Conferees slogging toward defense authorization agreement

A hotly contested provision that would have barred the Pentagon from doing business with foreign companies whose governments impose stiff industrial compensation requirements on U.S. contracts apparently has been dropped from the emerging fiscal 2005 defense authorization bill, according to a congressional aide.

Also dropped was a provision in the Senate version that would have actually loosened current domestic sourcing requirements for defense articles and services, the aide said.

At presstime, conferees were mulling proposals in an effort to resolve a handful of outstanding issues preventing final agreement on an estimated $422 billion authorization bill, according to sources familiar with the talks.

Last year, House Armed Services Chairman Duncan Hunter, R-Calif., compromised on a number of "Buy American" provisions that would have tightened restrictions on the Pentagon's purchase of military goods from foreign sources.

Although Hunter's current industrial base provision is far less sweeping than last year's language, the measure still faces stiff opposition from the Bush administration, Senate Republicans and top defense industry officials.

They say his approach would undermine U.S. defense firms' ability to compete in the global market while limiting the Pentagon's ability to obtain critical military technologies from overseas.

At presstime, it was unclear whether conferees had reached a compromise on House language that would delay by two years an upcoming round of military base closures. In May, the White House issued a veto threat against any authorization bill that delays the Pentagon's planned 2005 round of base closings and realignments.

Aides said efforts were still being made to strike a deal on House language to require the Air Force to renegotiate a $23.5 billion contract with the Boeing Co. for KC-767 tankers by March 1, 2005.

The House version of the bill would direct the Air Force to lease 20 and buy 80 of the Boeing tankers and establish an independent advisory board to ensure the new contract provides the Air Force with a fair deal. However, the aide said the March 1 deadline is likely to be pushed back or removed altogether.

It was unclear whether a handful of provisions backed by Sen. John McCain, R-Ariz., a senior member of the Senate Armed Services Committee and a staunch opponent of the Boeing tanker acquisition, had survived.

McCain's provisions would prohibit the Air Force from leasing any Boeing planes and would require congressional authorization of any tanker contract. Another provision would prevent the Air Force from retiring any of its legacy KC-135 tankers in fiscal 2005, a measure that service officials ardently oppose.

But conferees accepted a provision included in the Senate bill that would advance the Bush administration's efforts to grant a blanket arms export license for most unclassified defense technologies to the United Kingdom and Australia, two close allies in the war against terrorism and the ongoing conflict in Iraq.

Six years have passed since the Clinton administration first pushed for the waivers in an effort to improve defense trade ties with the two allies, but statutory obstacles included in House legislation drafted by the House International Relations Committee several years ago stymied the plan.