MAINTENANCE AND IMPROVEMENT OF THE DEFENSE INDUSTRIAL BASE

SEC. 821. MAINTENANCE AND IMPROVEMENT OF THE DEFENSE INDUSTRIAL BASE (a) Findings.—Congress finds the following: (1) A strong defense industrial base in the United States is essential to the national security and significantly enhances the capability of United States manufacturers and producers— (A) to develop technologically superior defense material rapidly and to produce such material efficiently in cost-effective quantities during peacetime; and (B) to expand productive capacity rapidly to meet the demands of a national emergency. (2) A strong and responsive defense industrial base is a basic deterrent to aggression and, thus, helps to preserve peace. (3) Studies conducted over a 10-year period by Congress, the General Accounting Office, the Department of Defense, and others have consistently shown a steady, unchecked erosion of the defense industrial base in the United States. (4) Despite the uniformly adverse findings contained in the reports on such studies, the United States still lacks a coherent industrial base policy that is directly linked to national security strategy. (5) Reliable methods for assessing the weaknesses and strengths of the defense industrial base have not been utilized. (6) The development and implementation of an effective program for the restoration and maintenance of the defense industrial base is unlikely to occur without improved centralized policy direction and management. (7) Existing programs and authorities designed to restore and maintain the defense industrial base have received inconsistent and, frequently, inadequate allocations of resources and 102 STAT. 2014management attention from the military departments and the Defense Agencies because the Office of the Secretary of Defense has not exercised strong leadership in defense industrial base management. (8) Procurement policies, regulations, and practices of the Department of Defense do not sufficiently encourage— (A) investment in advanced manufacturing technology and modernization of manufacturing facilities and equipment; (B) the entry of efficient commercial producers into the defense procurement market; and (C) continued participation of efficient producers in defense procurement competitions. (b) Amendments to Title 10.—(1) Chapter 148 of title 10, United States Code, is amended— (A) by redesignating sections 2501 and 2502 as sections 2506 and 2507, respectively; and (B) by striking out the chapter heading and the table of sections and inserting in lieu thereof the following: “CHAPTER 148—DEFENSE INDUSTRIAL BASE “Sec. “2501. Centralized guidance, analysis, and planning. “2502. Policies relating to defense industrial base. “2503. Defense industrial base office. “2504. Defense memoranda of understanding. “2505. Offset policy; notification. “2506. Limitation on use of funds: procurement of goods which are other than American goods. “2507. Miscellaneous procurement limitations. “§ 2501. Centralized guidance, analysis, and planning “The Secretary of Defense, acting through the Under Secretary of Defense for Acquisition, shall— “(1) provide overall policy guidance and direction to the military departments and the Defense Agencies on matters relating to the maintenance, expansion, and readiness of the defense industrial base of the United States; “(2) analyze the capabilities of the defense industrial base of the United States to fulfill the requirements of national defense strategy in time of peace and the expanded requirements of national defense strategy in time of war or national emergency; “(3) develop clear standards for assessing military mobilization requirements and the manner in which those requirements will be met; “(4) develop and direct the implementation of plans, programs, and policies that promote the ability of the defense industrial base of the United States to fulfill the requirements of the Department of Defense; and “(5) identify and plan for the procurement of items of supply that— “(A) are suitable substitutes for military standard items of supply, or suitable substitutes for subsystems or components of military standard items of supply, that are anticipated to be unavailable from existing sources in quantities that are sufficient to meet planned requirements in time of war or national emergency; and 102 STAT. 2015 “(B) are commercially available from domestic sources. “§ 2502. Policies relating to defense industrial base “(a) Acquisition Policies.—The Secretary of Defense, acting through the Under Secretary of Defense for Acquisition, shall establish and implement policies requiring— “(1) for each major defense acquisition program, an analysis of the capabilities of the defense industrial base to develop, produce, maintain, and support such program; “(2) the consideration of requirements for efficient manufacture during the design and production of the systems to be procured under the major defense acquisition program; “(3) the use of advanced manufacturing technology, processes, and systems during the research and development and production phases of the acquisition of a weapon system under a major defense acquisition program; “(4) to the maximum extent practicable for each major defense acquisition program, the development of an acquisition plan that provides for contract solicitations which encourage competing offerors to acquire, for use in the performance of the contract, modem technology, production equipment, and production systems (including hardware and software) that increase the productivity of the offerors and reduce life-cycle costs; “(5) the encouragement of domestic source investment in advanced manufacturing technology production equipment and processes through— “(A) recognition of the contractor’s investment in advanced manufacturing technology production equipment and processes in the development of the contract objective; and “(B) increased emphasis in source selections to the efficiency of production; “(6) the expanded use of commercial manufacturing processes rather than processes specified by the Department of Defense; “(7) elimination of barriers to, and facilitation of, the integrated manufacture of commercial items and items being produced under defense contracts; and “(8) the expanded use of commercial products as set forth in section 2325 of this title. “(b) Analysis.—(1) In the conduct of any analysis required under subsection (a)(1), the following factors, as appropriate, may be considered: “(A) The availability of essential raw materials, special alloys, and composite materials. “(B) The availability of components, subsystems, production equipment, and facilities that are essential for— “(i) the sustained production of a system that is fully capable of performing its purpose; “(ii) the uninterrupted maintenance and repair of such system; and “(iii) the sustained operation of such system. “(C) The availability of required special tooling and production test equipment. “(D) The identification of components or subsystems that are available solely from sources outside the United States. 102 STAT. 2016 “(E) Planned alternatives, if appropriate, for fulfilling requirements that during peacetime are fulfilled by sources outside the United States. “(2) In the conduct of the analysis required under subsection (a)(1), the Under Secretary shall minimize the paperwork burden on the contractor, its subcontractors, and suppliers. “(c) Assessments.—(1) The Secretary of Defense, acting through the Under Secretary of Defense for Acquisition, shall ensure that, for each major defense acquisition program— “(A) the capability of the domestic defense industrial base to meet requirements for that program has been assessed by the military department or Defense Agency carrying out such program; and “(B) the capability of the domestic defense Industrial base to meet the aggregate requirements for all such programs has been assessed in the Office of the Secretary of Defense. “(2) For purposes of this subsection, the term ‘domestic defense industrial base’ means firms engaged in production in the United States and Canada. “§ 2503. Defense industrial base office “The Under Secretary of Defense for Acquisition may establish within the Office of the Under Secretary of Defense for Acquisition a defense industrial base office to be the principal office in the Department of Defense for the development of policies and plans regarding the conduct of programs for the improvement of the defense industrial base of the United States. Such an office shall, at a minimum— “(1) develop and propose plans and programs for the maintenance and fostering of defense industrial readiness in the United States; “(2) develop and propose plans and programs to encourage the use by the defense industries of the United States of advanced manufacturing technology and processes and investment in improved productivity; “(3) propose, consistent with existing law, the repeal or amendment of the regulations of the Department of Defense prescribed as part of the Federal Acquisition Regulation (the single system of Government-wide procurement regulation as defined in section 4(4) of the Office of Federal Procurement Policy Act) and such other regulations and policies as may be necessary to eliminate any adverse effect that the regulations and policies may have on investment in improved productivity; and “(4) evaluate and propose for testing innovative ideas for improving defense industrial readiness in the United States, including ideas for improving— “(A) manufacturing processes; and “(B) the acquisition procedures of the Department of Defense.”. (2) The items relating to chapter 148 in the tables of chapters at the beginning of part IV of subtitle A of title 10, United States Code, and at the beginning of such subtitle, are each amended to read as follows: “148. Defense Industrial Base 2501”. 102 STAT. 2017 (c) Analysis of Defense Industrial Base Capability.—(1) The Under Secretary of Defense for Acquisition shall require the Secretary of each military department to provide to the Under Secretary at least one analysis of the type described in section 2502(a)(1) of title 10, United States Code (as added by subsection (b)) for an acquisition program carried out by such department. The Under Secretary shall compile and analyze the data obtained from such analysis in order to ascertain whether the industrial base is capable of supporting each such program. (2) A program may not be selected for an analysis under this subsection if production of the system to be acquired under such program has begun. (3) All analyses required under this subsection shall be completed not later than September 30, 1990. (4) Not later than February 1, 1991, the Under Secretary of Defense for Acquisition shall submit to the Committees on Armed Services of the Senate and the House of Representatives a report on the analyses required under this subsection.