A section within the Senate Armed Services Committee version of the Defense fiscal 2011 authorization bill would allow the Defense Department to establish standards for private sector supply chain management and exclude companies from certain procurements if they fail to adhere to those standards.

The legislative language, contained in Section 815, would apply to national security systems procurement. Under the provision, DoD agency heads would be able to exclude companies from consideration, based on their supply chain practices should the director of the Defense Intelligence Agency and the assistant secretary of defense for networks and information integration concur. The exclusion provision would also apply to subcontractors.

Federal worries over where on Earth technology is developed and manufactured have grown in recent years, as has concern that technology originating from potential enemy countries could contain intentional flaws or a back-door way of subverting performance.

The White House Comprehensive National Cybersecurity Initiative calls for development of new acquisition policies on managing supply chain risk, in partnership with industry.

However, at least one industry technology association is far from happy with the committee's language.

The provision doesn't require Defense to tell companies what aspect of their supply chain management merits exclusion, said Trey Hodgkins, TechAmerica vice president for national security and procurement policy. TechAmerica represents about 1,200 member companies and is the largest technology company advocacy organization in the United States.

Once excluded from a competition--without knowing why--companies could see their business with other agencies dwindle, Hodgkins said. "If the DoD won't buy from me, why would Agriculture buy from me?" he asked.

Nor does the provision require the DoD to state upfront what would be acceptable supply chain management practices, a requirement that Hodgkins should be necessary, since companies could then decide whether or not to participate in the procurement.

A company exclusion would not be subject to review before either the Government Accountability Office or in federal court.

The House fiscal 2011 defense authorization does not contain similar language. While the House has been ready since May 28 for reconciliation talks with the Senate over the two chambers' differences, the full Senate has yet to act on its version of the bill, which the Senate Armed Services Committee approved June 4.

This year's defense authorization process has been more than usually contentious, with some Republicans threatening to filibuster passage of the legislation due to language in both the House and SASC versions that would end the "don't ask, don't tell" policy on homosexuals serving in the military. Also, the White House has threatened to veto (.pdf) any bill that funds additional C-17 cargo planes or authorizes a second engine for the F-35 Joint Strike Fighter. Defense Secretary Robert Gates emphasized the threat in June 16 prepared testimony (.pdf) before the Senate Appropriations Committee defense subcommittee.

For more:
- go to the THOMAS page of the Senate fiscal 2011 authorization bill
- download the declassified portions of the Comprehensive National Cybersecurity initiative (.pdf)

Related Articles:
Cyberspace requires improved acquisition, information sharing
SASC wants $30M for private sector cybersecurity pilots
SASC orders DoD cybersecurity changes in authorization bill
House encourages IT acquisition reform in Defense bill