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National Defense Authorization Act for Fiscal Year 2012

Floor Speech

Location: Washington, DC


Mr. McCAIN. Mr. President, I thank Senator Levin and the staff for the thorough job of investigation that was undertaken to identify the counterfeit electronic parts that are penetrating the Department of Defense supply chain.

I thank Senator Whitehouse for his provisions which have been added to the bill from a bill he had introduced in the Judiciary Committee.

At the hearing we had on November 8, the committee received additional evidence to supplement an already robust investigative record, and some very serious issues were raised, including the threat counterfeit electronic parts pose to the safety of our men and women in uniform, to our national security, and to our economy, how counterfeits increase the short- and long-term costs of defense systems, the lack of transparency in the Defense supply chain, and the U.S. relationship with the People's Republic of China.

I see the Senator from Kentucky is on the floor. But I would just like to point out again and emphasize the points the chairman has made.

The problem of counterfeit electronic parts in the Defense supply chain is more serious than most people realize. During its investigation, our committee uncovered over 1,800 incidents, totaling over 1 million parts of counterfeit electronic parts in the Defense supply chain. Suspect counterfeit electronic parts have been installed or delivered to the military for use on thermal weapons sites, on THAAD missile mission computers, and on military aircraft, including the C-27J, C-17, C-130J, P-8A Poseidon, SH-60B, AH-64, and the CH-46.

I do not claim this legislation will solve the problem

of counterfeiting from China, the whole issue of intellectual property. Counterfeiting that goes on in other aspects of the world's economy and ours is one that is a very large issue. But at least this is an effort to make sure, as much as we can, that the men and women who serve in our military are not subject to operating systems that could literally endanger their lives--much less the incredible increase of the taxpayers' dollars.

I thank the chairman again and his staff, and I can assure my colleagues this is an issue we will be following very closely in the days and weeks and months ahead.

I note the presence of Senator Paul, so I ask for the regular order.


Mr. McCAIN. Mr. President, I would like to first of all thank the Senator from Kentucky for quoting me. It is always a very pleasant experience as long as it is something that one would admire. On several occasions, I have been quoted in ways that I wish I had observed what my old friend Congressman Morris Udall used to say is the politician's prayer: May the words that I utter today be tender and sweet because tomorrow I may have to eat them. So I want to thank the Senator from Kentucky for his kind words.

I also want to praise the Senator from Kentucky, who is a person who has come here with a firm conviction that he not only has principles but he intends to act on those principles in as impactful a way as possible and represent the people of Kentucky in a very activist fashion. He has my admiration. However, I would rise in opposition to the amendment.

I would like to read from a letter that was sent to the chairman and to me from the Chairman of the Joint Chiefs of Staff and the Secretary of Defense.

This week, as you consider the National Defense Authorization Act, the Department of Defense would like to respond to your request for views on the amendment offered by Senator Paul which would repeal the Authorization for the Use of Military Force in Iraq. U.S. Forces are now in the final stages of coming home by the end of 2011. We are moving to a new phase in the relationship between our two countries and equal partnership based on mutual interests and mutual respect.

While amendment No. 1064 echoes the President's policy, we cannot support the amendment as drafted. Outright and complete repeal of the AUMF-I, which is the Authorization for the Use of Military Force in Iraq, withdraws all Congressional support for any limited windup activities normally associated with ending a war. Thank you very much for your continued efforts.

The Department of Defense sent over an unclassified response that was approved by several members of the Pentagon. It says: Although we are implementing the U.S.-Iraqi security agreement in full and pulling out all of our forces by the end of the year, we still have a limited number of DOD personnel under the Chief of Mission Authority to staff the Office of Security Cooperation-Iraq. Because there may be elements that would choose this time of transition to attempt to do harm to these personnel, it is essential that the Department of Defense retain the authority and flexibility to respond to such threats. The AUMF-I provides these authorities. The administration has worked closely with Congress in circumstances where it has been necessary to rely on the AUMF, and it would continue to do so should the need arise.

In other words, and unfortunately, Iraq remains a dangerous place. We will have the largest contingent of Americans as part of the embassy there as we withdraw our combat troops. Some 16,000 Americans will man our embassy and consulates in Iraq, and unfortunately there are great signs of instability in Iraq. Al-Sadr has said that any remaining American troops will be a target. The Iranians continue to encourage attacks on Americans. There are significant divisions within the country which are beginning to widen, such as Sunni-Shia, the area around Kirkuk, increasing Iranian influence in the country.

I will refrain from addressing the deep concerns I had before the agreement to completely withdraw took place. I will leave that out of this discussion because I feel the decision that was clearly made not to keep a residual force in the country, which was made by this administration and which is the subject for debate on another day, has placed the remaining Americans in significant jeopardy. As I say, that is 16,000 Americans to carry out the postwar commitments we have made to Iraq to help them rebuild their country after many years of war and bloodshed.

I certainly understand the aim of the Senator from Kentucky. The President campaigned for President of the United States committing to withdraw all of our troops from Iraq. He is now achieving that goal. But I think it would be very serious to revoke all authority that we might have in order to respond to possible unrest and disruption within the country that might require the presence, at least on some level or another, of American troops to safeguard those 16,000 Americans who will be remaining in Iraq when our troops withdraw. So I argue that the amendment be defeated.

I yield the floor.



Mr. McCAIN. Mr. President, amendment No. 1419 would correct an unintended staff error in the new Division D funding tables that the Senate Armed Services Committee voted to adopt Tuesday, November 15, 2011. This error unintentionally reduced the President's budget request for the line 154, RDTE AF, JSTARS account by $33 million. This amendment would correct this error and restore the RDTE AF JSTARS account back to the level requested in the President's budget request and approved in the June 22, 2011, SASC-passed version of the National Defense Authorization Act. Both the majority and minority staff directors have acknowledged that this was an unintended staff error and have requested that this be corrected by restoring full funding of the RDTE AF JSTARS account to $121,610,000. Chairman Levin and I agree.


Mr. President, as I mentioned when the National Defense Authorization Act for Fiscal Year 2012 was first brought up on the floor, I wanted to focus on, in the course to the Senate's consideration of this bill, the issue of military space procurement. There can be no doubt that how the Department of Defense procures satellites and space-related capability has gotten unacceptably out of control.

In the impending environment of fiscal austerity, the situation has become nothing less than severe.

One need not look further than the Space-Based Infrared System High, SBIRS-HIGH, program as a good example of how bad things have gotten. This program has been a problem since its inception in 1996. In fact, 5 years into the program--in 2001--an independent review cited the program as ``too immature to enter the system design and development phase'' and observed that the program was based on faulty and overly optimistic assumptions with respect to, among others things, ``management stability and the level of understanding of requirements.'' The independent review also highlighted a breakdown in execution and management resulting from those overly optimistic assumptions and unclear requirements that essentially ``overwhelmed'' government and contractor management.

That was 2001, when it was determined that total program cost growth could exceed $2 billion, a 70 percent increase in cost. And, here we are today, 10 years later, and the system still has not achieved its objectives. In fact, it was just launched--for the first time--recently, on May 7, 2011.

Originally estimated to cost $2.4 billion, it is now expected to cost nearly $16 billion, roughly 7 times the original estimate. With SBIRS' having been launched finally, we will see if it has overcome its continuing software issues and delivers its improved ballistic missile-monitoring capability as promised. I am, however, not optimistic: the satellite was launched even though the flight system software was not ready, and the ground control software needed to exploit the satellite's full capabilities is still lagging.

It is worth bearing in mind that the Government Accountability Office's latest March 9, 2011, report on major defense acquisition programs notes that SBIRS has the odious distinction of breaching the ``Nunn-McCurdy'' law on cost growth a record four times--the most of any major weapons program. It's a hall-of-famer.

By the way, the DOD just recently reported to Congress that the next pair of these satellites, built by Lockheed Martin, could cost $438 million more than previously estimated and could be delivered a year late. Unacceptable.

SBIRS is, however, not the only space program that has been facing these types of problems. Over the past decade, most--I repeat, most--of the DOD's space programs have been over cost and behind schedule. Their delays have in fact been so significant that we now face potential gaps in capabilities in vital areas dependent on space procurement such as weather monitoring and ultra-high frequency communications.

After years of spiraling costs and under the specter of diminishing budgets, the Air Force now says it wants to buy space assets in bulk to save money. Only in Washington could programs with the kind of history of mismanagement and unparalleled cost-growth and schedule-delays we have seen in large military satellite and launch programs--which in the most egregious cases have yet to see a single day of operational performance or demonstrate intended capability--be proposed for economic savings by buying its related components in bulk.

Until the Air Force overhauls how it buys its biggest and most expensive military space assets--more than simply doubling down on bad bets--these kinds of programs will continue to be painful case studies of how problematic our overall system for acquiring major weapons remains.

One program that I chose to focus on in particular in this bill is the Air Force's Evolved Expendable Launch Vehicle, EELV, program. On this program, I have filed two amendments, which have either already been adopted or are awaiting adoption without opposition.

My first amendment would require the EELV program to report to Congress and to the Office of the Secretary of Defense on how it is doing in terms of cost, schedule and performance as if it were designated as a major defense acquisition program, MDAP, not in sustainment.

This sounds pretty simple, but why this amendment is in fact necessary is striking.

In 2006, the unit cost of the EELV program, which provides the DOD and other government agencies the launch capability to get large satellites into orbit, breached the cost thresholds under the Nunn-McCurdy law. Under that law, the Department is required to report to Congress if there is a significant or critical increase in unit cost over the program's baseline cost.
In this case, EELV's unit costs unexpectedly grew because of a change in the acquisition strategy warranted by a decrease in the demand for EELV launches. And, that was due to, among other things, satellite program development delays and cancellations.

But rather than restructure the program to make sure that it provides launch capability affordably; rebaseline its unit cost estimate to a more realistic number; and certify, after careful deliberation and an analysis of alternatives, that the program must continue--all of which is required under Nunn-McCurdy--something else happened.

In 2007, the program was basically taken out of the defense acquisition management system, otherwise known as the ``milestone system,'' and put in ``sustainment.'' The decision to do so significantly reduced EELV's reporting requirements to the Office of the Secretary of Defense and to Congress, particularly on the program's cost and status. And, that limited both the OSD and Congress' ability to oversee the program going forward.

Ordinarily, such a decision is made when a program has completed its development and production phases. But, this wasn't the case for EELV. Even to this day, the program faces maturity issues based on the fact that the DOD has yet to launch all EELV variants in sufficient numbers to ensure design and production maturity.

According to the Government Accountability Office in 2008, the decision to put EELV on sustainment may have been influenced by other factors, namely, avoiding the imminent Nunn-McCurdy unit cost breach.

One thing is clear: this decision should never have been made.

And, Congress' and the OSD's oversight of this large program has been hampered ever since.

Against this backdrop, my amendment would require that the DOD either move the program back to a major defense acquisition program (MDAP) not in sustainment or otherwise have the program provide, as appropriate, Congress or the OSD updates of the program's cost and status using the criteria set forth for other MDAPs.

This, frankly, should have been done years ago.

My second amendment is required because of more recent developments in the EELV program. That amendment would require the Air Force to explain, by a time certain, exactly how its new EELV acquisition strategy for the balance of rocket cores beyond its immediate purchase implements each of GAO's recommendations in its recent report on the program.

Unsurprisingly, the increasing cost of launching satellites into space has become a major problem. And, with defense dollars likely to decline for as far as the eye can see, driving down the cost of space launch is tough because, with regard to ``EELV''-class rockets, only one company provides the U.S. government with the ``heavy'' launch capability it needs--the United Launch Alliance, ULA, comprised of former competitors Lockheed Martin and Boeing.

There can be no doubt that, at the end of the day, only competition can meaningfully drive down costs. As GAO recently noted, competition for space launch missions provides the government with an unprecedented opportunity to control costs under the EELV program. I strongly agree. Largely because of the lack of competition and the DOD's reliance on a monopoly incumbent provider, by some estimates, EELV costs may increase by more than 50 percent over the next 5 years. This is neither desirable nor affordable.

But, in an effort to procure heavy-launch capability affordably, the Air Force, which serves as the Executive Agent for space at the DOD, originally came up with a strategy to sole-source from ULA as much as eight boosters over 5 years. This so-called ``Block-40 strategy'' would, however, have effectively locked-up the government into a large block purchase with ULA and foreclosed the possibility of competition over time.

Thankfully, GAO looked into this acquisition strategy. And, its report, which came out just a few weeks ago, was scathing. In it, GAO found that, despite statements by the Air Force to the contrary, the Air Force's Block-40 strategy was unsupported by the necessary data and analysis--most notably, certified cost and pricing data, analysis on the health of the industrial base and the cost-effectiveness of mission assurance.

This amendment would require the Air Force to explain when it submits its budget next year how it implemented each of GAO's recommendations. Those recommendations include, among other things, independently assessing the health of the U.S. launch industrial base and reassessing the proposed block buy contract quantity and length.

On October 21, 2011, I brought this issue to Secretary Panetta's attention, with Chairman Levin. While we only recently received a response, which I would like to be made part of this record, the question as to whether GAO's recommendations have been and will be complied with remains open. So, notwithstanding the letter, this amendment remains ripe and necessary.

Once again, I believe both of these provisions have been or will be adopted into the bill without opposition. And, I thank my colleagues for their cooperation. The area of how the Department of Defense procures space assets and capabilities is something we all have to focus on more than we have been. Particularly in these times of fiscal hardship and austerity, looking the other way and hoping for the best is an option we cannot afford.

I ask unanimous consent that the letter to which I referred be printed in the Record.


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