Six months after President Trump ordered the Pentagon to prioritize American-made products in its vast supply chain, powerful members of his own party are pushing in the opposite direction.
In a move that effectively aligns the White House with Senate Democrats, the Senate Armed Services Committee led by John McCain (R-Ariz.) has proposed language in the 2018 defense spending bill that would end long-held domestic sourcing protections, which require the Defense Department to rely on American-made suppliers for certain products deemed critical to national security.
The bill could give foreign manufacturers greater access to the U.S. shipbuilding supply chain, allowing them to bid on contracts for products such as circuit breakers, anchor and mooring chains, vessel propellers and lifeboats — opportunities that for years have been restricted to U.S. firms.
It would also end domestic sourcing requirements for more complicated goods such as buses, submarine piping valves, solar panel components and injectable antidotes for chemical weapons. A separate provision would give the Defense Department new authority to waive “Buy American” laws entirely when there is only one U.S. supplier able to bid on a contract.
The bill is far from finalized, with the House and Senate working to resolve differences in the legislation before it heads to the president’s desk. Meanwhile, President Trump’s America-first push is drawing new lines around an old fight.
Trump rode into office on promises to rip up international trade agreements and put America’s economic interests first. His April 18 “Buy American, Hire American” executive order put limits on the Pentagon’s ability to waive existing domestic sourcing restrictions, something that was meant to promote hiring in the United States. Since he took office, the Pentagon has tweaked its acquisition policy to step up enforcement of restrictions such as the 1933 Buy American Act, which requires the Pentagon to purchase domestically produced products topping a $3,500 threshold, and the 1941 Berry Amendment, which applies to clothing and food products.
Such policies have been a harder sell in Congress, where many Republicans are opposed to them.
Spokesmen from the House and Senate Armed Services Committees declined to comment, citing policies against talking about pending legislation.
But McCain has harshly criticized Buy American policies, saying they waste taxpayer money and frustrate cooperation with military allies.
“‘Buy America’ protectionist procurement policies, enacted by Congress to protect pork barrel projects in each Member’s State or District, hurt military readiness, personnel funding, modernization of military equipment, and cost the taxpayer $5.5 billion annually,” McCain said in a 2002 statement.
The White House objected to the Senate’s effort to weaken domestic sourcing restrictions in a Sept. 7 policy statement addressed to McCain. “This waiver authority, if used to override current Buy American laws, would result in further loss of existing American capabilities and jeopardize American jobs,” the White House letter said.
In the past, protections under Buy American laws have been primarily supported by Democrats, labor unions and members of Congress stumping for the economic interests of their home districts.
The 2017 defense spending bill included a provision that made military recruits’ athletic shoes subject to Buy American laws. If it remains in place, that change is likely to benefit Massachusetts-based New Balance, which maintains a line of “Made in the U.S.A.” shoes that rely on 70 percent U.S. content. That effort was openly promoted by Massachusetts Rep. Niki Tsongas (D). New Balance did not respond to email or phone queries.
Bill Greenwalt, who oversaw Defense Department acquisition policy in the George W. Bush administration, said getting rid of what he referred to as “sole-source earmarks” could be an unstated focus of the Senate bill. “This takes on a number of cats and dogs that have been protected [from foreign competition] for a long time,” Greenwalt said.
This year, Senate Minority Leader Charles E. Schumer (D-N.Y.) stepped across the aisle to join Republican Rep. Claudia Tenney, a freshman from Upstate New York, in trying to get stainless steel flatware included under Buy American laws.
The lawmakers openly stumped for a New York manufacturer called Sherrill Manufacturing, also known as Liberty Tabletop, which describes itself as the only U.S. silverware maker fully compliant with Buy American laws. The effort failed, largely because of opposition from House Republicans.
In today’s domestic sourcing fight, the White House finds itself aligned with Democratic senators from Rust Belt states and manufacturing-heavy Northeastern states such as Massachusetts. Sixteen Democratic senators, led by Tammy Baldwin (D-Wis.), an outspoken critic of Trump on other issues, came out against the proposal to loosen Buy American restrictions, publicly spelling out their objections in an Oct. 20 letter.
“Eliminating these current requirements would open this section of the defense acquisition market up to unfairly subsidized foreign competition, placing the U.S. industrial base at risk, and have the additional effect of undercutting U.S. steel and iron producers,” the senators wrote.
For government contractors, giving foreign suppliers a stronger foothold in the U.S. military supply chain could be a source of disruption.
The National Defense Industrial Association, a trade group, has not taken an official position on the potential changes, but Wesley Hallman, vice president for policy, said the organization is engaged in discussions with members on how to prepare for the rules to be eased.
The Aerospace Industries Association, which lobbies on behalf of defense manufacturers, said it is worried that giving the Defense Department extra waiver authority could have unintended consequences and possibly slow down the acquisitions process.
“There are situations where something other than full and open competition is appropriate and justified given the specific requirements, urgency and circumstances of a particular solicitation,” communications director Dan Stohr said in an email.
Budget hawks have generally opposed Buy American laws when applied to simple products such as shoes and forks.
“For something like anchor and mooring chains, as long as it meets testing standards, let’s get the best product for the best price,” said Steve Ellis, vice president of Taxpayers for Common Sense, an advocacy group.
The changes being considered would also apply to more complex products.
One section of the Senate bill could allow foreign pharmaceutical firms to supply the military with nerve agent antidotes, fast-acting injections designed to blunt the harmful effects of chemical weapons such as cyanide and phosphorus.
The U.S. military buys many of its nerve agent antidotes from Meridian Medical Technologies, a Columbia, Md.-based subsidiary of pharmaceuticals giant Pfizer. Another Maryland-based company, Emergent BioSolutions, manufactures its own nerve gas antidote in Germany, which it sells to overseas U.S. government staffers under a contract with the State Department.