WASHINGTON, D. C. — "The purpose of this morning's hearing on the Defense Production Act is to examine its continued relevance, as well as whatever modifications may be required as a prelude to its reauthorization."
The Defense Production Act was originally passed in response to the outbreak of war on the Korean Peninsula. Following the end of World War Two, the United States had undertaken a major reduction in the size of its armed forces. A combination of the end of war in Europe and the Pacific and the role that would be played in deterring the emerging threat from the Soviet Union by the introduction into the American arsenal of nuclear weapons seemed to dictate the need for far fewer conventional forces. With a much smaller military, industrial facilities that had been converted from commercial to military use to support the war effort reverted back to their original function. The North Korean attack on South Korea, however, jolted the American defense establishment back to reality with respect to conventional military requirements.
Increasing the size of the armed forces was one task. Equipping existing and emerging units for combat, however, was an entirely other matter. It was in that context that the Defense Production Act of 1950 was passed. The Department of Defense desperately needed American industry – that part of it that could support the new war effort – to adapt its production lines once again for military needs. The Defense Production Act was the statutory vehicle that provided the government the authorities it needed to respond to the sudden onset of war. Despite innumerable modifications over the decades, the Defense Production Act remains in large measure what it was originally intended to be: the means by which the United States Government ensures that commercial industry is responsive to the requirements of the military in the event of a crisis.
Just as the United States economy adapted to the end of the Second World War by ramping down that part of it involved in the production of military equipment, so the economy again responded to the end of the Cold War. The defense industrial base underwent a major contraction. According to the National Defense Industrial Association, some 2.5 million defense workers left that segment of the economy in the decade following the collapse of the Soviet Union, and half of the nation's 60,000 defense companies – 30,000 companies -- left the defense business. Manufacturers of many major weapons systems are precariously dependent on decreasingly smaller numbers of suppliers for components. In addition, the mind-numbing number of defense mergers and acquisitions over the past 10 years has contributed to the evolution of an increasingly precarious defense industrial base. In short, the ability of the economy to respond rapidly to emerging national crises has become the source of increasing concern to those who follow industrial base issues.
It is in this context that we are today examining the Defense Production Act. The DPA expires at the end of the current fiscal year, and it is the responsibility of this Committee to draft succeeding legislation. That is why this hearing was called. So that we can hear from some of the key federal agencies involved in using the authorities provided by the Defense Production Act. Today's panel is composed of officials from the Departments of Defense, Commerce, Homeland Security, and Energy.
As the witnesses will illuminate, Defense Production Act authorities continue to be used on a regular basis today, more than 50 years after the Act's original passage into law. It has been used to expedite production and fielding of weapon systems that have played a vital role in the conduct of military operations. The Act's authority to prioritize was key to the rapid fielding of Predator UAVs armed with Hellfire missiles and the provision to the British military of satellite communications technology essential to the conduct of joint operations in Afghanistan. It was used to procure precision guided munitions, supplies of which were being exhausted by their greater than ever rates of expenditure. Other agencies, as I've indicated, also utilize DPA authorities, as was seen in the Transportation Security Administration's use of them to acquire explosive detection devices for the nation's airports.
The Administration's budget request for fiscal year 2004 includes, as part of DPA reauthorization, $200 million for radiation-hardened electronic components, a special request that hopefully will not have to be repeated for future activities, but the justification of which in this instance does, I believe, pass the sniff test. Finally, the Administration has requested that Section 707 of the Act be made part of permanent law and no longer subject to periodic reauthorization. The Administration's justification for this request is the serious need to avoid a recurrence of what happened during Operation Desert Shield, when the Civil Reserve Air Fleet was activated and commercial aircraft were drafted into the war effort. Section 707 provides commercial businesses indemnification from lawsuits resulting from their having to respond to emergency taskings at the demand of the federal government.
While the Departments of Defense, Commerce, and Homeland Security are represented here today because of their roles in responding to crises, the Department of Energy is principally represented here today to discuss a slightly less comfortable issue: the possible abuse of DPA authorities by both the previous and current Administrations to provide relief to the State of California during the period of rolling blackouts. This highly questionable use of DPA authorities represents precisely the type of government action that must be very closely scrutinized. My predecessor Senator Gramm held a hearing on this subject in 2001. As the DPA expires soon and consequently needs to be reauthorized, I felt this was a good opportunity to address the matter once more for the purpose of preparing legislation.