U.S. weapons programs get big boost for contractors

Jeremy Herb, Politico, Apr 27

The defense authorization bill released Monday by the House Armed Services Committee is a clear win for defense contractors, with few program cuts and many big increases.
The mark from Armed Services Chairman Mac Thornberry (R-Texas) includes $1 billion for six additional F-35B aircraft produced by Lockheed Martin. It has an extra $1.15 billion to procure 12 F/A-18F Boeing-made Super Hornets. And it includes $169 million more than the Pentagon requested for the Javelin missile system from Raytheon and Lockheed.
In all, the mark boosts procurement funding to $117 billion – $3 billion higher than the Pentagon’s fiscal 2016 budget request.
The danger is that the full funding authorized in the bill never materializes.
The increases for weapons programs are being made under the assumption that defense spending can remain $38 billion above the Budget Control Act spending cap. The House and Senate-passed budgets boosted defense spending by $38 billion under the Overseas Contingency Operations war budget, which does not count against the BCA cap, but President Barack Obama and Senate Democrats may block the defense funding adds without equal increases on the domestic side.
“All the authorizations in there are based on the assumption appropriators will use the additional $38 billion in OCO funding,” said Todd Harrison, a defense analyst at the Center for Strategic and Budgetary Assessments. “But there’s no guarantee appropriators will be able to pass a bill to do that.”
Thornberry has said that using the OCO budget to keep the higher funding levels is not ideal, but that it’s the best solution going forward. Thornberry’s committee included $38.3 billion from the operations and maintenance budget that is base funding in the OCO budget, but designated it separately from the $50.9 billion war budget that was proposed by the Pentagon.
“Unlike other OCO programs, these are specifically authorized just as they were in the base budget,” a HASC summary of the mark explained. “Examples of base requirements funded by OCO include airlift operations, combat support forces, combat communications, training support, combatant commanders core operations, Army prepositioned stocks and equipment maintenance.”
The chairman’s bill, which will be marked up in a marathon session on Wednesday, did include some weapons program cuts, including a $460 million reduction to the long-range strike bomber program and a $224 million cut to the KC-46A tanker program. But those trims were included after “close consultation” with the program offices, committee aides said, and are mostly due to schedule delays that made it unlikely the programs would spend the full amount in fiscal 2016.
The chairman’s mark also cut the overall operations and maintenance budget by $1.6 billion below the Pentagon’s fiscal 2016 request, according to an internal Democratic committee summary of the bill obtained by POLITICO.
The mark makes some other large cuts to provide offsets. With oil prices still low, the bill includes $1.6 billion in fuel savings, arguing the Pentagon is using outdated rates to calculate fuel costs. And the measure takes $1.4 billion in savings from the Pentagon’s Foreign Currency Fluctuation account, created to lessen the budget impact of changes in foreign currencies. The committee says the account has been “over-resourced for some time.”
In all, Thornberry’s measure authorizes $495.9 billion in base Pentagon funding, $19 billion in Energy funding and $7.6 billion mandatory spending. It also includes $89.2 billion in OCO funding for an overall topline of $611.9 billion.
That’s in line with the Obama administration’s budget request, but the Pentagon’s budget request added the $38 billion by busting through the BCA cap (There was also a $38 billion boost to domestic spending.).
Thornberry, who is leading his first NDAA markup as chairman this year, broke from retired Chairman Buck McKeon (R-Calif.) on one of the biggest fights for the committee this year: the A-10 Warthog.
The Air Force has pushed for retiring the A-10, arguing other planes can take over its close-air support mission. But unlike McKeon, Thornberry included $683 million to keep the plane flying this year, which includes $240 million for re-winging the plane.
Thornberry did not, however, include language explicitly blocking the A-10’s retirement – a ploy to give vulnerable Rep. Martha McSally (R-Ariz.) the opportunity to offer that language in an amendment during markup.
“With funding secured, the chairman would welcome efforts at markup to prohibit the retirement of the A-10 fleet,” the summary states, all but acknowledging the political effort afoot.
Thornberry’s mark beefs up restrictions on transferring detainees from the U.S. military prison at Guantanamo Bay, Cuba, rolling back the certification rules loosened in the 2014 National Defense Authorization Act. The bill also adds a restriction that could block transfers to countries where transferred Guantanamo detainees have confirmed to reengage in terror activities, a proposal that’s opposed by the White House and the committee’s ranking Democrat, Adam Smith of Washington state, and is likely to be raised during Wednesday’s markup.
In addition, Thornberry threatens to fence off roughly $500 million for the office of the secretary of defense until the committee receives the documentation surrounding the Justice Department’s legal advice to the Pentagon on the swap of five Taliban commanders for Army Sgt. Bowe Bergdahl, who has since been charged with desertion and misbehavior before the enemy.
Thornberry’s measure also pushes back against several Pentagon cost-cutting proposals that have been roundly rejected by Congress in recent years, including a new round of base closures and a reduction to the growth of the basic housing allowance for service members.
The bill includes a key change proposed by a congressionally mandated commission to reform the military’s pay and benefits system: Overhaul the military’s 20-year retirement system. Thornberry’s mark includes the creation of a 401(k)-style retirement system for new service members, along with a reduction of payouts for those who serve more than 20 years to 40 percent of basic pay from 50 percent, although some measures are taken to offset the reduction.
There are also several measures in the chairman’s mark that have been proposed by both Thornberry and Smith: an acquisition reform proposal and an authorization for $200 million in funding for lethal aid to Ukraine.
The bill also includes $600 million for the Syrian train-and-equip program and $715 million for the Iraq program – and urges that 25 percent of the assistance go to the Kurds and Sunnis.
On the research side, Thornberry’s mark includes $184 million for the development of a new liquid rocket engine to replace the Russian-made RD-180, $100 million more than the Pentagon requested.
Thornberry’s bill includes an extra $137 million for Guard helicopters, $110 million in Apache helicopter upgrades and $80 million in Stryker vehicle upgrades.
In shipbuilding, the mark includes an extra $120 million for DDG-51 destroyers, $279 million to accelerate the LX(R) amphibious ship program. And it shifts $1.4 billion for the Ohio-class submarine replacement program into the National Sea-Based Deterrence Fund, a funding stream that was created by Congress in last year’s bill.
Austin Wright contributed to this report.