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 AIA UPDATE: April 2007, Volume 11, No. 7
U.S. Companies Bracing for Impact of Europe's REACH Legislation Environmental legislation abroad, particularly in the European Union (EU), is affecting how U.S. aerospace products are marketed there. The European Parliament late last year adopted controversial and sweeping chemical legislation that will require, over an 11-year period, registration and testing of up to 30,000 potentially hazardous substances and products that contain them. The Registration, Evaluation, and Authorization of Chemicals (REACH) regulation takes effect June 1 and will affect chemical producers and users, including those in the aerospace, automotive, and electronics industries. There are extensive costs, massive information disclosure, and a host of other administrative and legal requirements associated with REACH compliance. For example:
The first major milestone will occur from June-December 2008, the pre-registration period, when companies must declare the substances to be imported into the EU. A new cross-committee REACH working group has been formed at AIA to help AIA member companies raise awareness of the legislation. The working group is developing training for aerospace manufacturers and suppliers, examining tools for improving materials declaration and seeking other stakeholder collaborations. The group is also tracking how each EU member state will apply the REACH allowance for a military defense exemption. Companies will need to understand their specific responsibilities under REACH and involve appropriate managers and business groups, not just their environment, safety, and health professionals. Most AIA members are users of chemicals, not producers, and have different responsibilities. Regardless of whether a company produces chemicals or only exports products that contain them, each will need to check that the substances in its products have been properly registered or risk being banned from EU markets. AIA Source: hoai.huynh@aia-aerospace.org Congressmen Form Working Group to Modernize U.S. Export Controls In response to industry concerns, three congressmen have launched a bipartisan working group to help modernize the U.S. export control system. The Congressional Export Control Working Group, co-chaired by Reps. Don Manzullo (R-Ill.), Joe Crowley (D-N.Y.), and Earl Blumenauer (D-Ore.), has held two workshops to educate their colleagues and staff on the importance and intricacies of U.S. export control policies and processes. One workshop featured presentations on export control programs at the U.S. Commerce, Defense, and State departments. The second featured comments by representatives of AIA and other members of the Coalition for Security and Competitiveness. "Well-designed and targeted export controls are essential in a global environment," Manzullo said. "Unfortunately, many of our policies are not only ineffective but can be detrimental to U.S. national security interests because they allocate scarce resources to low risk areas." "Effective export control policies should protect our sensitive technologies, ensure cooperation with our allies, strengthen our defense industrial base, and reduce impediments to trade with legitimate customers," he added. Crowley said, "Sensible, common-sense, and realistic reform of our export control regime will enhance our competitiveness overseas and our national security. This congressional working group provides the opportunity for members and their staff to understand the benefits that a streamlined process that tightens security controls will have on our economy and job growth." "We need a modern export control system that takes into account the technological revolution and global integration of the last quarter century," explained Blumenauer. "Export controls are fundamental to our national security, but we must make sure the system works well at advancing our security and competitiveness simultaneously," Blumenauer added. "This working group will help expand the conversation within government and industry on how to strike the right balance." The purpose of the working group is to educate lawmakers and senior policy aides on the importance of a meaningful export control regime to U.S. national and economic security. Off-the-record, informal meetings will give relevant administration officials, lawmakers, and the regulated community an opportunity to discuss export issues and afford senior government officials insights to create an effective export control policy system. Acquisition Reform Plan Outlined in Latest Report to Congress The U.S. Defense Department plans to simplify its acquisition processes by overhauling the way it rewards contractors for performance, decides requirements for new weapons, and pays employees, according to a recent report by the department. The "Defense Acquisition Transformation Report," sent to Congress in February, is the first in a series describing how DoD plans to transform its internal business practices to promote efficiency and effectiveness. The report outlines seven basic goals for the acquisition transformation initiative:
The report fulfills the biannual congressional reporting requirement in the fiscal 2007 National Defense Authorization Act. "A sense of urgency has been established by the department to streamline and simply the acquisition system with aggressive initiatives to provide lasting solutions for predictable performance," Kenneth Krieg, undersecretary of defense for acquisition, technology, and logistics, wrote in the report's foreword. "DoD is tracking milestones to ensure (that) the desired outcomes in this transformation are achieved." AIA Source: terry.marlow@aia-aerospace.org AEROSPACE FOCUS  WASHINGTON PIPELINE: Acquisition Changes Should Avoid Unintended Consequences By John W. Douglass, AIA President and Chief Executive Officer As the 110th Congress gathered steam this spring, members started offering bills that would make changes to the Defense Department's acquisition process — five at last count, plus language in the emergency supplemental appropriations bill for the Iraq War. There are various reasons for this flurry of reform activity, not the least of which is a new party in control looking to make its mark on the procurement process. Having worked in the federal acquisition system for some 40 years, this is not a surprise to me. Congress has a habit of making changes to DoD procurement rules that is so regular you can almost set your watch to it. Our industry looks very different than it did in 1994 when Democrats last held power in Congress and extraordinary consolidation at all levels across the industry began to occur. On the positive side, the industry's consolidation has resulted in increased efficiency and productivity. A significant negative consequence, however, is a more fragile defense industrial base that is less able to deal with the financial impacts of ill-conceived legislation. We in the aerospace and defense industry want the same thing as lawmakers — an efficient and productive system that secures the best possible products for our warfighters at the best price to taxpayers. As the new Congress considers changes, we offer words of caution. New procurement laws often complicate existing laws and regulations that in many cases work well as long as the necessary funding and manpower to carry out the tasks are made available. Many times the changes have negative, unintended consequences and are so broadly written that they impact segments of the industry that were not the lawmakers' original target. To illustrate this point, many of the proposed legislative changes currently under consideration by Congress have been prompted by alleged abuses by companies with DoD service contracts in Iraq and Afghanistan as well as by companies hired by the government to respond to damage from Hurricane Katrina. Lawmakers should be mindful that service contracts are very different than long-term systems development and manufacturing programs. They should not be lumped together when forming new procurement rules. However, this does not mean that the acquisition system cannot be improved. For example, a worthy goal for the new Congress would be to work with DoD to take a close look at its acquisition workforce to make sure it has the tools and training it needs. Like many other sectors, the government acquisition workforce is aging and eligible to retire in greater numbers in the years ahead. Americans should be proud that the U.S. aerospace and defense industry, in partnership with the Defense Department, makes the best weapons systems in the world. This is a process that works. Occasionally, a breach of ethics occurs, but years of reform have resulted in a system today that catches and punishes wrongdoing. The addition of more laws will only make the system more cumbersome and less responsive to the new threats our nation faces today in the war on terror. WASHINGTON WATCH: Defense Contractor Accountability Bills Dot the Landscape on Capitol Hill Members of the new Congress have introduced several defense acquisition bills designed primarily to reduce the appearance of fraud and to limit the Pentagon's reliance on sole source procurements. Rep. Henry Waxman (D-Calif.), chairman of the House Oversight and Government Reform Committee, unveiled the Accountability in Contracting Act earlier this year, and the House Armed Services Committee in March overwhelmingly passed an amended version of the measure. The bill limits non-competitive emergency military contracts in excess of $1 million to a period of one year and prohibits former industry officials currently employed by the federal government from participating in procurement decisions involving their former employers for the same amount of time. Waxman's legislation also mandates a DoD plan to minimize sole source contracts as well as quarterly reports of company overcharges exceeding $10 million, which have been identified as "unjustified, unsupported, questioned, or unreasonable." In addition, Sen. Susan Collins (R-Maine), a member of the Senate Armed Services Committee, has sponsored a bill that contains a number of initiatives to address defense acquisition workforce challenges. Her Accountability in Contracting Act also requires competition for task orders, limits the length of non-competitive awards, and calls for a plan to minimize reliance on cost-plus contracts. Furthermore, the Collins bill debars contractors that pose "serious threats to national security." Sen. Patrick Leahy (D-Vt.), chairman of the Senate Judiciary Committee, has crafted the War Profiteering Prevention Act of 2007 that criminalizes activities such as "materially overvaluing" products and services and "excessively profiting" from military action or humanitarian relief projects if contractors exhibit a proven intent to defraud. The penalty provision of Leahy's legislation imposes a $1 million fine or an amount not greater than twice the offender's gross profits along with the possibility of a 20-year prison sentence. Sen. Byron Dorgan (D-N.D.) has also introduced a bill with language similar to the Leahy measure. The Honest Leadership and Accountability in Contracting Act of 2007 limits the use of task or delivery order contracts that exceed $100 million, requires competition for task order deliveries that exceed $1 million, and prohibits industry from executing contracts for "inherently governmental functions." Finally, Sen. Jeff Sessions (R-Ala.), a member of the Senate Armed Services Committee, has sponsored a "Responsible Government Contractors" amendment that implements a debarment penalty of up to 10 years for the employment of illegal aliens. The Sessions' amendment is currently a provision of the Fair Minimum Wage Act passed by the Senate in early February. AIA opposes both the Sessions' amendment and a similar one in the House Armed Services Committee version of the Accountability in Contracting Act. John Douglass, AIA president and CEO, last month sent a letter to Committee Chairman Ike Skelton (D-Mo.) and Chairman Waxman maintaining that the House amendment "appears to impose a severe penalty where the mistake of one individual could have a devastating impact on thousands of American families whose jobs would be put at risk if their company was caught hiring an illegal alien." AIA plans to oppose most of the other pending acquisition bills on the basis that the administration should focus on the enforcement of several existing laws designed to punish contractor fraud, which past experience has demonstrated as effective. AIA Source: cord.sterling@aia-aerospace.org WASHINGTON WATCH: FAA Reauthorization Plan under Scrutiny Congressional hearings continue to put FAA on the defensive regarding its reauthorization proposal, particularly its dramatic change in financing. From questioning of witnesses, it is apparent that members of Congress have serious doubts whether the financing plan will provide the stable, sufficient funding the administration projects. Many in Congress have voiced concern about the proposed funding, especially since FAA has requested less than what Congress has indicated it believes is necessary. AIA is identifying where the FAA proposal fails to meet the industry's needs and to sufficiently support the transition to the aviation systems of the future. The association and other industry leaders recently sent letters to House and Senate committee members, urging that FAA be required to allocate more resources to the transformation to the Next Generation Air Transportation System, or NextGen, and to strongly support the government-industry Joint Planning and Development Office, which is developing NextGen. Senate and House committees with jurisdiction are expected to release their FAA reauthorization proposals in May. AIA Source: susan.mertes@aia-aerospace.org WASHINGTON WATCH: U.S., European Bilateral Agreement Nearing Completion A new bilateral agreement on aviation between the United States and the European Council, the decision-making body of the European Union, is expected to be signed by June, possibly during the Paris Air Show. The agreement will provide a framework for cooperative regulatory and safety oversight and will establish an effective partnership with the European Union and the European Aviation Safety Agency. FAA representatives earlier this year gave industry an update on the agreement and heard concerns. It's expected the bilateral will go a long way toward bringing together a variety of airworthiness regulations between the United States and members of the European community. While details will be aired in the implementation process, the bilateral agreement and accompanying annexes are expected to be positive steps toward continued harmonization efforts with European regulators. Meanwhile, FAA is drafting modifications to existing orders that would be affected by policy changes brought about by the agreement. The agency is also planning Web-based training for FAA employees, designees, and industry by the end of 2007. Industry expects an opportunity to work with FAA on technical implementation procedures and guidance material. AIA Source: michael.vanzummeren@aia-aerospace.org AIA Space Council Policy Forum Develops Five-year Strategic Plan AIA's Space Council last month hosted a special strategy session on "Framing the Space Debate for the Next Five Years." Senior space program executives from member companies joined Space Council representatives in discussing AIA strategy on space issues after the 2008 presidential and congressional elections. Participants discussed the potential impact a number of political outcomes could have on space policy and discussed ways to ensure support and mitigate potential roadblocks. With vast expertise in space policy, association members provided the Space Council with guidance to help shape the space debate in coming years. Participants also focused on maintaining dialogue with key decisionmakers to keep space high on the national agenda. The meeting served as a bridge between AIA Space Council meetings and the Executive Space Industry Roundtable, which will be held with member company CEOs at the AIA Board of Governors' meeting in Williamsburg, Va., on May 24. AIA Source: jp.stevens@aia-aerospace.org Space Available at Paris Air Show For AIA Members and Suppliers AIA is again leading the U.S. aerospace and defense industry presence at the 47th International Paris Air Show June 18-24, one of industry's premier exhibitions. The association will be located in Hall 3, B13, next to the Defense Department area. Fourteen member companies have signed up to exhibit in the AIA booth:
Benefits for members that exhibit with AIA include on-site staff assistance, exhibitor passes, marketing assistance, Buyers' Day and lunch opportunities, and social event tickets. Exhibitors also will gain exposure to customers because AIA will be distributing tickets and invitations to social events at its booth. Limited space is still available. Companies interested in exhibiting with AIA, can contact trish.ward@aia-aerospace.org. ICAO Adopts AIA Proposal for Aviation Environmental Protection The Committee on Aviation Environmental Protection (CAEP) under the International Civil Aviation Organization (ICAO) recently adopted a data-driven approach to safeguarding the environment first advanced by AIA 10 years ago. This follows five years of aggressive development of environmental assessment tools by the Federal Aviation Administration. The new model assesses the impact of proposed noise and emissions and the constraints various policies impose on each other in reaching solutions among competing environmental goals. The methodology allows direct comparison of policy costs and benefits. The monetary value of the benefits is the cost of the additional impacts borne by society if the environmental effects of aviation are not reduced — such as the health effects of ozone if NOx emissions are not reduced. The first application of the new framework will evaluate the need for a new NOx control standard at the next CAEP meeting in 2010. Two other critical issues were resolved at the March 2007 CAEP meeting. New ICAO guidance on incorporating emissions from international aviation into Contracting States emissions trading schemes was adopted, leaving unresolved issue of whether States could apply the guidance without mutual agreement. Regarding levies placed on aviation, CAEP will continue to develop guidance on emissions charges related to local air quality and continue to assess the impact of emissions charging schemes currently in place in Europe. AIA Source: howard.aylesworth@aia-aerospace.org |
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