DoD Supply Chain Security Bill with Export, Border, Cargo, Berry, & Other Trade Provisions Goes to President

H.R. 6523 is now awaiting signature by the President. Highlights of the trade-related provisions in H.R. 6523 include:

Supply Chain Risk in Procurement, Cybersecurity Pilots

Reducing Supply Chain Risk in National Security System Procurements

Subject to determination and notification procedures specified in the bill, the Secretaries of Defense, Army, Navy, and Air Force would be allowed to carry out the following actions and limit the disclosure of information relating to carrying them out:

• Exclude a source that fails to meet qualification standards established in accordance with the requirements of 10 USC Section 2319, for the purpose of reducing supply chain risk¹ in the acquisition of a national security system (as defined in 44 USC 3542(b).
• Exclude a source that fails to achieve an acceptable rating with regard to an evaluation factor providing for the consideration of supply chain risk¹ in the evaluation of proposals for the award of a contract or the issuance of a task or delivery order.
• Decide to withhold consent for a contractor to subcontract with a particular source or to direct a contractor for a covered system to exclude a particular source from consideration for a subcontract under the contract.

(See bill text for details on the determinations required before the head of an agency may act, the circumstances in which such determinations may be made, and the scope of the actions that may be taken pursuant to such determinations.)

These new requirements would take effect on the date that is 180 days after the date of the enactment and would apply to (1) contracts that are awarded on or after such date; and (2) task and delivery orders that are issued on or after such date pursuant to contracts that awarded before, on, or after such date. The authority provided in this section would expire three years after the date of the enactment.

Cybersecurity Pilots to Secure the Global Supply Chain, Etc.

The Secretary of Defense (Secretary) and the Secretaries of the military departments would be required to jointly carry out demonstration projects to assess the feasibility and advisability of using various business models and processes to rapidly and effectively identify innovative commercial technologies and apply such technologies to the Department of Defense (DoD) and other cybersecurity requirements.

The Secretary would be required to support or conduct pilot programs on cybersecurity with respect to the following areas:

• Processes for securing the global supply chain.
• Threat sensing and warning for information networks worldwide.
• Managed security services for cybersecurity within the defense industrial base, military departments, and combatant commands.
• Use of private processes and infrastructure to address threats, problems, vulnerabilities, or opportunities in cybersecurity.
• Processes for threat sensing and security of cloud computing infrastructure.

Not later than 240 days after the date of the enactment, and annually thereafter at or about the time of the submittal to Congress of the budget of the President for a fiscal year, the Secretary would be required, in coordination with the Secretary of Homeland Security, to submit to Congress a report on any demonstration and pilot projects carried out during the preceding year.

Berry Amendment, Buy American

Berry Amendment Waiver for Fire Resistant Rayon Fiber

10 USC Section 2533a note (the Berry Amendment) would be amended to extend authority for the Secretary to procure fire resistant rayon fiber for the production of uniforms that is manufactured in a foreign country under certain circumstances until January 1, 2015 (such authority would otherwise expire on January 28, 2013).

H.R. 5136 would also prohibit DoD contract solicitations issued before January 1, 2015 from including a provision which requires the use of fire resistant rayon fiber.

Berry Amendment Modification 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.

(A previous Senate report had stated that this provision is needed to ensure that DoD has continued access to hand or measuring tools that are not available from domestic sources.)

Photovoltaic Device Procurement Compliance with Buy American Act

The Secretary would be required to ensure that each subject contract awarded by DoD includes a provision requiring the photovoltaic devices provided under the contract to comply with the Buy American Act, subject to the exceptions to that Act provided in the Trade Agreements Act of 1979 or otherwise provided by law.

(The contracts subject to this requirement include energy savings performance contracts, utility service contracts, land leases, and private housing contracts, to the extent that such contracts result in ownership of photovoltaic devices by the DoD.)

H.R. 6523 defines photovoltaic devices as devices that convert light directly into electricity through a solid-state, semiconductor process.)

Transport of Commercial Cargo by DoD When Space Otherwise Unavailable

10 USC Section 2649 (transportation of civilian passengers and commercial cargoes on DoD vessels) would be amended 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;
• limit the amount that can be charged for transportation in response to an emergency, a disaster, or a request for humanitarian assistance to the cost of providing the transportation; 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 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.)

Maritime Security Program Extended for 10 Years

The Maritime Security program would be extended for an additional 10 years through 2025 (from 2015).

(The MSP maintains a core fleet of U.S.-flag, privately-owned ships operating in international commerce which are also available to provide capacity needed to meet Department of Defense requirements during war and national Emergencies.)

Studies, Reports, Etc.

DoD Export Control Reform Study

Not later than 120 days after the date of the enactment, the Secretary would be required to submit to specified congressional committees a report on DoD’s plans to implement the reforms to the U.S. export control system recommended by the interagency task force established by the President on August 13, 2009. The report would be required to include an assessment of the extent to which the plans to reform the export control regime will:

• impact DoD’s Defense Technology Security Administration;
• affect the role of DoD with respect to export control policy; and
• ensure greater protection and monitoring of militarily critical technologies.

GAO Study, Recommendations on Security of Southern Land Border

H.R. 6523 would require the Government Accountability Office to conduct a study of the security of the U.S. southern land border and ongoing U.S. government efforts to improve such security.

Not later than 180 days after the date of the enactment, the GAO would be required to submit to selected congressional committees a report containing the findings of the study and such recommendations as the GAO considers to be appropriate (see bill text for details of what must be addressed in the study, report, and recommendations).

Assessment, Plan for Critical Rare Earth Minerals in Defense Applications

The Secretary would be required to undertake an assessment of the supply and demand for rare earth materials in defense applications and identify which, if any, rare earth material meets both of the following criteria: (i) the rare earth material is critical to the production, sustainment, or operation of significant U.S. military equipment; and (ii) the rare earth material is subject to interruption of supply, based on actions or events outside the control of the U.S. Government.

For each rare earth material identified, the Secretary would have to develop a plan to ensure the long-term availability of such rare earth material, with a goal of establishing an assured source of supply of such material in critical defense applications by December 31, 2015.

Not later than 180 days after the date of enactment, the Secretary would have to submit to specified congressional committees a report containing the findings of the assessment and the plan.

GAO Report on Supply Chain for Fire Resistant Fiber for Military Uniforms

Not later than March 15, 2011, the Government Accountability Office would be required to submit to specified congressional committees a report on the supply chain for fire resistant fiber for the production of military uniforms.

Updated Strategic Ports Study

The Commander of the U.S. Transportation Command would be required to update the study entitled ‘‘PORT LOOK 2008 Strategic Seaports Study’’. In updating the study under this section, the Commander would be required to consider the infrastructure in the vicinity of a strategic port, including bridges, roads, and rail, and any issues relating to the capacity and condition of such infrastructure.

¹The 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 covered system so as to surveil, deny, disrupt, or otherwise degrade the function, use, or operation of such system.

(See ITT’s Online Archives or 06/21/10 news, 10062166, for BP summary of previous Defense authorization bill (H.R. 5136) which was passed by the House on May 28, 2010.

See ITT’s Online Archives or 10/15/10 news, 10101520, for BP summary of previous Defense authorization bill (S. 3454) which was being considered by the Senate prior to the November 2010 elections.)