Language included in the 581-page National Defense Authorization Act spending bill for the 2016 fiscal year could change the landscape of Connecticut’s industrial economy.
An amendment introduced by U.S. Sen. Chris Murphy, D-Conn., and included in the final version of the bill that’s awaiting President Obama’s signature closes what Murphy called a “Virginia-class sized loophole” in the 82-year-old Buy American Act that has stripped billions in possible revenue and thousands of jobs from the state.
“This amendment is really about disclosure,” Murphy said in a phone interview.
Murphy’s amendment would require the Pentagon to submit detailed invoices for overseas purchases valued at more than $5 million. With Electric Boat ramping up to fill the largest Navy contract in history, Murphy said it is essential to ensure the domestic supply chain remains strong through the process.
In 2014, EB secured a $17.6 billion contract with the Navy to build 10 Virginia-class submarines over the next five years, a project expected to create 520 direct jobs.
“There are going to be thousands of dollars in the supply chain that are going to be created, and we need those jobs to be in Connecticut,” Murphy said. “That will only happen if the Buy American clause is applied. I’m particularly focused on this now because we’re about to get all this new work for the subs.”In May, Murphy’s office released a report that found that since 2007, the Department of Defense has granted 307,123 waivers to the Buy American Act, at a deferred cost of $176 billion to domestic suppliers. The act compels federal government agencies to favor U.S.-made products in its purchases. But language in the act allows procurement requirements to be waived if the domestic product is more expensive by a certain percentage than a foreign-produced one.
In defense sectors that affect Connecticut’s economy – aerospace and shipbuilding – a total of $5.4 billion was sent to internationally based firms since 2010, according to Murphy’s report.
Kelli Vallieries, president of Old Saybrook-based sheet metal fabricator Sound Manufacturing and head of the Eastern Advanced Manufacturing Association, said Murphy’s amendment will strengthen local economies as well as those in the private sector.
“Demand creates the ability to have really great middle class wages being paid to a large group of people that live in those communities, shop in local stores and pay taxes,” she said. “Buying American really stimulates the economy and local jobs.”
Murphy said his amendment also makes sense strategically, since some of the companies filling defense contracts now are based in nations whose relations with the U.S. are strained.
“The Navy should recognize the risk of losing the American-based supply chain,” Murphy said. “When a job is lost at a supplier in Connecticut, the costs don’t accrue to the Navy. The cost comes in increased unemployment and Medicaid. The Navy is trying to squeeze the amount of money going into the subs in part because their budget doesn’t hurt when people get laid off.”
John Beauregard, executive director of the Eastern Connecticut Workforce Investment Board, praised the Murphy amendment.
“It fits very well with our region’s initiatives to support our manufacturing base and the job opportunities it is presenting. The manufacturing industry’s high skill, high wage) jobs and strong job multiplier effect can be felt across an entire economy,” he said. “Plain and simple, legislation like this that results in increased opportunity for our area businesses results in stimulated economic activity.”