Historically, DOD has set the pace as the lead Federal agency in 
using competitive sourcing. But when we talk about ``setting the 
pace''--what we know is that fewer than 1 percent of DOD service 
contracts are subject to public-private competition. Work is outsourced 
without any opportunity for public sector employees to compete for the 
jobs. And DOD is considered the leader--few civilian agencies have 
utilized the process; in fact, in Fiscal Year 1997, not one civilian 
agency reported conducted a cost comparison study.
  The Department of Defense spends tens of billions of dollars annually 
on service contracts--ranging from services for repairing and 
maintaining equipment to services for medical care to advisory 
assistance services such as providing management support, performing 
studies, and delivering technical assistance.
  In fiscal year 1999, DOD reportedly spent $96.5 billion for contract 
services--more than it spent on supplies and equipment. GAO has 
repeately reported that inadequate and inaccurate

[[Page 11282]]

information provided by DOD on service contract spending hampers 
congressional decisionmaking and limits congressional use of 
information reported in the budget.
  Not only is reliable cost information scarce, there is too little 
competition for contracts to provide services to and for Federal 
agencies. As I indicated, fewer than 1 percent of DOD service contracts 
are subject to public-private competition. Because there is such a 
small fraction competed, there is a paucity of information and a host 
of unknowns about whether outsourcing to the private sector is really 
saving money for the taxpayers. Outsourcing has evolved as one of the 
principal mechanisms used to reduce the size, scope, and costs of the 
Federal government. However, we have few clues about whether 
outscourcing has in fact reduced government costs, size, and scope.
  A GAO study of savings obtained from competitive sourcing published 
in August 2000 reflected that DOD did realize savings from seven of the 
nine competitive sourcing cases reviewed, although less than the $290 
million DOD initially projected. And savings occurred regardless of 
whether governmental organizations or private contractors won the 
competition. Last year, the General Accounting Office elevated 
strategic human capital management to its list of ``high-risk'' 
government-wide challenges. In testimony in February 2001 before the 
Governmental Affairs oversight subcommittee which I now chair, 
Comptroller General David Walker made it abundantly clear that Federal 
employees are not the problem. As Mr. Walker emphasized, to view 
Federal employees as costs to be cut rather than assets to be valued 
would be to take a narrow and shortsighted view, one that is obsolete 
and must be changed. I was heartened by his perspective.
  Yet right on the heels of this acknowledgement of the severe human 
capital crisis facing the Federal workforce, the administration 
launched a major initiative requiring Federal agencies to compete or 
directly convert to the private sector at least 5 percent of the full-
time equivalent jobs listed on their Federal Activities Inventories. An 
additional 10 percent of the jobs are to be competed or converted by 
the end of Fiscal Year 2003, 85,000 jobs, for an aggregate of 15 
percent of all Federal jobs considered commercial in nature.
  It strikes me that it will be about as formidable as the perils of 
Sisyphus to make any headway in recruiting and retaining the best and 
brightest in the Federal workforce when in the same breath you are 
telling them that over the next few years one out of every four jobs is 
potentially slated to disappear into the private sector. We really 
don't have a trove of solid, reliable agency-by-agency information 
about the costs and performance of work that is being performed for the 
government under contract. This amendment will begin to gather it--by 
and for the Department of Defense.
  I have long been interested in whether we have a system to measure 
and account for these costs, determine if there is savings, and oversee 
the work that is being done with Federal funds. It has been my 
impression that some of my colleagues have been just hidebound to 
outsource, without regard to the price tag or performance. Their 
motivation was to reduce the size of the Federal workforce--at any 
cost. When I suggested amendments--arguing that we had to save money, 
they rejected them. They told me that is not the point--we have to turn 
some lights out in some federal buildings. I would like to know whether 
that's still driving the outsourcing fervor.
  I want to be perfectly clear: I am not opposed to all outsourcing. 
What I am concerned about is ensuring that decisions to shift work to 
the private sector are made fairly, not arbitrarily; that public-
private competition is fostered; and that we have a reliable system in 
place to have information about the costs and performance of work being 
performed with Federal funds by the private sector under these 
contracts, in essence, accountability.
  You can outsource and save money for taxpayers, and I think you 
should do that. If you decide you will outsource, privatize, and 
contract out, whether you save money for taxpayers or not, you are not 
serving either taxpayers or the needs of our Nation.
  It is interesting to me that the Senators on the other side of the 
aisle are fearful of the word ``competition.'' The thought that the 
private sector might have to compete for providing services to the 
Federal Government with the public sector is unacceptable to them.
  When you look at the Department of Defense, they spend over $96 
billion a year on contracts per services. How many of those are 
competitively bid? Less than $1 billion. Ninety-five billion out of $96 
billion in these contracts for services go without competitive bid. It 
has created cozy, sweetheart, comfortable arrangements with companies 
and the Pentagon. They do not want to compete. They do not want to 
stand up against those who say we can do it for you more 
professionally, more cheaply, more effectively. They can't stand the 
idea of competition. That is why they are opposing the Kennedy 
amendment.
  Should we not at this point in time of our history, with limited 
resources, fighting a war on terrorism, insist the taxpayers get every 
dollar of service for every dollar of taxpayers' money they put into 
our national defense? That is what the Kennedy amendment says. That is 
why I am happy to cosponsor it.
  The PRESIDING OFFICER. The time of the Senator has expired. Who 
yields time?
  Mr. KENNEDY. How much time remains to the other side?
  The PRESIDING OFFICER. They have 1 minute 25 seconds.
  Mr. KENNEDY. On either side, then?
  The PRESIDING OFFICER. There remain 1 minute 25 seconds for both.
  Mr. THOMAS. I just want to respond to the comments made with respect 
to OMB. I want to read from a letter from the Director.

       Dear Senator Warner, I am writing to express deep concern 
     over the possible Kennedy amendment [proposal]. While 
     packaged in good-government clothing, this amendment will 
     severely limit the Department of Defense's ability to acquire 
     services necessary to help the Department meet current 
     threats. The Department of Defense must have the flexibility. 
     . . .
       While agencies are embracing competition, focusing on core 
     mission, and eliminating barriers to entering the 
     marketplace, this amendment does the opposite.

  The Senator was talking about support from this Department, and this 
is not what is there.

       It would require the Government to consider reforming non-
     core activities that it doesn't have the skills to do when 
     entrepreneurs and their employees are ready, willing and able 
     to perform.
       We most focus our agencies on performance and 
     accountability. Now--when our nation is at war against 
     terrorism of global reach--is not time for the Secretary of 
     Defense to have fewer options, for the sake of moving more 
     functions into government hands.

  I yield the floor.
  Mr. KENNEDY. Madam President, I yield myself the remaining time.
  We should not have to get into a discussion about the value of 
competition. But a year ago one of our colleagues offered a very 
similar amendment and then Senator Warner said: Let's wait until we 
have the Commercial Activities Panel report. That was to guide the 
Defense Department.
  In this report, on page 47, it says:

       Establishing a process that, for activities that may be 
     performed by either the public or the private, would permit 
     public and private sources to participate in competitions for 
     work currently performed in-house, work currently contracted 
     to the private sector, and new work, consistent with these 
     guiding principles.

  Unanimous recommendation. That is what this amendment does. That is 
why we believe it is important. It will be in the interests of our 
national security, the Department of Defense, and the taxpayers. That 
is why we believe this amendment should be accepted.
  I believe all time has expired.

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