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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