Senate Defense Bill Has Supply Chain Exclusion, Border, Berry & Iran Provisions

S. 3454 was reported by the Senate Armed Services Committee on June 4, 2010. Most recently, the Senate rejected an attempt to proceed to consideration of S. 3454 on September 21, 2010, and the Senate set the measure aside. The House passed its own FY 2011 NDAA bill (H.R. 5136) on May 28, 2010 (see end of article for details).

Senate May Consider S. 3454 After November Elections

According to a press release from Senator Kyl, the Senate Republican Whip, S. 3454 is among the legislation that the Senate may consider when it returns for a lame duck session after the November 2010 elections.

Trade-related provisions of S. 3454 include a procurement exclusion for unacceptable supply chain risk, an expanded procurement ban for Iran, a military uniform supply chain report, Berry amendment changes, etc. Highlights of those and other provisions, as presented in S. Rept. 111-201 and the bill text, include:

Exclusion of Suppliers for Unacceptable Supply Chain Risk

The DoD Secretary would be authorized to take certain steps in the procurement process to reduce supply chain risk in the acquisition of sensitive information technology systems that are (i) used for intelligence or cryptologic activities; (ii) used for command and control of military forces; or (iii) form an integral part of a weapons system.

The DoD Secretary would be authorized to: (1) reduce supply chain risk by establishing qualification requirements in accordance with 10 USC Section 2319; (2) provide for the consideration of supply chain risk as a significant evaluation factor in certain solicitations; and (3) exclude a particular source from consideration where necessary to avoid an unacceptable supply chain risk.

The term ‘‘supply chain risk’’ would be defined as the risk that an adversary may sabotage, maliciously introduce unwanted function, or otherwise subvert the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of a system so as to surveil, deny, disrupt, or otherwise degrade the function, use, or operation of the system or item.

Authority expiration. The authority to exclude sources as provided above would expire five years after the date of enactment.

Report to Congress. DoD would be required to report to Congress, not later than 60 days after the end of each FY, on the use of the exclusion authority during the previous FY.

(The Senate Armed Services Committee notes in S. Rept. 111-201 that DoD found that the globalization of the information technology industry has increased its vulnerability to attacks on its systems and networks. DoD found an increasing risk that critical systems and networks could be exploited through the introduction of counterfeit or malicious code and other defects introduced by suppliers of systems or components.)

Deployment to Southern Border of National Guard to Assist CBP

The DoD Secretary would be required to deploy not fewer than 6,000 National Guard personnel to perform operations and missions along the southern land border of the U.S. for the purposes of assisting the U.S. Customs and Border Protection in securing the border. The DoD Secretary would be required to maintain the deployment of National Guard units and personnel along the southern land border of the U.S. until it is certified to Congress that the Federal Government has achieved operational control of the border.

Ban on DoD Procurements from Entities Engaging in Energy Activities in Iran

DoD would be prohibited from entering into any contract for the procurement of any goods or services from any person or entity through a contract, grant, loan, or loan guarantee in an amount in excess of $1 million unless the person or entity certifies to the DoD Secretary that the person or entity is not:

• in violation of the Iran Sanction Act of 1996, as amended;
• has not engaged in the sale of refined petroleum products to Iran;
• has not engaged in an activity that could contribute to enhancing the ability of Iran to import refined petroleum;
• has not engaged in the selling, leasing, or otherwise providing to Iran any good, services, or technology that could contribute to maintenance or expansion of the capacity of Iran to produce refined petroleum products; or
• does not own or control any person or entity that engage in such activity.

The Secretary of Defense could waive the prohibition if the Secretary determines that the procurement is essential to the national security interests of the U.S.

Presidential Report to Congress on Sanctions Against Iran

The President would be required to submit to Congress a report on U.S. engagement with Iran not later than January 31, 2011. (Information required to be included in this report includes sanctions against Iran, nuclear and missile activities, etc.

Addition of Export Safeguards During R&D Phase of DoD Acquisition Programs

The DoD Secretary would be authorized to carry out activities for the design and incorporation of exportability features - such as technology protection and capability differentiation features - into defense systems during the research and development phase of DoD acquisition programs. This authority would expire on September 30, 2016. The DoD Secretary would be required to submit an annual report on the defense systems for which exportability features were incorporated.

Transport of Commercial Cargo by DoD When Space Otherwise Unavailable

S. 3454 would amend 10 USC Section 2649 to:

• expand the means by which transportation may be provided to civilian passengers and commercial cargo to include vehicles and aircraft operated by the DoD; and
• allow DoD to credit any amounts received in reimbursement to the appropriation, fund, or account incurring the expense of providing the transportation, when such transportation is provided in response to an emergency, disaster response, or humanitarian request.

(10 USC Section 2649 currently authorizes the DoD Secretary to transport civilian passengers and commercial cargoes on vessels operated by DoD, when such transportation is not commercially available. Under the current language, reimbursement must be made at rates not less than those charged by commercial companies for the same services, and amounts received are deposited in the Treasury as miscellaneous receipts.)

Modification of Berry Amendment for Hand or Measuring Tools

10 USC Section 2533a would be amended to indicate that the Berry Amendment’s domestic non-availability exception applies to the purchase of hand or measuring tools. (According to S. Rept. 111-201, this provision is needed to ensure that DoD has continued access to hand or measuring tools that are not available from domestic sources.)

Report on Supply Chain for Fire Resistant Fiber for Military Uniform Production

The Government Accountability Office would be required to report to Congress on the supply chain for fire resistant fiber for the production of military uniforms.

House-Passed NDAA Contains Some, But Not All, of S. 3454’s Provisions

The House passed its own FY 2011 NDAA (H.R. 5136) on May 28, 2010. H.R. 5136 includes provisions which are identical or similar to some, but not all of the provisions highlighted above. For example, H.R. 5136 does not contain the provision which allows the DoD Secretary to exclude certain suppliers who represent an unacceptable supply chain risk from procurement of national security systems.

(See ITT’s Online Archives or 06/21/10 news, 10062166, for BP summary of H.R. 5136.)

S. Rept. 111-201 available here.