Bush '02 Budget Proposes Short-Term Fixes.

• Author: Stone, Ben

President Bush's budget request for the Defense Department in fiscal year 2002, as outlined in his February address to Congress, contains three major initiatives aimed at alleviating some of the department's short-term needs:

* An increase of $400 million for construction, renovation and privatization of military housing in order to improve the quality of life for uniformed personnel.

* A $1.4 billion pay raise for military personnel to help address recruiting and retention issues.

* A $2.6 billion increase in research and development (R&D) spending. This would be the first installment of $20 billion that he has proposed to spend for defense-related R&D during the next five years.

The R&D funds would pay for work to develop a national missile defense system, counter-terrorism strategies focused on unconventional threats to national security, improvements to existing testing and research facilities and leap-ahead technologies for new weapons and intelligence systems.

Bush has said that he will not determine final funding levels for 2002 until Defense Secretary Donald Rumsfeld has completed a systematic review of the department's missions, structutes, processes and national security strategy.

Federal Prison Industries

Legislation has been introduced in the House of Representatives that would dramatically alter Federal Prison Industries (FPI). According to its co-sponsors, the bill--the Federal Prison Industries Competition in Contracting Act of 2001--would impose long-overdue and much-needed restraints on the FPI, which they charge inflicts unfair competition upon private-industry competitors. Original cosponsors are Reps. Peter Hoekstra, R-Mich.; Barney Frank, D-Mass.; Michael Collins, RGa., and Carolyn Maloney, D-N.Y.

The FPI, a government-owned corporation within the Justice Department's Bureau of Prisons, was created in 1934 to provide jobs for federal prisoners. By law, federal agencies are required to buy the goods that they need from the FPI, provided that those goods are "substantially similar in quality, cost and availability" to those provided by commercial suppliers.

With annual revenue of $600 million, the FPI currently makes more than 300 products. It sells approximately 40 percent of these goods to the Defense Department. The FPI's lock on this market has had a dramatic and debilitating affect on small and medium sized businesses that contract with the Federal Government, according to the bill's supporters.

The...