Category Archives: Politics

Default Day Looms: Will you get paid? Who knows!

Sometime in early August, Uncle Sam’s checking account is going to get pretty messy if Congress and the President can’t arrive at some sort of meaningful solution.  Is this a stupid, manufactured disaster?  Probably so.  Will that change the facts on the ground if the government is in default?  Not at all.

In the middle of the noise surrounding debt payments and social security checks, there’s been very little noise about that other category of government payees:  the government contractors.  If the US government has to start prioritizing who gets paid first, you may not be too high on their list.  Granted, no one at DoD or Treasury can even begin to predict the downrange impacts of default, but it’s pretty obvious that payments would almost immediately be affected.

Let’s hope that cooler heads prevail, but I would keep my eye on this one.  It could get ugly in a hurry.


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Joint Strike Fighter: The Map Says it All

Today’s modern weapons systems possess the most advanced features known to humanity: sophisticated avionics, advanced materials, high performance power plants, and most importantly… extremely well planned supply chains to ensure survivability.  To that end, take a look at Lockheed Martin’s newly released map of supply chain impacts of the F-35 around the United States.

Coming in at almost $150M annually, the 4 Northwest states didn’t do too badly, but given that the total life of the program is valued at $380B, you can imagine that a few states are doing pretty well (I’m looking at you CA, TX and, unexpectedly, NH.)  It doesn’t take a genius to understand how this map affects the political impact of the program.  While the F-35B may be on the proverbial hot seat, this shows you what an uphill battle opponents of the B-variant will have in killing it.

Take some time and enjoy the map in all of its glory here.

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My Favorite Headline of the Week

Defense Secretary Robert Gates Smacks NATO

Defense Secretary Robert Gates: Enjoying his last few weeks on the job

Well, the outgoing SECDEF is not exactly going quietly into that good night.  Robert Gates’ farewell tour has spanned the globe, and his opinions on a wide range of issues have kicked up dust at just about every stop.  The latest? That grand ‘ol punching bag known as Europe, which leads to my favorite headline of the week: “Gates to NATO: You Guys Suck“.

From DoD Buzz:

Have you ever imagined quitting your job and telling your old cretin of a boss exactly what you think of him? Of course — it’s the American dream. And Defense Secretary Robert M. Gates is living it right now, having gone to the doorstep of one of the world’s most ossified, stultifying bureaucracies — NATO — and delivered this message: Get your act together.

Click here to read Philip Ewing’s full article.  It’s a great piece.

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Late breaking news:  The USAF has awarded the KC-X aerial refueling tanker contract to the Boeing Company.  This is huge news for our friends at Boeing, and a win for the Puget Sound Region’s economy.   I hope everyone takes a moment to celebrate, but it should be tempered.  Nearly everyone expects a protest to be imminent, and we know from experience how poisoned this whole process has been to date.  Stay tuned for more…

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Earmarks are Officially out of the Process (For Now)

Earmarking becomes a temporary thing of the past

Well, it’s been a long time coming, but the likes of Senator John McCain (R-AZ) and Congressman Jeff Flake (R-AZ) finally got their way.  This week, Senator Daniel Inouye (D-HI), Chair of the Senate Appropriations Committee, announced a two year moratorium on the practice of earmarking in the Senate, bringing both houses of Congress in line with pledges from the White House to veto any earmarked bill that comes before the President.

(In the interest of full disclosure, PNDC has and continues to receive federal funding that was the result of a congressional earmark for our Northwest Connectory project.)

While some observers are calling this a major capitulation by Senate Democrats, it looks to me more like a pragmatic acceptance of the new reality.   President Obama has chosen to side with House Republicans in their quest to end the longstanding practice, and Senator Inouye and the rest of the Senate Democrats would have to pick a politically costly fight to retain their control over the purse strings.

This decision is likely to have a whole host of as-yet-unseen consequences on the system, so it will be interesting to watch what happens over the next few months.  Earmarks not only pay for great organizations like PNDC to do economic development work, they’re also one of the main ways that public works projects get funded in municipalities around the United States.  Plus, there are a few DoD programs out there that got their start as pork barrel projects (I’m looking at you, Predator, Scan Eagle, etc.)

We may not know the full implication of this moratorium, but one thing is for certain: members of Congress must take care of their districts.  In the long run, it’s almost certain they’ll figure out a way to do it.

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PNDC Board Chair over GE CEO? I Love It!

Chandra Brown (at right) with President Obama

It’s not often that we get big time national kudos at PNDC, but the Huffington Post just gave the current PNDC Board Chair, Chandra Brown, a little bit of a boost today.  Here’s what Scott Paul, the head of the Alliance for American Manufacturing had to say today about Jeff Immelt’s appointment to lead President Obama’s jobs strategy team:

Intel’s former CEO Andy Grove, U.S. Steel’s John Surma, Nucor’s Dan DiMicco, or Chandra Brown of United Streetcar–which built an industry out of nothing–would all have been far superior choices.

She may not have made it this time, but we’re pulling for her next time…  See the whole article here.

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DHS Ruling Erodes the Strength of the Berry Amendment

Did you know that the legislation named after Congressman E.Y. Berry in 1941, requires the Department of Defense (DoD) to use appropriated funds to procure items made only with domestic materials? The other restrictive agreements often confused with Berry are the Buy American Act, Trade Agreements Act, General Agreement on Tariffs and Trade, Free Trade Agreements, and Defense Authorization Acts and Appropriations Acts. However, the Berry Amendment is the most restrictive when it comes to clothing and textiles.

The original intent of the Berry legislation, as expected, was to protect the domestic clothing and textile industry. The concern today is that other Federal agencies fall only under the Buy American Act which is not as encompassing. Departments such as the Department of Homeland Security (DHS) are not specifically required by the Federal Acquisition Regulation to follow the Berry Amendment, even though this agency is as involved in national defense as the DoD. It gets more confusing because other agencies such as the GSA who procure for the DoD must adhere to the Berry Amendment – so if the DoD procures for DHS the amendment applies but not the reverse.

The question is “why is the Department of Homeland Security (DHS)  excluded from following Berry Amendment acquisition guidelines?” As reported by  James A. Morrissey, Washington Correspondent for Textile World, DHS has adopted as final their interim rule established last August 2009 which rejects the objections from the clothing and textile industry. The reason the industry objected to the ruling is that DHS has included the North American Free Trade Agreement (NAFTA) countries Mexico and Canada and for some reason Chile, as eligible for Federal contracts. Even though DHS said it received comments from 26 organizations and individuals and members of Congress suggesting  that DHS comply with the Berry amendment, the DHS response was that the Homeland Security legislation “is not an extension of the Berry Amendment.”

However, apparently not all DHS procurement officers are aware of this final ruling because according to United States Industrial Fabrics Institute (USIFI),  the Transportation Security Administration (TSA) and the U. S. Coast Guard (both DHS organizations) procurement officials do include Berry Amendment requirements for purchases.  

Again, according to Textile World, Representative Larry Kissell (D-N.C.), who guided the textile response to DHS, said that “any rule allowing unnecessary use of non-domestic parts will substantially undermine the job-creating capability.”  Rep. Kissell is obviously concerned with the erosion of the Berry Amendment and the negative consequences for American workers and the industry itself.

Until such time as legislation can be introduced to bring DHS into the same  compliance DoD follows with the Berry Amendment, companies in the clothing and textiles industry must be prepared to support ongoing efforts such as the Kissell amendment. Further, companies must invest in the time and effort required to understand the acquisition policies and procedures of the Federal government and especially the Department of Homeland Security.

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Federal Prison Industries Erodes Clothing and Textile Industrial Base; by jonathandouglaslong

Did you know that even though DoD contracts contain a clause that prohibits manufactures from employing prison labor (such as China) that Federal law requires the DoD to procure certain clothing and textile (C&T) items such as helmets and uniforms from Federal Prison Industries (FPI). According to the American Apparel and Footwear Association (AAFA), approximately 19% of all Army Combat Uniforms (ACU) are produced by Federal prisoners.
Should Federal Prison Industries continue as a mandatory source for Army Combat Helmets (ACH) and Army Combat Uniforms (ACU)? Why should 6,505 federal convicts be fully employed in regional areas of 10% or more unemployment?
This is the question put directly to both Senate and Congressional staffers during a recent AAFA visit to Capitol Hill. In almost all cases, staffers were amazed to learn that much of our military gear is made by federal prisoners. In fact, according to the FPI Annual Report from 2009, prisoners achieved $262.7M in sales in the Clothing and Textiles category earning $36M in profits ($60M in 2008). The question on everyone’s mind is that given prisoners are only paid pennies per hour, who is reaping the benefits of these $36M in earnings? The question from the tax payer’s mind is simple – wouldn’t it be better for the $262.7M in sales to be pushed into the free enterprise market and potentially re-employ the 6,505 tax paying, sewing and manufacturing people who may be unemployed today?
The other question is a matter of quality assurance in the personal protective products made by UNICOR. From the FPI website “UNICOR also produces body armor that meets National Institute of Justice (NIJ) standards, as well as a wide range of ballistic products for military applicants.” Unfortunately these products do not meet NIJ standards given the recent recall of 44,000 Army Combat Helmets. The Army and the prime contact holder Armor Source both confirmed that UNICOR, also called Federal Prison Industries, manufactured all 44,000 of the recalled helmets.
The stated purpose of the FPI program, again from the FPI web site is “. . . not about business, but instead, about inmate release preparation…. helping offenders acquire the skills necessary to successfully make that transition from prison to law-abiding, contributing members of society. The production of items and provision of services are merely by-products of those efforts.” I wonder how the clothing and textile $96M profit over the last two years really helped prisoners acquire job skills.
The Industrial Base and overall employment of textile, apparel, and furnishings workers is expected to decline rapidly through 2018 from 212,400 jobs in the year 2008 to 140,900 jobs by the year 2018; a loss of 71,500 jobs. Specific rehabilitation by the FPI program in the C&T industry is for sewing machine operators which is expected to decline rapidly by 34 percent ( Question – why is the government taking potential jobs from workers who could be employed today, to train and rehabilitate prisoners in a declining job field with little hope for a job when released from prison?
Wouldn’t the government be better served by focusing on the areas of high future job growth? The U.S. Bureau of Labor Statistics predicts the top ten following occupations requiring only on-the-job training or work experience, than all other occupations with similar requirements will grow the fastest, through 2018. Home Health Aides growth 50 percent; Home Care Aides 46 percent; Physical Therapist Aides 36 percent; Dental Assistants 36 percent; Medical Assistants 34 percent; Self-Enrichment Teachers 32 percent; Government Compliance Officers 31 percent; Occupational Therapist Aides 31 percent; Pharmacy Technician 31 percent; and Medical Secretaries 27 percent.
Now – granted, some of these occupations may not be a good fit because they require background and security assessments to deal with personal data. This doesn’t change the fact that these are the greatest growth potential job fields and therefore have the greatest rehabilitation and reemployment potential for prisoners over through 2018. The Department of Justice, which oversees the FPI program, must get creative in determining how to really best support rehabilitation of prisoners and not just push inmates into labor intensive jobs like clothing and textiles because FPI can make significant profits.
There is a current amendment offered by Representative Walter B. Jones (NC) included in the 2011 National Defense Authorization Act (HR 5136) which attempts to get at the question of unfairly controlling market share. The amendment requires FPI to follow the existing rules. It is neither REP Jones nor the AAFA’s intent to cancel the rehabilitation efforts of FPI but to roll back FPI’s market share as required by law in product areas where they exceed 5%. The 5% cap is already included in the National Defense Authorization Act for fiscal year 2008 (Public Law 110-18). The point now is to control FPI’s appetite for growth in clothing and textiles beyond the 5% limitation – for example pulling back 10 – 12% of ACU production and pushing that production back into the private industrial base to increase job growth.
I believe this is a step in the right direction by Congress and bringing the aggressive nature of FPI to the attention of the Secretary of Defense. It seems that holding FPI to the already defined 5% cap is right. However, the larger questions remain as to why doesn’t the Congress push the 6,505 prisoner jobs into private industry to provide more employment opportunity? Further, why does the Federal government prohibit contractors from using prison labor when the US government mandates that percentages of all Federal contracts be set aside for US prison labor? And last, what is the message that we are sending to both our troops and to our allies when the soldier, sailors, marines, and airman who deploy to defend our values of freedom and democracy are wearing uniforms made by US federal prisoners?

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Defense Budget: Showdown at the Pentagon

Defense Secretary Robert Gates

Defense Secretary Robert Gates: A Guy Whose Job I Don't Want

Appointed by a Republican president, serving in a Democratic administration. That’s quite an accomplishment for anyone.  As if that hasn’t burnished his credentials enough, Defense Secretary Robert Gates is in the middle of picking a fight (or many, many fights) with just about everyone.  Here’s a short list of the aggrieved:   

  • Veteran’s Groups
  • Defense Industry Lobbyists
  • Capitol Hill
  • The Pentagon Bureaucracy
  • My Grandma, my little sister, and even my puppy, who growled at Gates on CNN last night

In all seriousness, this has been coming for quite a while now.  Some of the best thinkers out there saw this coming a mile away, and most of the experts I’ve spoken to were pretty confident that we were in for this fight no matter who won the last presidential election.  The red ink we’ve got across the board in the US is not going to go away on its own, and the Executive branch is looking for any way it can to contain ballooning budget deficits.   

The good news?  It looks as though the Obama administration is looking to avoid a repeat of the 1990’s, when military readiness was impacted by big shifts in the budget.  The noises coming from the corner office at the Pentagon seem to emphasize the status quo when it comes to force structure, which is a net positive.    

The bad news?  Well, there’s plenty.  Military pay has seen huge escalation over the last decade, and Congress shows no signs of stopping the steep increases.  These costs are starting to add up, leading some in the Pentagon to worry about how long they can keep this up.  Another major cost driver is the ever escalating price tag for health care.  The Pentagon’s Tricare program is shoveling out huge amounts of cash to cover our healthcare obligations to current and former service members, and the costs just keep heading north. On top of this, major weapons systems acquisitions are still an unholy mess.  The Joint Strike Fighter (JSF) is getting more expensive by the hour, and the Littoral Combat Ship (LCS) program has seen substantial cost growth of its own.  That’s not to mention the hundreds of other acquisitions that are busting cost and schedule milestones.   

Underlying all of this is something you should keep in mind: nearly everyone who thinks about these things for a living saw this coming.  That doesn’t mean these fights aren’t going to be ugly and acrimonious, but they are going to follow a very predictable script.  Many SECDEF’s in the past have tried to reform the Pentagon…I think you know how that went.  Here’s my prediction: It’s going to be one long summer for Robert Gates.  You can take that one to the bank.

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Congressman Norm Dicks: What a Year

Rep Norm Dicks (D-WA) Addresses a Crowd in 2008

It’s been quite a year for Congressman Norm Dicks.  In the span of a few months, the longtime Representative from the Kitsap Peninsula has quickly gone from high profile Democratic leader to highest profile.  Dicks had long served on the House’s Appropriations Committee, as Chair of the Interior Appropriations Subcommittee, as well as serving as the second higherst ranking member of the powerful Defense Appropriations Subcommittee.  Earlier this year, Rep. John “Jack” Murtha (D-PA) unexpectedly passed away, which moved Rep. Dicks into the position of Chair of the Defense Subcommittee.

Just as he started to get comfortable in his new role as Chair, another bombshell dropped today.  The current chair of the House Appropriations Committee, Rep. David Obey (D-WI) annouced that he will not run for re-election in 2010.  This leaves Dicks, the number two ranking member of the Appropriations Committee, as the next most senior member.  While seniority isn’t everything in the House, it means quite a lot.  If seniority rules (and if the Democrats keep control of the House in 2010), we could see Congressman Dicks ascend to the head of the most powerful committee in Congress.  That said, it appears as though Dicks may already have some competition for the spot, so this is nowhere near a done deal.

Some of you who are a little tired of politics (or don’t care at all) may wonder why this matters to us?  Here’s the quick and dirty:

The Pacific Northwest has never been synonymous with Defense.  That’s why PNDC exists, and why I’m here blogging at 6pm on a Wednesday.  Congressman Dicks has been in the House since 1977, and has been championing Defense-related causes for many years.    For the first time in a long, LONG time, the Pentagon is going to be paying close attention to what’s happening out here in the Great Northwest.  I don’t care if you’re a Democrat or a Republican… that’s something I could definitely get behind.

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