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 AIA UPDATE: March 2008, Volume 12, No. 6
Study Finds U.S. Export Controls Harm Space Industrial Base and Global Competitiveness Policies governing the export of U.S. commercial satellites and their components are hurting the U.S. space industrial base at a time when other countries are improving their own space capabilities, according to a report released in February by the Center for Strategic and International Studies (CSIS). The study has produced, for the first time, quantifiable data about the unintended, negative consequences of export controls to U.S. second- and third-tier suppliers. Commercial satellites and components without American content — and marketed as free of U.S. International Traffic in Arms Regulations (ITAR) — are increasingly attractive to overseas buyers. According to a 2007 Air Force Research Analysis Laboratory review used by CSIS, annual ITAR compliance costs average $50 million for the industry. As a percent of foreign sales, the cost burden for third-tier companies is nearly eight times that for first-tier companies. The current export control policy is also constricting U.S. engagement and partnership with the rest of the global space community, the study found. The U.S. National Space Policy has clarified one of its goals as encouraging international cooperation with foreign nations on space activities that are mutually beneficial. The study's authors — a panel of experts including former AIA President and CEO John Douglass and Paul Kaminsky, former DoD undersecretary of defense for acquisition and technology — noted that the "grand strategic intent of the space export controls is not being achieved." CSIS recommends removing U.S. commercial communications satellites, subsystems and components from the U.S. Munitions List and suggests further study to determine whether other systems, such as weather satellites, should be available for export. The study also proposes an annual review of satellites and other space systems to assess their strategic importance to the United States and to determine whether the technologies are already available overseas. In addition, Congress could ease the process by adopting the best practices used for other export processes by setting timelines and establishing special licensing vehicles for commercial satellites. To increase U.S. participation in international programs, the study suggests creating a special program authority to permit timely involvement of U.S. participants in multinational space projects. AIA strongly endorses the findings of this study and looks forward to helping address the challenges identified by CSIS. The report is available online at www.csis.org. AIA Source: remy.nathan@aia-aerospace.org AEROSPACE FOCUS: Speaking of Space...  Rep. Terry Everett (R-Ala.), at right, ranking minority member of the House Armed Services Subcommittee on Strategic Forces, emphasized the value of educating decisionmakers on the importance of space. As a member of the subcommittee, Everett oversees U.S. military space programs, missile defense and defense-related energy research. He cited the significance of Space Situational Awareness and Operationally Responsive Space programs as well as the need for the United States to move forward with the Global Positioning System III. Rep. Tom Feeney (R-Fla.), ranking minority member of the Subcommittee on Space and Aeronautics of the House Science and Technology Committee, highlighted the importance of maintaining the U.S. Space Exploration Policy, stressing the merits of a stable, long-term plan that continues over several administrations. Feeney also spoke about the importance of satellites to U.S. civilian and national security infrastructures and about China's increasing interests in space. WASHINGTON PIPELINE: First Steps Taken toward Modernizing Export Control By Marion C. Blakey, AIA President and CEO In late January our industry received great news from the administration regarding export controls. A slate of new rule changes promises marked improvements to an outdated and overburdened system and, ultimately, will allow us to share technology in a timely manner with our closest friends and allies around the world. Our government's ability to expedite decisions on export authorizations is extremely important as we battle our enemies in Afghanistan, Iraq and wherever else on the globe we are threatened. Our allies, fighting shoulder-to-shoulder with U.S. soldiers, should have quick access to the best technology available. The need to modernize the system is underscored by a report from the Center for Strategic and International Studies released in February. It concludes that the U.S. space industrial base, a strategic asset, has been greatly harmed and has lost ground to other nations because of export controls that, ironically, are supposed to preserve American security. AIA, along with many other advocacy organizations in Washington, has been working within the Coalition for Security and Competitiveness to modernize the export control system. The White House proposal reflects many of the coalition's recommendations. Skeptics aside, the administration's changes are the most significant steps forward in many years. For example, they require, for the first time, that all export license applications must be processed by the State Department within 60 days, barring national security considerations. The new regime also creates an interagency process for review and oversight of commodity jurisdiction and commits to similar improvements in the day-to-day processing of licenses. These changes are notable for several other reasons. The fact that they came from the president's office recognizes that international trade and technology cooperation are vitally important in today's globalized world and will only continue to increase in significance. Additionally, jurisdictional committee leaders in both the House and Senate have expressed support for the changes, some calling for even greater modernization. The changes also reflect greater commitment among federal agencies that in the past have not had stellar track records for working together. But, as we all know, the devil is in the details as the agencies begin implementing the new rules. There are several other steps the administration and Congress can take to move forward. They include approving pending defense trade treaties with the United Kingdom and Australia — two of our most trusted allies — clarifying commodity jurisdiction for civil aircraft components and improving licensing options for the U.S. government's own critical defense programs. We are very optimistic about these important first steps toward modernizing export control. The challenge for industry, this administration, Congress and those that follow will be to sustain this momentum and not lose sight of opportunities to make even more progress. Our warfighters and those of our allies deserve no less. Bright Spots for Aerospace in Fiscal 2009 Budget President Bush's $3.1 trillion federal budget request for fiscal 2009, which starts Oct. 1, addresses several AIA priorities, including air traffic modernization, aeronautics R&D, space exploration and defense procurement. The request for FAA totals $14.6 billion, part of which is $688 million for the Next Generation Air Transportation System. That is a three-fold annual increase in funding for development and implementation of the satellite-based system vital to meeting passenger flight levels that are expected to triple by 2015. The funding increase will go largely to air traffic management technologies such as Automatic Dependent Surveillance-Broadcast, a crucial component of NextGen. The proposal also includes an 8.4 percent increase over the enacted fiscal 2008 budget for facilities and equipment, reaching a total of $2.72 billion. The research, engineering and development budget would increase 16.3 percent over the current fiscal year's request to reach $171 billion. "The FAA budget request is on the right track in several important areas," AIA President and CEO Marion Blakey said. "This will allow further progress toward NextGen implementation, and I would encourage Congress to support this proposal." The administration's budget request for NASA has an overall increase of 3 percent from 2008 to $17.6 billion. It includes an increase for space exploration, but aeronautics research continues to fall short. The budget would cover continued space exploration priorities while boosting Earth observation efforts and the Commercial Orbital Transportation System program. The $447 million aeronautics request continues a lengthy trend of inadequate R&D funding and pales in comparison to the historic high in aeronautics R&D investment — $1.54 billion in 1994. The aeronautics budget request includes $62.6 million for Aviation Safety, $74.6 million for Airspace Systems, $235.4 million for Fundamental Aeronautics and $73.9 million for the Aeronautics Test Program. The request also asks $910 million over five years to fund five Earth observation systems and includes full funding of the Commercial Orbital Transportation Services project. "Exploration and NASA's science activities are vital to maintaining our status as the world's space leader," Blakey said. "We need to continue making space a national priority, and the administration's budget does that." NASA has several important undertakings in the next few years, including 11 scheduled flights before the space shuttle is retired in 2010 and development of the next generation of vehicles in the Constellation program. In defense, the proposed budget calls for $515.4 billion, 7.5 percent higher than the 2008 budget, and includes $104.2 billion for weapons procurement and nearly $80 billion for research and development, testing and evaluation. Although the spending proposal is 7.5 percent higher than the fiscal 2008 budget, the extra dollars for research and development come at the expense of procurement funding, which is down about $6 billion. The decrease illustrates AIA's concern about the future erosion of the defense budget. The procurement accounts, which will keep our nation strong, are challenged by growing operating and personnel costs. AIA Source: cord.sterling @aia-aerospace.org WASHINGTON WATCH: Mandatory Disclosure Provisions Disputed AIA has submitted comments to the General Services Administration disputing the validity of a rule proposed by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council to govern contractor ethics and self-reporting. The proposed rule, "Contractor Compliance Program and Integrity Reporting," would amend Federal Acquisition Regulations (FAR) to require contractors to:
AIA contends that the mandatory disclosure requirement in the proposed rule is unreasonable because it lacks a rational basis. The requirements also discourage disclosures by denying a contractor the benefits of a voluntary disclosure under applicable Justice Department principles. Moreover, explicit language is needed to limit the scope of full cooperation to preclude inappropriate demands for disclosure of information protected by attorney-client or work product privileges. AIA Source: elaine.guth@aia-aerospace.org WASHINGTON WATCH: Congress Extends FAA Authority through June Both the U.S. House and Senate have passed short-term legislation that temporarily extends FAA authority, giving senators more time to write a four-year reauthorization measure for the agency. The House passed its version of the FAA Reauthorization Act of 2007, H.R. 2881, last September, but the Senate has continued to debate parts of the bill, including how to pay for the Next Generation Air Transportation System. Once the Senate agrees to its version of FAA reauthorization, S. 1300, both chambers will need to work out differences in the two measures through a conference committee before the June 30 extension expires. With competing legislative priorities in a contentious election year, additional extensions could jeopardize final passage before the end of the 110th Congress. AIA continues to track this significant issue closely. AIA Source: brian.elson@aia-aerospace.org WASHINGTON WATCH: Industry-Government Team to Combat Counterfeit Parts AIA's Quality Assurance and Intellectual Property committees have formed a joint industry-government integrated project team to address the problem of counterfeit parts in the supply chain. After receiving numerous presentations from industry and government agencies on the problem, the team has developed a working definition of "counterfeit" parts. In April the team plans to begin development of best practices to combat counterfeit parts, including mitigating the risk of purchasing counterfeit parts and recommending processes for inspection, detection and reporting. Possible sources for counterfeit parts have been identified as manufacturers other than original equipment producers or their approved suppliers, parts obsolescence that forces re-engineering or redesign of replacement parts, and cost and schedule compliance pressures. Without risk mitigation, a growing number of suspect parts could find their way into aerospace, remain in supply chains and impose an increasingly negative impact on product integrity. AIA Source: matt.williams@aia-aerospace.org Deadline Nears to Qualify for AIA's Team America Rocket Contest A total of 643 middle and high school teams from 43 states and the District of Columbia have registered for AIA's Team America Rocketry Challenge, the world's largest rocket contest. The competition, aimed at increasing interest in math and science and promoting aerospace careers among young people, will involve about 7,000 students from start to finish. Teams have until April 7 to qualify for the final competition. This year's challenge is to build and fly a model rocket that reaches 750 feet while remaining aloft for 45 seconds and then returning the payload of two raw eggs to the ground unbroken. Students are vying for $60,000 in scholarships and prizes. Lockheed Martin Corporation provides $5,000 scholarships to each of the top three teams, and Raytheon Company will sponsor the winning team's trip to the Farnborough International Airshow in July. The top 100 teams will gather on Saturday, May 17, for the national finals at Great Meadow in The Plains, Va. AIA is sponsoring the contest along with the National Association of Rocketry, partnered with NASA, the Defense Department, the American Association of Physics Teachers and 33 AIA member companies. For more information, visit www.csis.org.rocketcontest.org. AIA Source: audrey.koehler@aia-aerospace.org 2008 Team America Rocketry Challenge Sponsors Special thanks to our 2008 Team America Rocketry Challenge sponsors. These AIA member companies have been instrumental in inspiring middle and high school students to pursue careers in aerospace.
Aerojet American Pacific Corporation Analytical Graphics, Inc. B&E Group, LLC BAE Systems, Inc. Barnes Aerospace The Boeing Company Crane Aerospace & Electronics DRS Technologies, Inc. Ducommun Incorporated Embraer Aircraft Holding Inc. General Electric Company GKN Aerospace Goodrich Corporation W. L. Gore & Associates, Inc. Harris Corporation Honeywell ITT Corporation L-3 Communications LMI Aerospace, Inc. Lockheed Martin Corporation Natel Engineering Co., Inc. National Technical Systems Northrop Grumman Corporation Parker Aerospace Raytheon Company Rockwell Collins Rolls-Royce North America Inc. Textron Inc. Timken Aerospace Transmissions, LLC Purdy Systems United Technologies Corporation Vought Aircraft Industries, Inc. Woodward Governor Company |
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