Lawmakers are pushing defense-industry reforms intended to both keep contractors in check and help businesses work with the Pentagon.
The Senate Armed Services Committee (SASC) is taking a different approach to contracting reforms in the fiscal year 2013 Pentagon policy bill than its House counterparts are, by calling for more limitations on companies than are in the House-passed version of the legislation.
The Democrat-led SASC approved a defense authorization bill May 24 with contracting controls including a near-prohibition on using cost-type contracts for producing major weapons systems, with only a few exceptions.
“These provisions should go a long way to improve the oversight of (Department of Defense) DoD contracts and ensure taxpayer money is not wasted,” SASC Readiness Chairwoman Claire McCaskill (D-Mo.) said May 21 when her subpanel approved early versions of contracting reforms in the committee bill.
The legislation, which will not be filed until the Senate returns from recess next week, further looks to how the Pentagon conducts business with industry by requiring DoD review its profit guidelines and revise them to provide a presumably better link between contractor’s profits and performance.
The SASC measure would give the Pentagon the power to require contractors share additional cost data on spare and repair parts for weapon systems in order to verify pricing is appropriate. It also would ensure that Pentagon auditors can access contractors’ internal audit reports to evaluate the companies’ internal controls.
The Senate panel further is tackling contractors’ paychecks, calling for lowering the cap on contractor pay that is reimbursed by the Pentagon from $750,000 to $237,000.
The Republican-led House Armed Services Committee (HASC), meanwhile, has been more focused on helping businesses–particularly small and mid-sized ones–conduct business with the Pentagon. When the HASC marked up its version of the FY ’13 defense authorization bill on May 10 it included multiple provisions that a special HASC Panel on Business Challenges in the Defense Industry approved March 20 after spending seven months investigating barriers smaller businesses face entering and competing in the defense industry.
The House-passed authorization bill, thus, includes requirements for the defense secretary to report to Congress on areas of risk in the industry base and to develop a so-called national-security strategy for the defense industry.
After the full House passed the bill May 18 HASC Chairman Howard “Buck” McKeon (R-Calif.) declared it reforms “the way the Pentagon interacts with the defense industrial base.”
“We’ve taken steps to ensure that competition is promoted for government contracts, worked to ease stresses on small businesses seeking to do business with the armed forces, and evaluated the military’s supply chains for weaknesses,” McKeon said.
The House bill contains varied reforms recommended by companies during the Panel on Business Challenges in the Defense Industry’s hearings. Those include limiting when the Pentagon can bundle contracts, spurring the Pentagon’s two audit agencies to complete audits of in less time, and making it easier for U.S. firms to export satellite technology.
After the full Senate passes its version of the defense authorization bill, perhaps as soon as in June, House and Senate negotiators will craft a final version of the legislation to send President Barack Obama. The White House has threatened to veto the House-passed bill, which adds money and weapons programs to the Pentagon’s proposed budget. FY ’13 starts Oct. 1.