- The Washington Times - Wednesday, November 30, 2022

If the last two years have taught us anything, it’s that U.S. policymakers erred when they allowed the regulatory burden to grow so intrusive that it gave companies incentive to relocate their manufacturing businesses overseas.

There’s been some effort to ameliorate that. On Aug, 9, President Biden affixed his name to the CHIPS and Science Act, a bipartisan measure Congress passed to bolster the U.S. semiconductor supply chain by bringing chip-making back from Asia.

In theory, a great idea. In reality, a questionable effort at subsidies may ultimately be unnecessary. But if the CHIPS Act reduces America’s reliance on Chinese industry, every little bit helps.

Unfortunately, the U.S. government can’t stay out of the way. The Biden administration in particular has businesses hamstrung with onerous regulations and potential regulations limiting innovation, blocking mergers and acquisitions, and preventing the U.S. economy from unlocking its potential to bring business back from China.

The lack of clarity between objectives and outcomes is concerning. In the case of the National Defense Authorization Act, which most analysts expect to be finished during the post-election lame-duck session, the indecision is dangerous to the country’s economic health and its security.

The NDAA should have been finished before Oct. 1, the start of the new fiscal year. Predictably, it wasn’t, but there are hopes it will be ready to be voted out of Congress in the first full week in December.

As is usually the case with these big, comprehensive bills, buried within it is a damaging provision that was apparently snuck in at the last minute in the hope no one would notice. Now, it may bring the whole bill down.

A provision of the NDAA known as Section 802 in the House-passed version (and Section 822 in the Senate bill) creates added bureaucratic hurdles for private companies wanting to do business with the federal government by adding numerous, onerous disclosure requirements about material sourcing and the prices paid for those materials.

If the bill passes with Section 802 or something like it included, it will force companies that work with the government to potentially violate partnership agreements on sourcing and other proprietary information or be subject to false claim act penalties.

Rep. Rob Wittman, a member of the House Armed Services Committee, has been upfront about his concerns that Congress is trying to tie the hands of the same U.S.-based companies it wants working to build and maintain U.S. defenses. In a recent op-ed, he drew attention to the increased roadblocks and challenges Congress continues to put in front of companies trying to develop products for the government.

Mr. Wittman rightfully pointed out that “existing DoD systems and processes do not allow the Department to take full advantage of advancements derived from private investment in startups outside of the traditional defense supplier ecosystem. DoD must become a better buyer and customer of commercial products; one that understands industry incentives and market drivers.”

The disclosures required under the current draft of NDAA under Section 802 increase the risks for private companies currently supplying the military, and will also limit the entry of new innovators into the space and have a massive impact on the growing commercial providers to the government.

Commercial providers, the companies on whom the military relies to make wheels, brakes, seats, and other things it needs will be less inclined to work with the government if new disclosures on how they produce their products were forced upon them and made public for their commercial competitors to see.

These commercial partners are a vital part of the U.S. defense industry even if we don’t think of them as defense contractors. Remember, the number of government partners has been continually declining for some time. According to a recent GAO report from fiscal 2011 to fiscal 2020, the number of small businesses receiving Department of Defense contract awards decreased by 43% even as obligations to small businesses increased by 15%.

If we are going to remain both economically and militarily strong, we need to cut red tape, not add to it. Congress must ensure that our men and women in uniform are given every competitive advantage and the Department of Defense should be given the freedom to harness private sector innovation and not be hindered by unnecessary disclosure regulations.

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