Omnibus Boosts Defense Spending
By: Matt Vallone
On Tuesday night, Congressional leaders finally completed negotiations on the omnibus spending bill that will fund the government for the remainder of FY 2016. While the topline funding levels for this legislation were set by the Bipartisan Budget Act passed in October, this Omnibus spending measure allocates the topline across accounts and programs. In addition to providing funding close to the level of the FY 2016 President’s Budget Request, the omnibus legislation contains a variety of provisions relevant to aerospace and defense investment firms.
The House has yet to issue a detailed report, outlining the full breadth of puts and takes at the account and program levels. But it has communicated the broad outlines of the legislation.
The base Department of Defense budget in FY 2016 will be $514.1 billion with an additional $58.6 billion in Overseas Contingency Operations funding, for a total of $572.7 billion. This is roughly what Avascent had expected for DoD given the topline for National Security spending set in the October Bipartisan Budget Act, and is close to the President’s original request of a $577.8 billion last February.
In terms of acquisition programs, the omnibus contains funding for a variety of procurements above the level requested by the Department of Defense. This includes new aircraft such as:
– 7 additional E/A-18G Growlers
– 5 additional F/A-18E/F Super Hornets
– 6 additional F-35B Joint Strike Fighters
– 3 additional F-35A Joint Strike Fighters
– 2 additional F-35C Joint Strike Fighters
– 4 additional MQ-9 Reaper aircraft
Shipbuilding also receives a boost in the omnibus. The Shipbuilding and Conversion account gains $2.1 billion above the administration request, or a total of $18.7 billion. This funding will allow the construction of 11 ships, one more than requested. Ships to be built include:
– 2 Virginia-class attack submarines
– 2 DDG-51 destroyers
– 3 Littoral Combat Ships
– 1 LPD 28 amphibious transport dock
– 1 JHSV
– 1 AFSB
– 1 T-AO(X)
The legislation includes an increase in missile defense funding, adding $175 million to the budget request. As part of this, an additional $329.8 million will go towards Israeli missile defense programs, such as David’s Sling.
There are a variety of provisions included in the legislation that limit or direct spending that are also of interest for aerospace and defense firms. The legislation contains language blocking the retirement of the A-10, the KC-10, and other aircraft. It also places limits on the transfer of AH-64s away from the National Guard. Lastly, language was included in the bill that will allow United Launch Alliance to continue to import Russian rockets and compete for military contracts.
As of Thursday, December 17, the legislation had not yet been passed, but the House is scheduled to vote on it on Friday, December 18th with the Senate expected to follow shortly thereafter.