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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Public Law 108-136

House Conference Report 108-354

SEC. 813. IDENTIFICATION OF ESSENTIAL ITEMS: MILITARY SYSTEM BREAKOUT LIST.

(a) IDENTIFICATION PROCESS- (1) The Secretary of Defense shall establish a process, using the Defense Logistics Information System existing database, to identify, with respect to each military system--

(A) the essential items, assemblies, and components of the system that are active items, assemblies, and components;

(B) foreign and domestic sources of supply for active items, assemblies, and components of the system;

(C) the active items, assemblies, and components of the system that are commercial; and

(D) Federal Supply Class and North American Industry Classification System Codes for active items, assemblies, and components of the system.

(2) Any modification to the logistics management system or any successor system of the Department of Defense shall maintain the capability to identify--

(A) essential items, assemblies, and components described in paragraph (1)(A);

(B) foreign and domestic sources of supply for active items, assemblies, and components;

(C) the active items, assemblies, and components of the system that are commercial; and

(D) Federal Supply Class and North American Industry Classification System Codes for active items, assemblies, and components.

(3) For purposes of meeting the requirements set forth in this section, the Secretary of Defense may not require the provision of information beyond the information that is currently provided to the Department of Defense through existing data collection systems by non-Federal entities with respect to contracts and subcontracts with the Department of Defense or any military department.

(b) MILITARY SYSTEM ESSENTIAL ITEM BREAKOUT LIST- The Secretary of Defense shall produce a list, to be known as the `military system essential item breakout list', consisting of the items, assemblies, and components identified under subsection (a)(1)(A). In producing the list, the Secretary of Defense shall consider the results of the report under subsection (c).

(c) ASSESSMENT- Not later than 18 months after the date of the enactment of this Act, the Secretary of Defense, acting through a federally funded research and development center, shall prepare a report that--

(1) assesses the criteria that should be used for identifying whether an item, assembly, or component is essential to a military system; and

(2) recommends which items, assemblies, and components should be included on the military system essential item breakout list under subsection (b).

The House bill contained a provision (sec. 812) that would direct the Secretary of Defense to identify and list all items and components of military systems which are essential and critical to the U.S. industrial base. The Secretary of Defense would be required to submit an annual report to the committees on Armed Services of the Senate and the House of Representatives that would compile the lists required under this section, including a list of items and components that are manufactured outside the United States.

The Senate amendment contained no similar provision.

The Senate recedes with an amendment that would require that existing data sources be used to meet the requirements of this provision and a Federally Funded Research and Development Center conduct a study to support the Secretary of Defense in developing common definitions and recommending which items and components of military systems that are deemed essential.

House Report 108-106

SECTION 812--IDENTIFICATION OF CRITICAL ITEMS: MILITARY SYSTEM BREAKOUT LIST

This section would direct the Secretary of Defense to identify all items and components of military systems and to identify which of these are essential and critical to the U.S. industrial base. Essential items and components would be those essential for the proper functioning and performance of a military system or those involving a defense critical technology. Critical items would be those items already deemed essential that also pose high barriers to entry for the production of the item or component in question. This section would also require an annual report, beginning with November 1, 2004, that would compile the lists required under this section, including a list of items and components that are manufactured and produced outside the United States. The committee is concerned that the U.S. is becoming dependent on foreign sources for many essential and critical items and has limited means to assess risks related to this dependency.

The committee is also concerned by a lack of visibility by both industry and the Department of Defense of the sources of items or components typically provided by subcontractors. Such visibility is unavailable using current methods. The lists compiled through this section, however, can provide a first step to providing this information by first identifying those items and components that are essential and critical to the U.S. defense industrial base.