Congress seeks better deal for U.S. contractors on Israeli Iron Dome system

July 21

Congress, which has been pouring extra money into the Iron Dome, wants Tel Aviv to give U.S. firms a bigger share of the Israeli missile defense system’s contracts.

The Israeli state-owned Rafael Advanced Defense Systems, along with other mostly Israeli-government-owned contractors, developed and built the Iron Dome system, but it was primarily financed with Defense Department funds. Congress added much of that money on top of the administration’s requests.

For example, there is some $351 million in the fiscal 2015 Defense Appropriations Bill that passed in the House on June 20 and the Senate Appropriations Committee on Thursday. It’s now awaiting action by the full Senate. Congress added $175 million to the $176 million the Obama administration originally sought in the measure.

If approved, that would make almost $1 billion from the United States over five years for Iron Dome production. The Israeli government has contributed some $600 million. The head of the Israel Defense Ministry missile defense agency, Yair Ramati, told reporters recently that U.S. funds had paid for seven of eight Dome batteries in the field. An Israeli parliament foreign-affairs subcommittee has said the country would need 13 Iron Dome systems. Three more are in the pipeline.

Up to this year, the major portion of Pentagon-supplied Iron Dome funds — said to be over 90 percent — was spent in Israel. Compare that with the Bush administration’s 10-year, $30 billion military aid agreement with Israel in 2007, which limited 26.3 percent of those U.S. funds to be spent on Israeli-manufactured equipment. Arrow and David’s Sling, other Israeli anti-missile systems, were developed as joint U.S.-Israeli programs, with most of the money spent through U.S. defense contractors.

The Iron Dome defense

To remedy the current low U.S. contractor participation level, a future co-production deal for Iron Dome interceptors and other parts was signed in March between the U.S. Missile Defense Agency and the Israeli Missile Defense Organization. With the agreement, the proportion of funds for U.S. contractors, which has been as low as 3 percent, could rise to more than 50 percent. In preparation, the 2014 Pentagon budget has $15 million to pay for U.S. contractors’ engineering costs in developing capacity to co-produce Dome components.

Last week, the Senate Appropriations Committee said that more reassurance was needed. It voted to withhold the $175 million for fiscal 2015 until it has confirmation that Israel has provided the Pentagon with a timeline for Iron Dome expenditure of the 2015 U.S. funds; a delivery schedule for funded items; and a report to the Missile Defense Agency documenting delivery and acceptance by U.S. industry suppliers of all Israeli technical data packages required for U.S. co-production of Iron Dome.

The committee also wanted a joint U.S.-Israel “common cost model of Iron Dome components,” as well as “actual Iron Dome production costs beginning in fiscal year 2013; and component lead-times and delivery schedules for each fiscal year thereafter.”

The House Armed Services Committee in May originally inserted the $175 million in the defense bill after Israel said producing parts in the United States would boost Dome costs. In its report on the measure, the House panel said, “Given the significant U.S. taxpayer investment in this [Iron Dome] system, the committee believes that co-production of parts and components should be done in a manner that will maximize U.S. industry participation.” The panel added that it expected the Pentagon to withhold the money until Israel supplied a “detailed cost and schedule justification” for the added funds.

Last week, the Senate panel toughened up the House language.

The success of the Dome system will draw more purchasers. Haaretz reported July 18 that several governments had expressed interest.

It appears Congress means business when it comes to future Iron Dome business.

Gitmo costs

The Senate committee also took on another touchy issue — the costs of maintaining Guantanamo’s detention facilities, which the Obama administration wants to close. The panel offered a reason to do it, saying its costs are becoming “prohibitive” and “greater effort must be made to find a longer term solution.”

Its report points out that as the detainees age, their current medical clinic “functions with inadequate space and is lacking proper medical treatment equipment.”

As a result, the Guantanamo Naval Station base hospital has the only ability to handle chronic care for detainees. For security, that base facility must be used after hours or closed during daytime hours to handle detainee emergencies. To modify the present clinic would cost $11 million. Housing facilities for service members supporting the detention facilities need replacement, which would cost more than $100 million.

Most stunning, the average annual cost to house a Guantanamo detainee is approximately $2.8 million a year, according to the committee. A May 2013 Government Accountability Office report put the average cost of a maximum-security Federal Bureau of Prisons inmate within the United States at roughly $78,000 a year.

A new reason to close Guantanamo: It just cost too much to keep it open.

For previous Fine Print columns, go to washingtonpost.com/fedpage.

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