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Quick Hit – May 27, 2016

by Gene Moran in Blog

Disruptions to the Appropriations Process….

The smooth path to FY17 appropriations successes in the House ground to halt as the energy and water appropriations bill was voted down yesterday due to an amendment regarding LGBT rights. As Speaker Paul Ryan stated after the bill’s failure:

“When I became speaker one of the commitments I made to our members was to open up this process. That means … more amendments from both sides of the aisle. It means fewer predetermined outcomes and, yes, more unpredictability.”

An open amendment process for appropriations was a key element of Speaker Ryan’s agreement with Republican factions upon assuming the Speakership. Many lawmakers are already predicting that more controversial amendments and failure to individually pass the 12 necessary spending bills will require a continuing resolution at the end of the year.

How the Appropriations Should Go…

Usually, the appropriations bills reported by the House and Senate in May continue to advance through early June, and move to floor consideration throughout the summer. Both chambers typically aim to finish consideration of appropriations bills before the August recess, although the Senate process sometimes continues through the fall — this year’s August recess begins in mid-July due to the Presidential conventions. The fall and winter have recently been dominated by negotiations to reconcile the differences between the appropriations bills passed in each chamber. Debates between Senate, House, and the administration to find an acceptable compromise is what often prompts the passage of continuing resolutions to a prevent government shutdown at the end of the year.

At this early phase of the process, given the differences in the bills, a desire by Democrats to match any defense increase with non-defense increases, and the potential for politically charged amendments (LGBT rights, for example), it will once again be an exciting process. 

Business leaders should be communicating with their government customer regularly in order to understand the mutual implications of a CR on their specific programs.

The Four Defense Bills in Progress…

Screen Shot 2016-05-27 at 9.40.46 AM

Senate Defense Appropriations

The Senate Defense Appropriations Subcommittee approved a bill for FY17 on Tuesday, and the Senate Appropriations Committee approved the bill Thursday; summary found here. The bill adheres to the original budget agreement from last year, allocating $515.9 billion to base defense budget funding and $58.6 billion to Overseas Contingency Operations.

The main difference between the SAC Defense bill and the HAC Defense bill is that the Senate has chosen not to follow the House maneuver to shift OCO funds to prompt an overall increase in the defense budget next year. The Senate bill cuts approximately $15 billion in spending and will redistribute those funds towards operation readiness, maintenance accounts, shipbuilding, and aircraft procurement. Highlights of the Senate Defense appropriation:

Shipbuilding $2.1 billion increase, 3 additional ships, $1 billion for first Polar Icebreaker Recapitalization Project

Aircraft Procurement $2.5 billion increase (not originally requested)

    $979 million for twelve F-18 aircraft (Navy)

    $507 million for two F-35 carrier variant; and two F-35 vertical take-off, Joint Strike Fighters (Marine Corps)

    $367 million for fifteen Blackhawk helicopters (Army National Guard)

    $187 million for twenty-eight Lakota helicopters (Army)

    $160 million for two C-130J aircraft (Air Force)

    $150 million for two MV-22 helicopters (Marine Corps)

    $103 million for Compass Call aircraft replacement (Air Force)

   $75 million for UH-1N replacement helicopters (Air Force)

Readiness $900 million for National Guard and Reserves equipment account

Space Rockets/Engines — $396.6 million to space launch vehicles or rocket engines, launch procurements will be available to all certified launch providers regardless of where the rocket engine was manufactured (addressing the controversy over US use of Russian RD-180 engines)

OCO enables funding for ongoing threats, operations against ISIL, and the European Reassurance Initiative

Senate Majority Leader Mitch McConnell has stated that he would like to take up the appropriations bill after the NDAA. Expect further action on both of these bills when the Senate reconvenes in June.

Senate NDAA

The Senate voted to move forward with debate on the FY17 National Defense Authorization Act on Wednesday, but Democrats pushed against voting on a final version before the recess. Senate Minority Leader Harry Reid contested that the closed SASC markup session did not give lawmakers enough time to read and fully consider the bill.

Additionally, there are now many amendments to the bill that must be considered. At the forefront is SASC Chairman John McCain’s proposal to increase the Pentagon’s budget by $17 billion to provide the military with some of its “wish list” items such as 14 F/A-18 Super Hornets and 11 F-35 fighters, 36 UH-60 Blackhawk and 17 LUH-72 Lakota helicopters. McCain’s amendment would also raise military personnel salary by 2.1%, all in an effort to fight back against “short-sighted cuts,” said McCain, to the defense budget.

Other amendments, totaling over 170, address the Iran missile program, Guantanamo, the Afghan Special Immigrant Visa program, and more. Expect more amendments and more debate on the NDAA when the Senate returns after Memorial Day.

HLS Appropriations

Thursday, the Senate Appropriations Committee approved a $48.07 discretionary spending level for the Department of Homeland Security. The budget includes $6.7 billion for FEMA Disaster Relief Programs and $163 million for Cost Guard Overseas Contingency funding.

The $48.07 level is $245 million above the FY16 spending level and $740 million above the President’s budget request.

Budget Reform

Committee Chairs of the House and Senate Budget Committees are raising the issue of broad budget reform in Congress. HBC Chairman Tom Price is hoping to leverage support from the conservative wing of the Republican party to support passing a budget, in exchange for some rules changes. Efforts in the House are unlikely to gain Democratic support, but chances for SBC Chairman Mike Enzi are slightly better in the Senate. The proposals currently being made would bring significant changes the how the Congressional budget deals with mandatory spending, regulatory costs, etc., but these types of reforms have a long way to go before they gain bipartisan support.

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Quick Hit – May 13, 2016

by Gene Moran in Blog

An unusually busy two-week stretch for defense bills moving simultaneously (and early) through both the House and Senate.

Diverging Strategy in House vs. Senate NDAA

Yesterday, the Senate Armed Services Committee finished its markup of the National Defense Authorization Act, meaning both chambers have now released their own versions of the NDAA legislation for fiscal year 2017.

The key difference between House and Senate versions is their funding strategy. In the NDAA bill from the House Armed Services Committee, Overseas Contingency Operations (OCO) fund will only extend through April 2017. The effect of this move, supported by Chairman Mac Thornberry, is essentially to shortchange the OCO budget in order to reallocate money to the base budget to fund Pentagon operations. The $23.1 billion in OCO the House NDAA bill shifts to the Pentagon’s base budget is an attempt to bump the defense budget beyond what current spending caps allow, and force the president to request supplemental funding next year.

The Senate Armed Services Committee, led by Chairman John McCain, has not supported Thornberry’s approach. During a closed session ending late Thursday night, the SASC passed a $602 billion defense authorization bill with only three dissenting votes. The Senate subcommittee bill only shifts $5 billion from OCO to base budget funds, as requested by the Obama administration, as opposed to the $23 billion in the House version. McCain would also like to see more funding for defense, but is hoping to achieve this through negotiations on the floor. The SASC markup of the NDAA should be released to the public imminently. The bill can be expected to go to the floor before Memorial Day Weekend.

Other Points of Interest:

Overall, the House NDAA bill is more generous with authorizing funding for the Air Force B-21 bomber program, procurement of Russian RD 180 engines for U.S. manufactured rockets, pay increases for military personnel, and other weapons manufacturing. McCain has vocalized opposition to overspending in these areas, prioritizing the need for broader military reforms in structure, healthcare, etc.  The HASC markup of the NDAA may be found here.

The Senate version of the NDAA also proposes significant restructuring of existing Combatant Commands, a change to the role of the Chairman of the Joint Chiefs of Staff, and further restructuring of OSD’s acquisition leadership organization.

 “This is a reform bill, The NDAA contains the most sweeping reforms of the organization of the Department of Defense in a generation.”

– John McCain, May 12, 2016

House Defense Appropriations:

On Wednesday this week the House Appropriations Committee released the subcommittee draft of the FY17 Defense Appropriations Bill. A full committee markup of the bill is scheduled for this Tuesday, May 17. The current version supports the NDAA proposal from the HASC, shifting about $16 billion in OCO funds to the defense base budget, funding a 2.1% pay increase for military personnel, and expanding weapons infrastructure. Find the full text of the current bill here and stay tuned for developments on Tuesday.

Senate Appropriations Moves Ahead:

Last week, Senate Majority Leader Mitch McConnell was forced to contend with a stall in his appropriations schedule due to a controversial amendment to the FY17 energy and water bill. The amendment proposed by Senator Tom Cotton of Arkansas, would have dealt a fatal blow to the Obama administration’s nuclear deal with Iran. After a deal brokered by Senator Lamar Alexander (R-TN) on Thursday, Cotton’s amendment was rejected, the energy and water bill passed, and now the Senate appropriations cycle can proceed on schedule. Up next is the MILCON/VA appropriations bill.

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Quick Hit – May 9, 2016

by Gene Moran in Blog

Big week for defense in the House and Senate.

In the House…

Last week the House Armed and Services Committee approved a defense budget topline of $610 billion, adhering the budget deal agreed upon last fall, and $59 for Overseas Contingency Operations (OCO). See the full bill and text here.

This week…

  • Tuesday: Full bill text for House version of defense appropriations released; tables will not be released prior to the Full committee mark by HAC.
  • Wednesday: House Appropriations Subcommittee on Defense markup of FY17 defense appropriations

What to look for…

Now, it is up to Defense Subcommittee Chairman Rodney Frelinghuysen (R-NJ) to back HASC Chairman Mac Thornberry’s plan to extend OCO funds through April next year as a mechanism to raise the budget topline. Frelinghuysen has recently expressed concern about the need to maintain Army aviation readiness in order to deter Russia, so his support can be expected.

What comes next…

  • May 16: House floor action on NDAA begins

*** Without a budget, the House must wait until after May 15th to proceed with floor action on appropriations bills. It is unlikely a budget agreement will be reached before then.

In the Senate…

The Senate will mark up its own version of the National Defense Authorization Act (NDAA) this week in a series of subcommittee hearings. The legislation will largely reflect Chairman John McCain’s defense agenda, as this is possibly his last appropriations season as head of the SASC.

What’s coming up this week…

  • Monday: Airland Subcommittee closed hearing at 2:30 p.m.
  • Tuesday: Seapower Subcommittee closed hearing at 9:30 a.m.

Personnel Subcommittee open hearing at 11:00 a.m.

Readiness and Management Subcommittee open hearing at 2:00 p.m.

Emerging Threats Subcommittee open hearing at 3:30 p.m.

Strategic Forces Subcommittee closed hearing at 5:30 p.m.

  • Wednesday: Senate Armed Services full committee closed session beginning 9:30 a.m., continuing through Friday, May 13.

In the coming weeks…

  • May 16: Senate Appropriations Subcommittee on Defense appropriations markup
  • May 18: Senate Appropriations Committee full committee mark of FY17 defense appropriations

Off the Hill…

The Sea-Air-Space Exposition is taking place at the Gaylord National Convention Center in Washington D.C. from May 16 – 18. The SAS is the largest maritime exposition in the country…find the list of this year’s exhibitors here.

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Quick Hit – April 20, 2016

by Gene Moran in Blog

What Happened Yesterday?

In the House…

The House Armed Services Committee (HASC) released the six subcommittee (Emerging Threats and Capabilities, Readiness, Military Personnel, Tactical Air and Land Forces, Seapower and Projection Forces, and Strategic Forces) markup bills for the FY17 National Defense Authorization Act (NDAA). The full committee markup will be released by Chairman Mac Thornberry on Monday.

Here’s What We Know

  • Army’s authorized troops were increased by 5,000 to total 480,000 for next year
  • Requested funding for extra fighters (14 F/A 18 and 11 F-35) are expected to be included in the final markup
  • Navy ships will increase and proposed cuts to Pentagon budget delayed
  • Military payroll increase
  • More funding for Army helicopter programs
  • Restart production of F-22 fighters

What Does It Mean?

  • Subcommittee markups look good for defense contractors
  • Nothing in terms of the budget…there is still no topline budget agreement
  • Hard to tell the full picture until Monday, many provisions have still not been released (ex. Healthcare reform for military personnel)

*Side note* The Senate will start its version of the FY17 NDAA the week of May 9

In the Senate…

FY17 Commerce, Justice, Science and Related Agencies (CJS) Spending Bill Approved in Subcommittee


  • $56.3 billion total spending
  • $563 million above FY16 level
  • $1.6 billion over budget request
  • Full Committee review on Thursday

FY17 Transportation, Housing and Urban Development, and Related Agencies (THUD) Appropriations Spending Bill Approved in Subcommittee


  • $56.5 billion total spending
  • $827 million below FY16 level
  • $2.9 billion below budget request
  • Full Committee review on Thursday

What’s Happening Today?

In the House…

Hearing: Senate Budget Committee – “Fixing the Broken Budget Process and Restoring Stability to Government Operations”

Markup: House Appropriations Committee Legislative Branch Subcommittee – FY17 Legislative Branch Appropriations Act

In the Senate…

Hearing: Senate Appropriations Committee Interior, Environment, and Related Agencies Subcommittee on FY17 budget and EPA funding

Hearing: Senate Appropriations Committee Defense Subcommittee on FY17 budget, funding for defense innovation & research

On Thursday?

In the House…

Closed Hearing: House Appropriations Committee Defense Subcommittee on Intelligence Community budget

In the Senate…

Markup: Senate Appropriations Committee on FY17 CJS and THUD proposals

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Quick Hit – April 11, 2016

by Gene Moran in Blog

Appropriations season is in full swing as the Senate subcommittees continue to meet and the House comes back into session on Tuesday. The House will resume its budget negotiations this week, but is unlikely to have gained much progress during the Easter recess. In the meantime, see below a brief outline of what can be expected over the next several weeks:

April 12 (Tues):

  • House Armed Services Committee (HASC) releases markup schedule and bill number for National Defense Authorization Act (NDAA)

April 13 (Wed):

  • House FY17 MILCON/VA Full Committee Markup and “Interim” Suballocation of Budget Allocations – “interim” in anticipation of a new number after a potential new budget deal on the topline.
  • House FY17 Energy and Water Appropriations Subcommittee Markup
  • House FY17 Agriculture Appropriations Subcommittee Markup

April 14 (Thurs):

  • Senate Appropriations Committee presents subcommittee spending allocations

April 20 — 21 (Wed — Thurs):

  • HASC subcommittees discuss FY17 NDAA allocations

April 27 (Wed):

  • HASC Markup of FY17 NDAA

May 9 — 10 (Mon — Tues):

  • Senate Armed Services Committee (SASC) subcommittees vote on final portions of FY17 NDAA Bill

May 11 (Wed):

  • SASC Markup of FY17 NDAA


Stay tuned for more detailed info as markups and budget talks unfold!

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Quick Hit – March 28, 2016

by Gene Moran in Blog

VA/MILCON appropriation advances amid a Budget Stalemate:

On Tuesday, March 22, the House Appropriations Committee released their initial mark of the FY17 Military Construction and Veterans Affairs Appropriations bill. The total discretionary spending for the bill comes to $81.6 billion, which is $1.8 billion over FY16 levels and $1.2 billion less than the President’s budget request.

Committee Chairman Harold Rogers expressed support for the bill, stating, “The Committee is getting off to a fast and productive start.”

So, the appropriations process has officially begun. What’s the problem?

The problem is that before going on recess for the Easter Holiday, House Republicans never agreed upon an overall budget, as Speaker Paul Ryan hoped they would. Chairman Rogers may be happy to see the appropriations cycle kick off, but Speaker Ryan has explicitly declared that he will not support the passage of 12 individual appropriations bills without an agreed topline spending limit.

Freedom Caucus Republicans will make a budget agreement difficult, given the 40 votes they carry in the House. Their insistence on cutting the previously agreed upon $1.07 trillion spending level to $1.04 trillion increases the possibility that Speaker Ryan will be forced to push through another sweeping omnibus appropriation at the end of this year.

Until then…the appropriations process will resume after the House returns in two weeks, and dominate floor activity for the next three months. If a new budget agreement is not reached, the proposed FY17 appropriations legislation under review will operate under the budget deal of $1.07 trillion topline from last year’s negotiations.

What to expect next…

Members of Congress will spend the next two weeks hearing from constituents during their district work periods. They will then return to a furiously paced appropriations and budget timeline and decision process that should be largely complete by mid-summer, and that they will carry into the November elections.

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Quick Hit – March 15, 2016

by Gene Moran in Blog

Budget Talks, Mark-Ups, and What’s Coming Up:

What Happening with the Budget? 

Congress is again struggling to set a budget topline number from which the appropriations process can flow. We have lived without a budget in years past, and likely will again this year.  As reported in previous Quick Hits, the budget itself is a political document, not law. Appropriations bills are law. A two-year topline number was agreed last year; however, many in defense circles want to revisit that topline in order to increase defense spending for FY17. How to increase defense spending is the underlying issue. Particularly in an election year, asking Senators and Representatives in vulnerable races to take difficult votes on things like budget amendments is always a balancing act for Congressional leadership.

Conflict Inside House GOP…

rep. jim jordan - qh 3.15

Chairman of House Freedom Caucus, Rep. Jim Jordan (R-OH)

Monday night, the House Freedom Caucus voted in opposition to the GOP leadership’s 10-year budget plan. The new plan, proposed by House Budget Committee Chairman Tom Price (R-GA), aimed to maintain discretionary spending levels at $1.07 trillion, the amount determined in the October 2015 budget deal, offset by a series of bills that would cut mandatory spending levels by $30 billion. House Speaker Paul Ryan and Chairman Price hoped this plan would appease the party’s far right contingent. Now that the plan has been rejected, the GOP will need to regroup. The markup for the bill could happen as early as Wednesday, with a vote on the floor next week before the House breaks for Easter.

Without the support of the 40-member Freedom Caucus or a significant number of Democrat crossover votes, it is unlikely the bill will pass.

On the Senate Side…

The Senate is not hampered by the same party tensions that have been causing trouble in the House. Last week Senate Majority Leader Mitch McConnell stated:

Senate Majority Leader Mitch McConnell of Ky., flanked by Sen. Roy Blunt, R-Mo., left, and Sen. John Thune, R-S.D., talks to reporters on Capitol in Washington, Tuesday, March 8, 2016, following a closed-door policy meeting. (AP Photo/J. Scott Applewhite)

Senate Majority Leader Mitch McConnell talks to reporters on Capitol in Washington, Tuesday, March 8, 2016, following a closed-door policy meeting. (AP Photo/J. Scott Applewhite)

“We’ll be using the topline that was agreed to last year in order to move forward on the Senate appropriations”

As far as the Senate leadership is concerned, the topline has already been decided, and will proceed with a budget plan that aligns with that initial agreement made last year.

The Bottom line…

The end goal of the budget negotiations is to agree on a spending topline that will set the appropriations process in motion. Congress’s main job in the process is to pass the 12 appropriations bills that will fund the government for the next fiscal year, but that cannot happen before deciding how much will be spent overall.

House Appropriations Committee Chairman Rodgers is caught between a strong will from the Republicans to reduce spending and keeping the budget process moving along in order to pass appropriations legislation out of committee on schedule (typically April-May each year). Chariman Rodgers commented last week:

“What I don’t want us to do is blow up the process, make it impossible to pass bills”

And in regards to cuts to mandatory spending:

“So long as it’s not attached to or part of the appropriations bill, I have no problem with that.”

House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell have set a goal to pass all 12 appropriations bills individually, to avoid a catch-all bill at the end of the year. This has not been accomplished since 1994.

Congressional Confirmations

johnkingSecretary of Education — John King

On Monday, John King was confirmed in a bipartisan vote as the Secretary of Education. The bipartisan effort is not a major triumph in this case, as King has already been serving as acting secretary since the beginning of the year and will likely not serve beyond the one year left in the Obama administration.

Republicans will not demonstrate the same level of compromise for the open Supreme Court seat, which remains empty and is likely to stay that way until after the election:

“The American people should have a voice in the selection of their next Supreme Court Justice. Therefore, this vacancy should not be filled until we have a new president”

Senate Majority Leader Mitch McConnell

Secretary of the U.S. Army — Eric Fanning

eric fanning - qh 3.15After being nominated by President Obama for Secretary of the Army in September, Eric Fanning was confirmed for nomination by a voice vote in the Senate Armed Services Committee last Thursday. Fanning’s nomination now advances to a full Senate vote.

The main obstacle to Fanning’s confirmation comes from Republican Senator Pat Roberts, who has vowed to delay the nomination until President Obama agrees to end his campaign to close Guantanamo Bay and transfer prisoners to US facilities (some of which are located in Roberts’s home state of Kansas). Similar to King, if Fanning is confirmed his position is not guaranteed in the next administration.

Of note, if Fanning does become the Secretary of the Army he will be the first openly gay man to  hold a leadership position in military service.

Coming Up On the Calendar:

The Senate will break this Friday, March 18 and reconvene after Easter on Monday, April 4.

The House will be in session until next Wednesday, March 23, and reconvene on Tuesday, April 12.

Hearings season is in full swing and bill mark-ups are about to begin. Appropriations bills from Milcon/VA and Defense will be marked up over the next month and will proceed to the floor of the House by May.

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Quick Hit – February 24, 2016

by Gene Moran in Blog

Things you should know
…a periodically published set of common questions and answers.

We are often asked by clients to clarify aspects of the federal budget and funding process. Headlines are often confusing or wrong, and articles are often incorrect or poorly sourced.  What business leaders generally want to know is ground truth and what it means to them.  A few nuggets:

  • We are in FY16. A Consolidated Appropriations package (Omnibus) was passed and signed into law in December 2015. Funds for FY16 are finally flowing in government departments and agencies.  The Omnibus passed on the heels of a balanced budget agreement (often referred to as BBA 2.0).
    • Much of the funds are “one-year” appropriations and must be spent by September 30, 2016.
    • Because funds arrived late, many mid-year adjustments will be made. These “reprogrammings” can represent opportunities or potential challenges to your funding stream.
  • The FY17 President’s Budget was sent to Congress in February.  Agency “posture” hearings are underway where Executive branch officials attempt to “defend” the President’s Budget request.
    • After Congress has conducted hearings, committees will then “mark” their section of the President’s Budget request.
    • The time for your input to the marks is NOW…if you aren’t engaged, you have likely missed the window for FY17.
  • This being an election year, many foresee this process moving quickly through early summer, and then stalling until after the November elections.
  • The FY18 budget is being “built” in most agencies now and should be complete at the agency level by the end of this summer.
    • Now is the right time to be engaging your agency customer(s) to shape your FY18 outcomes.
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Quick Hit – February 12, 2016

by Gene Moran in Blog

The Defense Budget

Same headlines, different year?  Not really.

Beginning with the end in mind, we anticipate a continuing resolution (CR) at least into December. Why? You guessed it, the elections. The Congressional calendar in the beginning of the year is robust. However, after mid-July, there are only 17 scheduled legislative days in session before the election. Congress will not be able to get it all done before the election.

What does it mean for your legislative priorities? Making your case to Congressional supporters and decision makers early is as important this year as ever.
The FY17 Budget is Out…What Does it Mean?

On Tuesday, the Obama administration released its budget proposal for the 2017 fiscal year, including $582.7 billionallocated to defense spending. Although this figure is in line with the budget deal reached this past October, recent developments in the Middle East, Europe, Russia, and China have forced many Republicans to reconsider the feasibility the previously agreed plan. There are two main concerns about the budget circling Republicans and Democrats on the Hill:

        1) Determining the OCO budget is the number right and will it be used for things other than Overseas Contingency Operations?

        2) Changing the budget topline – is an increase required and can it be agreed upon? The appropriations process cannot produce a bill without the topline number agreed up front.


Left: House Budget Committee Chairman Rep. Tom Price (R-Georgia) Right: Senate Budget Committee Chairman Sen. Mike Enzi (R-Wyoming)

Displaying Can These Things Be Fixed?

The answer is likely, yes but it will require an exciting legislative ride to get there. At present, the budget allocates $59 billion to OCO funds, but with the recent practice of using OCO money to cover day-to-day operations costs, Republicans worry and argue the figures are fundamentally too low. The problem is that the Balanced Budget Act placed caps on the amount that Congress can increase the DoD budget. As Senator John McCain has consistently pointed out, until this legislation is reversed, Congress will be forced to perform a juggling act between OCO and base budget funds.

Of note, House and Senate Budget committees would not conduct a traditional budget hearing to publicly air positions. That means any topline budget adjustment will be conducted at the leadership level and appear as another backroom deal so disliked by rank-and-file Members of Congress.
Is There Anything to Like About the Budget?

That depends. Secretary Carter has followed through on the promises he made in a speech last week, to prioritize the administration’s “Third Offset” strategy by expanding operations and maintenance spending by $6.5 billion and supporting the acceleration of a variety of technology demonstrations. However, to pay for this increase, procurement has been cut by about the same amount. This means lawmakers representing districts that rely on the weapons manufacturing economy and legacy systems will be in a tough spot to claw those funds back. As suggested in the preceding paragraph, many legislators argue that the current defense budget is simply not enough.


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Quick Hit – February 2, 2016

by Gene Moran in Blog

What’s Coming Next Week in Defense…

On February 9 the Obama administration will release its budget proposal for the 2017 fiscal year. The expected topline defense proposal according to the October 2015 budget deal should be $583 billion, split $524 billion in base budget funding and $59 billion for Overseas Contingency Operations funding.  

The OCO Debate…

The debate now comes from Republicans who fear that the presently proposed budget will not be enough to account for today’s military threats that have evolved even since thNovember 2015 budget agreement. The main source of contention is the OCO budget. The administration opposes OCO funds as a gimmick to circumvent sequesters from the Budget Control Act of 2011. Recall sequester amounted to a $50 billion dollar cut each year to the topline defense budget. However, as the Pentagon has faced increased, shortfalls the OCO funds have become necessary to cover everyday military costs. Last year, $30 billion of the $58.8 billion OCO budget paid for base budget services. What Republicans want from next week’s budget proposal is an increased defense budget that will supply sufficient funds for everyday military operations without touching the $59 billion allocated for OCO. Senate Armed Services Chairman John McCain has stated the problem will not go away until the BCA caps are repealed. At present, the most recent budget deal in November 2015 leaves BCA caps in place through 2021, as the law is written.

Image courtesy of

Image courtesy of

Comments from Secretary Carter…

Today, Secretary of Defense Ash Carter foreshadowed the administration’s intention to prioritize funding a “Third Offset” agenda  over legacy programs in the upcoming FY17 defense budget proposal.The goal of “Third Offset” programs is to modernize U.S. military technology, assigning greater investment towards cyber intelligence, weapons development, and superior artificial intelligence capabilities. Specifically, funds and technologies being used to combat ISIS will be expanded, as well as funds for rotational forces in Europe and undersea weapons technology. The administration has proposed several cuts to existing programs in order to pay the $12-$15 billion cost of “Third Offset” programs over the next five years. Some of these suggested cutbacks are the Navy’s Littoral Combat Ship program, a delay to the F-35A production schedule, and shrinking active-duty Army troops by an additional 40,000 over the next few years. Overall, the FY17 defense budget is expected to preference development of new technology over upgrades to existing programs.

Secretary Carter’s budget plans are already ruffling feathers inside the Pentagon and on Capitol Hill. By prioritizing modernization over force structure, he’s setting up a showdown with lawmakers whose states and districts benefit from legacy programs.

Image courtesy of

Image courtesy of


The House Armed Services Committee is slated to mark up its FY17 National Defense Authorization Act on April 27, according to multiple sources familiar with the panel’s tentative plans. The date of the markup, subject to change, puts this year’s defense policy bill on a similar track as last year’s legislation. HASC marked up the FY16 NDAA on April 29.

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