[House Report 108-56]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     108-56

======================================================================



 
             DEFENSE PRODUCTION ACT REAUTHORIZATION OF 2003

                                _______
                                

 April 2, 2003.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Oxley, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1280]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 1280) to reauthorize the Defense Production Act of 
1950, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     3
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     6
Performance Goals and Objectives.................................     6
New Budget Authority, Entitlement Authority, and Tax Expenditures     7
Committee Cost Estimate..........................................     7
Congressional Budget Office Cost Estimate........................     7
Federal Mandates Statement.......................................     8
Advisory Committee Statement.....................................     9
Constitutional Authority Statement...............................     9
Applicability to Legislative Branch..............................     9
Section-by-Section Analysis......................................     9
Changes in Existing Law Made by the Bill, as Reported............    10
Dissenting Views.................................................    12

  The amendment is 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, 2007''.
  (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 
``1996 through 2003'' and inserting ``2004 through 2007''.

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

  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 is authorized to 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.

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. 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 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 Reports.--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.

                          PURPOSE AND SUMMARY

    H.R. 1280, the Defense Production Act Reauthorization of 
2003, reauthorizes the Defense Production Act of 1950 for 4 
years, until September 30, 2007, and makes 3 minor technical 
amendments to the underlying legislation.

                  BACKGROUND AND NEED FOR LEGISLATION

    The Defense Production Act of 1950 allows the Government to 
prioritize deliveries of materials needed for national defense 
or in the case of natural or man-made disaster, and allows the 
use of financial incentives to create defense-related 
production capacity where none exists. Unlike most defense-
related legislation, the authorities under this legislation 
address the means of production and manufacturing, a great 
power with dire consequences for the economy if it is misused. 
For the same reason, the Act is not a permanent authority but 
requires regular re-authorization. This legislation 
reauthorizes the underlying Act for a period of four years; the 
Committee intends to study whether any changes need to be made 
to the underlying Act, to modernize it, outside of the 
authorization cycle.
    The most regular users of the Act, however, asked that 
three minor changes be made to the Act to improve its 
usefulness immediately: The act imposes a per-project cap of 
$50 million for efforts to create defense production capacity, 
and a project to develop such capacity for radiation-hardened 
electronics--already authorized to about $100 million by 
previous act of Congress--will likely run to $167, according to 
the Defense Department, which has asked for a $200 million cap 
in case that amount is somewhat low. Separately, section 708 of 
the Act indemnifies persons for acts they take in complying 
with the Act's authorities. The Defense Department requested 
that this section be made permanent, pointing to a period 
during the Gulf War a decade ago in which the Act temporarily 
expired. In that instance, commercial airlines were providing 
troop transportation on commercial aircraft, displacing 
previous contracts for performance. The airlines could have 
incurred liability during the period in which the Act was 
unauthorized as its powers provided the backing for the 
airlines' actions.
    Finally, while section 705 of the Act provides that the 
President's investigatory authority--delegated to the 
Department of Commerce--may be exercised where ``necessary or 
appropriate to the enforcement or administration of the [DPA] 
and the regulations or orders issued thereunder,'' the 
provision does not specifically reference studies conducted 
pursuant to section 401(4) of Executive Order 12656. However, 
Executive Order 12656 specifically authorizes the Secretary of 
Commerce to perform industry analyses to assess capabilities of 
the commercial industrial base to support the national defense 
under the authority of the DPA. This legislation clarifies the 
President's investigative authority in this instance.

                                HEARINGS

    The Subcommittee on Domestic and International Monetary 
Policy, Trade and Technology held a hearing on March 19, 2003, 
on H.R. 1280, the Defense Production Act Reauthorization of 
2003. The following witnesses testified: Ms. Suzanne D. 
Patrick, Deputy Undersecretary for Defense and Industrial 
Policy, Department of Defense; Dr. Ronald M. Sega, Director of 
Defense Research and Engineering, Department of Defense; Ms. 
Karan K. Bhatia, Deputy Under Secretary for Industry and 
Security, Department of Commerce; and Mr. R. David Poulison, 
Director of the Preparedness Division, Department of Homeland 
Security.

                        COMMITTEE CONSIDERATION

    The Subcommittee on Domestic and International Monetary 
Policy met in open session on March 19, 2003, and approved H.R. 
1280 for full Committee consideration, as amended.
    The Committee on Financial Services met in open session on 
March 26, 2003, and ordered H.R. 1280 reported to the House 
with a favorable recommendation, with an amendment.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Oxley to report the bill to the House with a 
favorable recommendation was agreed to by a voice vote. The 
following amendments were considered by record votes:

          An amendment by Ms. Waters, no. 2, preventing 
        conflicts of interest for contracts under the Defense 
        Production Act, was not agreed to by a record vote of 
        14 yeas and 41 nays (Record vote no. FC-5).

                                              Record vote no. FC-5
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........   Mr. Frank (MA)..        X   ........  .........
Mr. Leach......................  ........        X   .........   Mr. Kanjorski...  ........  ........  .........
Mr. Bereuter...................  ........  ........  .........   Ms. Waters......        X   ........  .........
Mr. Baker......................  ........        X   .........   Mr. Sanders*....        X   ........  .........
Mr. Bachus.....................  ........        X   .........   Mrs. Maloney....  ........        X   .........
Mr. Castle.....................  ........  ........  .........   Mr. Gutierrez...  ........  ........  .........
Mr. King.......................  ........        X   .........   Ms. Velazquez...        X   ........  .........
Mr. Royce......................  ........        X   .........   Mr. Watt........        X   ........  .........
Mr. Lucas (OK).................  ........        X   .........   Mr. Ackerman....  ........        X   .........
Mr. Ney........................  ........  ........  .........   Ms. Hooley (OR).        X   ........  .........
Mrs. Kelly.....................  ........        X   .........   Ms. Carson (IN).        X   ........  .........
Mr. Paul.......................        X   ........  .........   Mr. Sherman.....  ........        X   .........
Mr. Gillmor....................  ........        X   .........   Mr. Meeks (NY)..        X   ........  .........
Mr. Ryun (KS)..................  ........  ........  .........   Ms. Lee.........        X   ........  .........
Mr. LaTourette.................  ........        X   .........   Mr. Inslee......  ........  ........  .........
Mr. Manzullo...................  ........        X   .........  Mr. Moore........  ........        X   .........
Mr. Jones (NC).................  ........        X   .........   Mr. Gonzalez....  ........        X   .........
Mr. Ose........................  ........        X   .........   Mr. Capuano.....  ........        X   .........
Mrs. Biggert...................  ........  ........  .........  Mr. Ford.........  ........        X   .........
Mr. Green (WI).................  ........  ........  .........   Mr. Hinojosa....  ........  ........  .........
Mr. Toomey.....................  ........        X   .........   Mr. Lucas (KY)..  ........        X   .........
Mr. Shays......................  ........        X   .........   Mr. Crowley.....  ........        X   .........
Mr. Shadegg....................  ........  ........  .........   Mr. Clay........  ........  ........  .........
Mr. Fossella...................  ........        X   .........   Mr. Israel......  ........        X   .........
Mr. Gary G. Miller (CA)........  ........  ........  .........   Mr. Ross........  ........        X   .........
Ms. Hart.......................  ........        X   .........   Mrs. McCarthy     ........        X   .........
                                                                 (NY).
Mrs. Capito....................  ........        X   .........   Mr. Baca........        X   ........  .........
Mr. Tiberi.....................  ........        X   .........   Mr. Matheson....  ........        X   .........
Mr. Kennedy (MN)...............  ........        X   .........   Mr. Lynch.......  ........  ........  .........
Mr. Feeney.....................  ........        X   .........   Mr. Miller (NC).  ........        X   .........
Mr. Hensarling.................  ........        X   .........   Mr. Emanuel.....        X   ........  .........
Mr. Garrett (NJ)...............  ........        X   .........   Mr. Scott (GA)..        X   ........  .........
Mr. Murphy.....................  ........        X   .........   Mr. Davis (AL)..        X   ........  .........
Ms. Ginny Brown-Waite (FL).....  ........        X   .........  .................  ........  ........  .........
Mr. Barrett (SC)...............  ........        X   .........  .................  ........  ........  .........
Ms. Harris.....................  ........  ........  .........  .................  ........  ........  .........
Mr. Renzi......................  ........        X   .........  .................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------
*Mr. Sanders is an independent, but caucuses with the Democratic Caucus.


          An amendment by Ms. Waters (as modified by unanimous 
        consent), no. 4, requiring certain officials to recuse 
        themselves, was not agreed to by a record vote of 32 
        yeas and 35 nays (Record vote no. FC-6).

                                              Record vote no. FC-6
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........   Mr. Frank (MA)..        X   ........  .........
Mr. Leach......................  ........        X   .........   Mr. Kanjorski...        X   ........  .........
Mr. Bereuter...................  ........        X   .........   Ms. Waters......        X   ........  .........
Mr. Baker......................  ........        X   .........   Mr. Sanders*....        X   ........  .........
Mr. Bachus.....................  ........        X   .........   Mrs. Maloney....        X   ........  .........
Mr. Castle.....................  ........        X   .........   Mr. Gutierrez...  ........  ........  .........
Mr. King.......................  ........        X   .........   Ms. Velazquez...        X   ........  .........
Mr. Royce......................  ........        X   .........   Mr. Watt........        X   ........  .........
Mr. Lucas (OK).................  ........        X   .........   Mr. Ackerman....        X   ........  .........
Mr. Ney........................  ........        X   .........   Ms. Hooley (OR).        X   ........  .........
Mrs. Kelly.....................  ........        X   .........   Ms. Carson (IN).        X   ........  .........
Mr. Paul.......................        X   ........  .........   Mr. Sherman.....        X   ........  .........
Mr. Gillmor....................  ........        X   .........   Mr. Meeks (NY)..        X   ........  .........
Mr. Ryun (KS)..................  ........        X   .........   Ms. Lee.........        X   ........  .........
Mr. LaTourette.................  ........        X   .........   Mr. Inslee......        X   ........  .........
Mr. Manzullo...................  ........        X   .........  Mr. Moore........        X   ........  .........
Mr. Jones (NC).................  ........        X   .........   Mr. Gonzalez....        X   ........  .........
Mr. Ose........................  ........        X   .........   Mr. Capuano.....        X   ........  .........
Mrs. Biggert...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Green (WI).................  ........        X   .........   Mr. Hinojosa....        X   ........  .........
Mr. Toomey.....................  ........        X   .........   Mr. Lucas (KY)..  ........        X   .........
Mr. Shays......................  ........        X   .........   Mr. Crowley.....        X   ........  .........
Mr. Shadegg....................  ........        X   .........   Mr. Clay........        X   ........  .........
Mr. Fossella...................  ........        X   .........   Mr. Israel......        X   ........  .........
Mr. Gary G. Miller (CA)........  ........        X   .........   Mr. Ross........        X   ........  .........
Ms. Hart.......................  ........        X   .........   Mrs. McCarthy           X   ........  .........
                                                                 (NY).
Mrs. Capito....................  ........        X   .........   Mr. Baca........        X   ........  .........
Mr. Tiberi.....................  ........        X   .........   Mr. Matheson....        X   ........  .........
Mr. Kennedy (MN)...............  ........        X   .........   Mr. Lynch.......  ........  ........  .........
Mr. Feeney.....................  ........        X   .........   Mr. Miller (NC).        X   ........  .........
Mr. Hensarling.................  ........        X   .........   Mr. Emanuel.....        X   ........  .........
Mr. Garrett (NJ)...............  ........        X   .........   Mr. Scott (GA)..        X   ........  .........
Mr. Murphy.....................  ........        X   .........   Mr. Davis (AL)..        X   ........  .........
Ms. Ginny Brown-Waite (FL).....        X   ........  .........  .................  ........  ........  .........
Mr. Barrett (SC)...............  ........        X   .........  .................  ........  ........  .........
Ms. Harris.....................  ........  ........  .........  .................  ........  ........  .........
Mr. Renzi......................  ........        X   .........  .................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------
*Mr. Sanders is an independent, but caucuses with the Democratic Caucus.


          An amendment by Ms. Waters (as modified by unanimous 
        consent), no. 7, prohibiting the use of contracting 
        authority under the Defense Production Act for the 
        production of chemical and biological weapons, was NOT 
        AGREED TO by a record vote of 23 yeas and 43 nays 
        (Record vote no. FC-7).

                                              Record vote no. FC-7
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Oxley......................  ........        X   .........   Mr. Frank (MA)..        X   ........  .........
Mr. Leach......................  ........        X   .........   Mr. Kanjorski...        X   ........  .........
Mr. Bereuter...................  ........        X   .........   Ms. Waters......        X   ........  .........
Mr. Baker......................  ........        X   .........   Mr. Sanders*....        X   ........  .........
Mr. Bachus.....................  ........        X   .........   Mrs. Maloney....        X   ........  .........
Mr. Castle.....................  ........        X   .........   Mr. Gutierrez...  ........  ........  .........
Mr. King.......................  ........        X   .........   Ms. Velazquez...        X   ........  .........
Mr. Royce......................  ........        X   .........   Mr. Watt........        X   ........  .........
Mr. Lucas (OK).................  ........        X   .........   Mr. Ackerman....        X   ........  .........
Mr. Ney........................  ........        X   .........   Ms. Hooley (OR).  ........        X   .........
Mrs. Kelly.....................  ........        X   .........   Ms. Carson (IN).        X   ........  .........
Mr. Paul.......................  ........        X   .........   Mr. Sherman.....  ........  ........  .........
Mr. Gillmor....................  ........        X   .........   Mr. Meeks (NY)..        X   ........  .........
Mr. Ryun (KS)..................  ........        X   .........   Ms. Lee.........        X   ........  .........
Mr. LaTourette.................  ........        X   .........   Mr. Inslee......        X   ........  .........
Mr. Manzullo...................  ........        X   .........  Mr. Moore........        X   ........  .........
Mr. Jones (NC).................  ........        X   .........   Mr. Gonzalez....  ........        X   .........
Mr. Ose........................  ........        X   .........   Mr. Capuano.....        X   ........  .........
Mrs. Biggert...................  ........        X   .........  Mr. Ford.........        X   ........  .........
Mr. Green (WI).................  ........        X   .........   Mr. Hinojosa....  ........        X   .........
Mr. Toomey.....................  ........        X   .........   Mr. Lucas (KY)..  ........        X   .........
Mr. Shays......................  ........        X   .........   Mr. Crowley.....        X   ........  .........
Mr. Shadegg....................  ........        X   .........   Mr. Clay........        X   ........  .........
Mr. Fossella...................  ........        X   .........   Mr. Israel......        X   ........  .........
Mr. Gary G. Miller (CA)........  ........        X   .........   Mr. Ross........  ........        X   .........
Ms. Hart.......................  ........        X   .........   Mrs. McCarthy           X   ........  .........
                                                                 (NY).
Mrs. Capito....................  ........        X   .........   Mr. Baca........        X   ........  .........
Mr. Tiberi.....................  ........        X   .........   Mr. Matheson....  ........        X   .........
Mr. Kennedy (MN)...............  ........        X   .........   Mr. Lynch.......  ........  ........  .........
Mr. Feeney.....................  ........        X   .........   Mr. Miller (NC).        X   ........  .........
Mr. Hensarling.................  ........        X   .........   Mr. Emanuel.....  ........        X   .........
Mr. Garrett (NJ)...............  ........        X   .........   Mr. Scott (GA)..  ........        X   .........
Mr. Murphy.....................  ........        X   .........   Mr. Davis (AL)..        X   ........  .........
Ms. Ginny Brown-Waite (FL).....  ........        X   .........  .................  ........  ........  .........
Mr. Barrett (SC)...............  ........        X   .........  .................  ........  ........  .........
Ms. Harris.....................  ........  ........  .........  .................  ........  ........  .........
Mr. Renzi......................  ........        X   .........  .................  ........  ........  .........
----------------------------------------------------------------------------------------------------------------
*Mr. Sanders is an independent, but caucuses with the Democratic Caucus.


    The following amendments were also considered:

          An amendment by Ms. Waters, no. 1, preventing 
        conflict of interest for all contracts, was ruled 
        nongermane by the Chair.
          An amendment by Mr. Paul, no. 3, restricting the use 
        of title III authority only to military and military 
        purposes, was not agreed to by a voice vote.
          An amendment by Mr. Meeks, no. 5, requiring the 
        Secretary of Defense to submit a report to the 
        Financial Services Committee on the extent to which 
        contracts under the DPA have been with minority and 
        women owned businesses, was agreed to by a voice vote.
          An amendment by Ms. Waters, no. 6, of chemical and 
        biological weapons, was ruled nongermane by the Chair.

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee made findings that are 
reflected in this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    The Executive Branch agencies delegated authorities of the 
Act will exercise them judiciously, providing appropriate 
materials for national security at home and abroad while 
minimizing effects on the economy that might result from market 
distortions.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of budget authority, entitlement authority, or 
tax expenditures or revenues contained in the cost estimate 
prepared by the Director of the Congressional Budget Office 
pursuant to section 402 of the Congressional Budget Act of 
1974.

                        COMMITTEE COST ESTIMATE

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 28, 2003.
Hon. Michael G. Oxley,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1280, the Defense 
Production Act Reauthorization of 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are David 
Newman (for federal costs) and Adam Talaber (for the private-
sector impact).
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

H.R. 1280--Defense Production Act Reauthorization of 2003

    H.R. 1280 would extend the authorities of the Defense 
Production Act of 1950 (DPA) for an additional four years 
through September 30, 2007, and would authorize all necessary 
appropriations for that period. The DPA provides the President 
the authority to require preferential performance on contracts 
and orders to meet approved national defense requirements; and 
to allocate materials, services and facilities as necessary to 
promote the national defense in a major national emergency 
(Title I); authorizes loan guarantees, direct loans, direct 
purchases, and purchase guarantees for those goods necessary 
for national defense (Title III); and allows the President to 
void international mergers that would adversely affect national 
security (Title VII). These authorities are set to expire on 
September 30, 2003. CBO estimates that implementing H.R. 1280 
would cost about $110 million over the 2004-2008 period, 
assuming appropriation of the necessary amounts. The bill would 
not affect direct spending or receipts.
    The bill would authorize the appropriation of such sums as 
necessary for purchases and purchase guarantees under title III 
to correct for shortfalls in domestic industrial capacity. 
Although the DPA gives the Department of Defense (DoD) the 
authority to make direct loans and loan guarantees, under an 
agreement with the Office of Management and Budget, DoD does 
not use those authorities.
    In recent years, DoD has used the authority to purchase 
equipment that it furnishes to contractors for manufacturing 
radiation-hardened microprocessors. Section 3 of this bill 
would increase the limit on total obligations for this purpose 
from $50 million to $200 million, permitting the expenditure of 
funds requested by the President for fiscal year 2004. A 
significant portion of spending for this purpose, however, will 
come from funds already appropriated for fiscal year 2003. 
Thus, the estimated costs for implementing H.R. 1280 include 
only the additional outlays that would come from future 
appropriations.
    Appropriations for purchase and purchase guarantees under 
the DPA have averaged about $23 million a year over the 1992-
2003 period, ranging from $100 million in 1994 to $3 million in 
2001. (A purchase guarantee is a commitment to buy a specified 
quantity of defense goods if the contractor cannot sell it 
elsewhere). No money was appropriated for this purpose in 1992, 
1993, or over the 1996-1999 period. More recently, the Congress 
appropriated $40 million in 2002 and $72 million in 2003 for 
these purposes. The Administration has requested an 
appropriation of $68 million for 2004. Because of the sharp 
variations in annual funding, specific yearly amounts for the 
indefinite authorization are difficult to project.
    Based on information from DoD and the historical average 
over the past 10 years, CBO estimates that extending the 
authorization would require about $140 million in 
appropriations for the four-year period covered by the bill. 
Based on historical spending patterns, CBO estimates outlays 
from that funding would total $110 million over the 2004-2008 
period.
    To date, no funds have been appropriated for other 
provisions of the DPA. As a result, CBO has no basis for 
estimating any additional costs that could be triggered by 
extending its authorization for three more years.
    Section 4 of the Unfunded Mandates Reform Act excludes from 
the application of that act any legislative provisions that are 
necessary for the national security. CBO has determined that 
the provisions of the DPA would fall under that exclusion.
    The CBO staff contacts are David Newman (for federal costs) 
and Adam Talaber (for the private-sector impact). This estimate 
was approved by Peter H. Fontaine, Deputy Assistant Director 
for Budget Analysis.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
defense and general welfare of the United States), and clause 3 
(relating to the power to regulate foreign and interstate 
commerce).

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section establishes the short title of the bill, the 
``Defense Production Act Reauthorization of 2003.''

Section 2. Reauthorization of Defense Production Act of 1950

    This section extends authorization of the act for 4 years, 
to September 30, 2007. It also makes permanent section 708 of 
the Act which provides that no person shall be held liable for 
damages or penalties for any act or failure to act resulting 
directly or indirectly from compliance with a rule, regulation, 
or order issued pursuant to the DPA.

Section 3. Resource shortfall for radiation-hardened electronics

    This section lifts the $50 million per-project cap for 
activities taken under section 303 of the Act, to $200 million 
for a single project, involving radiation-hardened electronics.

Section 4. Clarification of Presidential authority

    This section amends section 705 of the Act to clarify 
Presidential authority to assess the capacity of the national 
defense industrial base.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

DEFENSE PRODUCTION ACT OF 1950

           *       *       *       *       *       *       *


TITLE VII--GENERAL PROVISIONS

           *       *       *       *       *       *       *


  Sec. 705. (a) The President shall be entitled, while this Act 
is in effect and for a period of two years thereafter, by 
regulation, subpoena, or otherwise, to obtain such information 
from, require such reports and the keeping of such records by, 
make such inspection of the books, records, and other writings, 
premises or property of, and take the sworn testimony of, and 
administer oaths and affirmations to, any person as may be 
necessary or appropriate, in his discretion, to the enforcement 
or the administration of this Act and the regulations or orders 
issued thereunder. 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. 
The President shall issue regulations insuring that the 
authority of this subsection will be utilized only after the 
scope and purpose of the investigation, inspection, or inquiry 
to be made have been defined by competent authority, and it is 
assured that no adequate and authoritative data are available 
from any Federal or other responsible agency. In case of 
contumacy by, or refusal to obey a subpoena served upon, any 
person referred to in this subsection, the district court of 
the United States for any district in which such person is 
found or resides or transacts business, upon application by the 
President, shall have jurisdiction to issue an order requiring 
such person to appear and give testimony or to appear and 
produce documents or both; and any failure to obey such order 
of the court may be punished by such court as a contempt 
thereof.

           *       *       *       *       *       *       *

  Sec. 711. (a) * * *
  (b) Title III Authorization.--There are authorized to be 
appropriated for each of fiscal years [1996 through 2003] 2004 
through 2007, such sums as may be necessary to carry out title 
III.

           *       *       *       *       *       *       *

  Sec. 717. (a) Title I (except section 104), title III, and 
title VII (except sections [708] 707, 708, and 721), and all 
authority conferred thereunder, shall terminate at the close of 
September 30, [2003] 2007: Provided, That all authority hereby 
or hereafter extended under title III of this Act shall be 
effective for any fiscal year only to such extent or in such 
amounts as are provided in advance in appropriation Acts. 
Section 714 of this Act, and all authority conferred 
thereunder, shall terminate at the close of July 31, 1953. 
Section 104, title II, and title VI of this Act, and all 
authority conferred thereunder shall terminate at the close of 
June 30, 1953. Title IV and V of this Act, and all authority 
conferred thereunder, shall terminate at the close of April 30, 
1953.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

    No one questions the need for the Federal Government to 
obtain the necessary resources to fulfill its constitutional 
role of providing for the common defense. However, the Federal 
government must fulfill this duty in a manner that does not 
conflict in any way with the Constitution or endanger 
republican government. The Defense Production Reauthorization 
Act (DPA), which gives almost unchecked power to the executive 
to interfere in the economy in the name of ``national 
security,'' fails both of these standards. In fact, when I 
inquired at the sole hearing held on this bill as to which 
section of the Constitution authorized such sweeping grants of 
power to the Executive, I was greeted by silence from the 
``expert'' witnesses!
    Under this bill, the President is given authority to void 
private contracts in order to ensure that federal defense 
priorities, as determined by the executive, are met. The only 
limitation on the President's judgment is a requirement that he 
submit a series of ``findings'' to Congress. The Executive also 
has what appears to be unchecked authority to use financial 
incentives such as loan guarantees, direct loans, and purchase 
guarantees to ensure production of items he determines are in 
the national interest.
    Congress appears to have no ability to perform any real 
oversight of a Presidential action under the DPA. In fact, my 
office has been informed by the Congressional Research Service 
that past Presidents may have invoked the DPA without even 
submitting the required findings to Congress!
    The wide grant of unchecked power to the Executive runs 
counter to the intent of the drafters of the Constitution. The 
Founders carefully limited the executive power because they 
recognized that an executive with unfettered power was a threat 
to liberty.
    In recent years we have seen administrations of both 
parties undermine the Constitutional separation of powers via 
enhanced reliance on executive orders and unilateral decision-
making. The Defense Production Reauthorization Act provides 
Congressional blessing to this usurpation of power, and not 
just in areas clearly related to national defense. For example, 
the DPA has been used to justify Federal interference in the 
energy market. It is an open question what other exercise of 
federal power could be justified as related to defense. For 
example, federal education programs have been justified on the 
grounds that an educated population is vital to national 
defense, so perhaps a future president will use DPA to impose a 
national curriculum! At the least, it has been confirmed that 
the DPA will be invoked to reduce Congress' role in overseeing 
the use of taxpayer dollars in the reconstruction of Iraq.
    I am also concerned that this bill violates the Fifth 
Amendment's takings clause. In particular, DPA allows the 
government to seize private property by interfering with the 
performance of private contracts in order to give a greater 
priority to military production. This action reduces the value 
of the affected parties' proprietary interests, and thus is a 
taking, requiring the government to provide just compensation 
to the affected party. The Fifth Amendment intends to assure 
that the government does not unfairly burden one group of 
citizens in carrying out its constitutional functions. By not 
providing for just compensation, DPA allows the executive to 
unfairly burden one group of citizens for costs that the 
Constitution requires be shared among the entire population.
    In conclusion, the Defense Production Act gives the 
executive unchecked power to meddle in the economy, flying the 
face of the original constitutional structure and endangering 
the very liberty it claims to protect. Therefore, I must oppose 
this bill.
                                                          Ron Paul.

                                
