National Defense Authorization Act for Fiscal Year 2005-Continued

NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2005-CONTINUED

Mr. REED. Mr. President, I thank my colleagues Senators Warner, Levin, Gregg, Hollings and McCain for working with Senator Kohl and I on this important amendment preserving the Manufacturing Extension Partnership, MEP, Program. I particularly want to thank Senators Hollings and Gregg for their strong support of the MEP Program and their efforts to restore funding to a program that is vital to our Nation's small manufacturers. I look forward to working with them this year to ensure funding is restored in fiscal year 2005.

Senator Kohl and my amendment clarifies that the Secretary of Commerce has the ability to transfer and reprogram $21.8 million to the MEP Program this fiscal year in order to assist our nation's small manufacturers. Senator Gregg, Hollings, Kohl and I believe that the Secretary already has the ability to transfer and reprogram this funding; however, rather than honor the request of 55 Senators and work with the Senate and Congress to help reprogram funds, the Department of Commerce has chosen to hide behind a legal interpretation that it lacks such authority.

Small manufacturers have a direct impact on national security. Small manufacturers are the backbone of our defense production capacities. Firms with fewer than 500 employees comprise more than 80 percent of the defense supply chains. Small businesses are responsible for a significant share of defense contracting. They receive 21 percent of prime contracts and 41 percent of the subcontracts awarded to businesses by, or on behalf of, the Department of Defense.

The National Coalition for Advanced Manufacturing in a 2002 report identified five key challenges that confront the defense industrial base. First, the loss of small and medium-sized firms that participate in the defense supply chain is taking its toll on our Nation's defense readiness as many makers of components and spare parts for the larger defense contractors have left the marketplace or are ill-prepared to respond to swift increases in orders. There is no known source of supply for over 11,000 products used by the Department of Defense. Second, our Nation needs to maintain sufficient surge production capacity to meet unanticipated national defense needs. The production of platform systems, components and munitions is constrained by the surge capacity of prime contractors and the capabilities of the supplier base. Being able to provide for these defense needs is vital to our military. Third, outdated and aging manufacturing systems and processes are involved in the production of major weapon systems. The need for quality and technology improvements along with increased productivity and cost reduction makes the shortage of capable small manufacturers more problematic. Fourth, large defense companies often have the knowledge and resources to make investments in productivity and efficiency improvements; however, small manufacturers frequently lack the necessary technical knowledge, staff and resources to take advantage of new techniques and technology. Lastly, to increase participation in defense production, small manufacturers need assistance adapting commercial production practices and techniques to the needs of the defense industrial base.

The MEP program can help our Nation address these challenges. MEP Centers have a strong track record of solving supply management issues. MEP helps preserve and strengthen domestic production of unique defense technologies and provides a strong strategic edge over threats to national security. MEP is active within U.S. defense supply chains assisting small sub-tier suppliers to cut costs, boost productivity, integrate technology and accelerate delivery times. Officials from Boeing, General Dynamics, Lockheed Martin, Northrop Grumman, and Raytheon expressed their reliance on MEP for cost and quality improvements at small manufacturing firms on which they rely for component parts and assemblies.

To date, the actions of the Department of Commerce have been unacceptable. The administration needs to make resources available to help our Nation's small manufacturers. The administration should immediately reprogram $21.8 million to support the MEP Centers this year as directed by Senator Kohl and my amendment. Given the broad bipartisan and national support for this program, the administration should send a Budget Amendment to Congress to support $106.9M for the MEP program in fiscal 2005.