Outsourcing the Pentagon

Did you know the Pentagon has issued 161,711 waivers to avoid buying American? buyamerican.jpg That it has cost us 620,000 manufacturing jobs and $53.5 billion dollars since 2007? So says a new report from the House of Representatives Buy American Caucus Chair, Chris Murphy.

Today, Congressman Chris Murphy, Chair of the House Buy American Caucus, was joined by local manufacturers and advocates for American manufacturing to unveil a report showing that federal policies of the Department of Defense are costing as many as 620,000 American manufacturing jobs. By issuing over 161,000 waivers to the Buy American Act, the Department of Defense has sent $53.5 billion to overseas contractors since 2007.

How in God's name could the Pentagon do this, considering the United States has a massive jobs crisis and that is, after all, U.S. taxpayer money. First, the Buy American act allows exceptions.

The Buy American Act, which has governed federal procurement since 1933, is full of loopholes and exceptions that allow billions of dollars to flow out of the country each year. Two of the biggest loopholes allow for waivers for any product that is to be used overseas, or for products in which the Department of Defense finds that there are no domestic suppliers.

But wait for it, the DoD is claiming there are no domestic suppliers when in fact there are. Some American Business are screaming political bloody murder as loud as they can about the Pentagon snub too.

Unfortunately for too many domestic suppliers, the Department of Defense says that it cannot find a product in the United States when in fact that product is made right in the U.S. This happened to Colonial Bronze in Torrington when the U.S. Air Force asked for a waiver to construct a new facility at Eielson Air Force Base in Alaska. Rep. Murphy wrote to the Air Force requesting that they immediately rescind this waiver.

John Bogart, President of Integro said: "Manufacturing in America creates good jobs in America that ripple through the economy. Integro petitioned the federal government to enforce existing Buy American laws. Since doing so, Integro and its suppliers have seen increased sales that have helped both the company and the community"

Jamie Gregg, President of Colonial Bronze said: "Instead of looking at my company to supply the products that the Air Force needs, they issued a waiver, saying that these products were only made in China. Careless investigations into American made product availability like these are not only hurting my company and the families we employ, they are destroying U.S. manufacturing."

Don't forget, there is huge money in the great military-industrial complex and lobbyists are all over the Department of Defense as bad as they cover the rest of our government, like flies on...well, you know.

Seems there is also a real interesting definition of what is American Made too. The act claims only 51% of something has to be domestically sourced to be called American.

The report states 92% of the 161,711 waivers were due to loopholes around the Buy American Act. The report lists 8 major loopholes on how our Department of Defense skirts around the Buy American Act. They are:

  1. Use outside the United States: The Buy American Act does not apply to purchases of goods that will be used outside of the United States. That doesn’t mean that all of the articles materials and supplies used outside of the United States (which would be almost everything needed to fight in Iraq and Afghanistan) are bought from foreign companies, but billions of dollars are spent on these types of purchases.
  2. Resale: If DoD is not the end user of the item, the Buy American Act doesn’t apply.
  3. WTO GPA and Free Trade Agreements: Purchases that would interfere with our obligation to the WTO, the Agreement on Government Procurement or other Free Trade Agreements that restrict domestic preference are not subject to the Buy American Act.
  4. Commercial IT: Purchases that are commercial information technology (IT) like computers, printers, software and hardware are exempt.
  5. Public Interest Determination: Purchases for which an Agency head determines that enforcing the Buy American Act is not in the “public interest” are not subject to the Buy American Act. This waiver authority can be invoked after bidding is open and is at the discretion of the Secretary of Defense.
  6. Domestic Non-availability: An item that is not made in the United States in sufficient quantity or quality is not subject to the Buy American Act. Even though there are American firms that make these items, DoD still sometimes says the items are non-available anyway.
  7. Unreasonable cost: A federal agency is permitted to use a foreign product if the head of the agency determines that the cost of the lowest priced domestic product is "unreasonable." A system of price differentials has been established for use in making this determination. A 50% price differential is applied to Department of Defense procurements.
  8. Qualifying country: If the purchase is from a “qualifying country”, which is one where we have a special trade agreement or a memorandum of understanding regarding defense trade, a waiver is available.

Are they kidding me? They have an exemption for I.T.? Ever heard of cyber warfare?

Here's the breakdown of losses by waiver class from the report.




In terms of money lost, the the worse was use for outside of the United States. It cost $36.26 billion since 2007. Before 2007, unfortunately there are no detailed records. Think Iraq and the billions lost. That's not even counting the fact Home Depot lied to the government on where their products were sourced from.

The worst year for losses from waivers was at the height of the recession, 2008. While Americans were having their jobs slaughtered, the Pentagon issued 65,000 waivers to not Buy American at a cost over $18 billion.

Now, if anyone would realize we also need a Hire America Act as well.



Economy in Crisis gets a hat tip

Their blog alerted me to this new report. Yet another group trying to get something done about U.S. manufacturing, trade and American jobs.

Not an accident

Not and accident, all by design.