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

Public Law 108-136

House Conference Report 108-354

SEC. 814. PRODUCTION CAPABILITIES IMPROVEMENT FOR CERTAIN ESSENTIAL ITEMS USING DEFENSE INDUSTRIAL BASE CAPABILITIES FUND.

(a) ESTABLISHMENT OF FUND- There is established in the Treasury of the United States a separate fund to be known as the Defense Industrial Base Capabilities Fund (hereafter in this section referred to as the `Fund').

(b) MONEYS IN FUND- There shall be credited to the Fund amounts appropriated to it.

(c) USE OF FUND- The Secretary of Defense is authorized to use all amounts in the Fund, subject to appropriation, for the purposes of enhancing or reconstituting United States industrial capability to produce items on the military system essential item breakout list (as described in section 812(b)) or items subject to section 2534 of title 10, United States Code, in the quantity and of the quality necessary to achieve national security objectives.

(d) LIMITATION ON USE OF FUND- Before the obligation of any amounts in the Fund, the Secretary of Defense shall submit to Congress a report describing the Secretary's plans for implementing the Fund established in subsection (a), including the priorities for the obligation of amounts in the Fund, the criteria for determining the recipients of such amounts, and the mechanisms through which such amounts may be provided to the recipients.

(e) AVAILABILITY OF FUNDS- Amounts in the Fund shall remain available until expended.

(f) FUND MANAGER- The Secretary of Defense shall designate a Fund manager. The duties of the Fund manager shall include--

(1) ensuring the visibility and accountability of transactions engaged in through the Fund; and

(2) reporting to Congress each year regarding activities of the Fund during the previous fiscal year.

The House bill contained a provision (sec. 814) that would establish within the Department of the Treasury, the Defense Industrial Base Capabilities Fund that would be used to develop U.S. capabilities for the production of essential or other important defense items and authorize $100.0 million for the fund in fiscal year 2004.

The Senate amendment contained no similar provision.

The Senate recedes with an amendment that would delete the $100.0 million authorization.

House Report 108-106

SECTION 814--PRODUCTION CAPABILITIES IMPROVEMENT FOR CERTAIN CRITICAL ITEMS USING DEFENSE INDUSTRIAL BASE CAPABILITIES FUND

This section would establish within the Department of the Treasury, the Defense Industrial Base Capabilities Fund that would be used to develop U.S. capabilities for the production of items, components, or materials that are determined to be critical to the operation and performance of military systems. The fund's activities would focus on items currently available only from foreign contractors and those available only from a limited number of United States contractors.

This section would authorize $100.0 million for the fund in fiscal year 2004. Prior to the obligation of any monies from the fund, the Secretary of Defense must submit to Congress his plans for executing this activity, including the priorities for which the Secretary will obligate funds; the criteria for determining to whom funds shall be obligated; and the mechanisms through which funds may be provided to the recipients.

The committee believes that it must aggressively seek to build the U.S. industrial base for critical items. The fund established in this section would provide the resources to revitalize portions of the United States industrial base and would provide the Department of Defense with a flexible mechanism for more directly assisting critical industries that are currently struggling.