ÆäÀÌÁö À̹ÌÁö
PDF
ePub

We know that one of the main reasons for cost overruns in weapons systems is the long delay in producing these items. It is fair to say that title I does serve to lessen the cost impact resulting from delays. If they were not there and defense contracts were put in just ordinary sequence, they would undoubtedly take longer to complete.

There are critics, however, who say and insist that industry compliance with title I priorities and allocations measures has been uneven, that especially below the prime contractor level, these priority ratings are fairly often ignored.

Let me turn to title III. This has to do with the expansion of production capacity and supply.

The purpose here is basically to provide government assistance or support in maintaining the viability of industries which are considered essential to the defense of the country. There are a variety of ways in which the government provides assistance. It can guarantee loans from the private sector. It can make direct loans. It can purchase materials directly or make commitments to purchase materials as a way of stimulating production of key and critical materials.

The impact of title III during the Korean war was considerable. It has been said that aluminum production was doubled during the 3-year period. That tungsten production was quadrupled. And that the titanium industry was pretty much created from scratch.

Title III has fallen into relative disuse during the last 15 years. Part of the reason for this has been that during the Vietnam war, and in subsequent years, the feeling was prevalent that industrial preparedness was not as important as it had been in the past. It was widely believed that if there was a major conventional confrontation or war, it would quickly escalate into a nuclear conflict and that it would be over very quickly, one way or the other. On the basis of this scenario, the need for a sustained industrial mobilization effort just simply wasn't there.

There is, I believe, a process of reconsideration of this particular strategic outlook going on at this time.

The last major non-fuel use of title III occurred in 1967, although I may be corrected later on by the people from FEMA. In 1967, $83 million was provided for the development of the Duval Sierrita copper mines.

In 1980, DOD unsuccessfully tried to get funds appropriated for fiscal year 1982 to expand production of four key materials that it thought was absolutely essential for the defense and security of the country. The concern was that we were overly—

Chairman LAFALCE. Mr. Lockwood, under title III, the President, in his budget, is requesting an additional $200 million, as I understand it.

Mr. LOCKWOOD. Currently. Yes. I was saying that up until recently there had been very little utilization of title III. I was talking about the effort in 1980 for fiscal year 1982 to expand production of four key materials. That was unsuccessful. But DOD felt that it was necessary because of the need to be less dependent on foreign sources for cobalt and a number of other critical materials.

There was a fuel-related use of title III in 1980. An Energy Security Act amendment to the DPA provided $3 billion at that time for the development of synthetic fuels.

The most recent effort to put life into title III was the Defense Industrial Base Revitalization Act of 1982, H.R. 5540. The dual purpose of this bill was to strengthen the defense industrial base and to provide stimulus to the lagging economy. It had provisions relating to the modernization of industry, particularly middle-size and small industries, and the training of skilled labor and the provision of equipment to schools of engineering and other institutions of higher education.

The outcome of this particular effort or initiative was that, after the bill was referred to this Subcommittee on Economic Stabilization, a hearing was held. The bill was reported out and debated at length on two occasions on the House floor, but without resolution, and, therefore, it expired at the end of the 97th Congress.

Chairman LAFALCE. That was as close to a filibuster as you can come in the House. [Laughter.]

Mr. LOCKWOOD. Yes, I know. In conclusion, let me turn to title VII, general provisions. Some of these provisions are currently in force; others are moribund or have been deleted. The provisions in force include voluntary agreements and the national defense executive reserve.

I know that Mr. Krueger will discuss both these programs with you. Basically, the purpose of these measures is to provide for cooperation between government and industry in terms of meeting the potential requirement of a mobilization effort.

Provisions of title VII that are no longer in force involve three organizations, which are no longer in existence. One was the creation of the National Commission on Supplies and Shortages, the funding for which was terminated after it had issued a report in 1977. The Cost Accounting Standards Board had its funding terminated in 1980. Its purpose was essentially to provide uniform cost accounting standards for defense contractors. In the last 2 years, the functions of the Cost Accounting Standards Board have been in a state of limbo. I may not be current on this, but I think these functions have been reassigned, or at least the intention is to reassign them to the Office of Federal Procurement Policy at OMB.

Finally, there was the Joint Committee on Defense Production, which was created in 1950. Its purpose was to serve as a centralized forum for coordinating policies and procedures having to do with preparedness and mobilization issues. It issued a number of studies and held many hearings.

In 1970, it was discontinued when the congressional committee system was reorganized. The functions of the Joint Committee were at that time reassigned to the House and Senate Banking committees.

That concludes my statement. I hope that I have been able to provide something of a historical overview to provide a background for the presentation by Mr. Krueger.

Chairman LAFALCE. That's been extremely helpful, Mr. Lockwood. Before we go to Mr. Brinkerhoff or Krueger, in whatever order they want to, I just want to get some idea of who is present because the briefings that we have are for the purpose of educating

the Members and their staff. I will call off the names of the Members and if their staff are here, would they just say "here" or "aye."

Lundine?

[Answer in the affirmative.]

Chairman LAFALCE. Vento?
[Answer in the affirmative.]
Chairman LAFALCE. D'Amours?
[No response.]

Chairman LAFALCE. Oakar?
[Answer in the affirmative.]
Chairman LAFALCE. Minish?
[Answer in the affirmative.]
Chairman LAFALCE. Fauntroy?
[No response.

Chairman LAFALCE. Schumer.
[No response.]

Chairman LAFALCE. Coyne. [No response.]

Chairman LAFALCE. Roemer.

[blocks in formation]

[No response.]

Chairman LAFALCE. Ridge.

[No response.]

Chairman LAFALCE. Mr. Brinkerhoff or Krueger, please proceed.

STATEMENT OF JOHN R. BRINKERHOFF, ACTING ASSOCIATE DIRECTOR FOR NATIONAL PREPAREDNESS, FEDERAL EMERGENCY MANAGEMENT AGENCY

Mr. BRINKERHOFF. Yes, Mr. Chairman. We welcome the opportunity to provide information on the Defense Production Act. I am the Acting Associate Director for National Preparedness Programs. The responsibility of the Associate Director for National Preparedness Programs is to do the planning and policy formulation, and to

oversee and coordinate the Federal Government programs to assure that the Nation is ready, if necessary, to mobilize for, and engage in, a war.

The coverage of my responsibilities extends from civil preparedness, civil defense, mobilization to support

Chairman LAFALCE. You said something, Mr. Brinkerhoff, that I want to underscore. The Defense Production Act is not something that we need in time of war; it's something that we need to be prepared for war, should war come.

Mr. BRINKERHOFF. That is correct.

Chairman LAFALCE. OK.

Mr. BRINKERHOFF. We need it before in order to be prepared and we would need it during the mobilization in order to make sure that we could mobilize effectively and efficiently.

Chairman LAFALCE. A lot of individuals say the Defense Production Act is a wartime measure. It is, first and foremost, a pre-wartime measure and then, second, a wartime measure, correct?

Mr. BRINKERHOFF. Yes. You have to prepare in advance; otherwise, we won't do very much.

Mr. SHUMWAY. Well, the titles that had expired dealt with wartime situations, didn't they.

Chairman LAFALCE. I was thinking of all seven titles when I asked the question. [Laughter.]

Mr. BRINKERHOFF. I want to underscore the importance of the Defense Production Act. Providing for the common defense is an important function of Government; perhaps the single most important function of Government. Congress and the President share responsibility for national defense. While the President has some authority inherent in his constitutional role as Commander in Chief, most of the President's authority derives from authority granted to him by the Congress through law.

The two most important statutes which give the President authority to plan, prepare and provide for the national defense are the National Security Act of 1947 and the Defense Production Act of 1950. Both of these provide in peacetime the authority to maintain preparedness against the possibility of war. This is very important.

In addition, the President would seek from the Congress additional authorities during the time of progressive tension, mobilization, and increased readiness. We do have on the shelf some standby legislation which we would provide to the Congress.

The immediate problem that we face-

Chairman LAFALCE. I would like you to submit that standby legislation to this subcommittee just so that we could see what it looks like.

Mr. BRINKERHOFF. YES, SIR.

Chairman LAFALCE. Thank you.

[The standby draft legislation submitted for the record by Mr. Brinkerhoff appears at the end of the hearing as part of the appendix.]

Mr. BRINKERHOFF. The immediate problem that we face is that the Defense Production Act will expire on March 31, unless the Congress extends it. An expiration of the DPA would be bad. The

DPA has been extended 27 times in 321⁄2 years, about 1.2 years per extension.

We have sent to the Speaker of the House and the President of the Senate an administration bill proposing a simple extension of the Defense Production Act for a period of 5 years. We urge the passage of this legislation. We think that it would provide us the necessary stability and authority

Chairman LAFALCE. When was that bill sent from the administration to the Speaker?

Mr. BRINKERHOFF. It was signed off by our general counsel yesterday. I can't say that it's been delivered, but it's on the way. Mr. LAFALCE. All right. Would you make sure that we get a copy of that also?

Mr. BRINKERHOFF. Yes.

[A letter from George Jett, General Counsel of the Federal Emergency Management Agency to Vice President George Bush, dated March 1, 1983, with attached proposed legislation to extend the Defense Production Act of 1950 for 5 years follows:]

« ÀÌÀü°è¼Ó »