BILL WOULD END CARGO PREFERENCE ON MILITARY SHIPMENTS

BILL WOULD END CARGO PREFERENCE ON MILITARY SHIPMENTS

The Clinton administration has told Congress the government should change the way it purchases goods and services, including how it ships military cargoes.

Five Democratic senators introduced the procurement reform bill on behalf of President Clinton. Part of the bill would give the secretary of defense much greater authority to use foreign-flag vessels to carry Pentagon shipments.The decision was made despite strong protests from the Department of Transportation, said several intra-administration memos. Liner operators are ''very dependent" on defense cargo because it accounts for about 10 percent of their revenue on average, one Maritime Administration memo said.

"The United States government continues to favor the use of U.S.-flag ships" to carry military cargoes, Albert Herberger, maritime administrator, said in statement issued Tuesday.

Marad is studying the impact of the proposed Department of Defense pilot program on U.S. shipping, Mr. Herberger said.

In an internal memo obtained by The Journal of Commerce, Mr. Herberger last week was harshly critical of the proposal. He told Mortimer Downey, deputy transportation secretary, the DOD program would be viewed as "ill-conceived" by U.S. shipping lines and be used by the industry to justify abandoning the U.S.-flag.

The Pentagon already has power to use foreign-flag ships when U.S.-flag carriers aren't available, but as a practical matter the restrictions make that option unusable, several sources said.

"The difference is that this would open military shipments to foreign flags in peacetime," one industry lobbyist said.

The provision weakening the U.S.-flag requirement was reportedly a part of the bill Monday and is assumed to remain in the version introduced in the Senate but no printed version of the bill is yet available.