Bloomberg News

Senate Panel Backs Defense Bill Keeping With Obama Budget

May 25, 2012

The U.S. Senate Armed Services Committee paved the way for a congressional fight over defense spending, approving a measure that stayed within President Barack Obama’s request after the House passed a bill to spend about $4 billion more.

The Democratic-led Senate panel voted yesterday to authorize a $631.4 billion spending package for the Pentagon, fighting wars and defense-related programs, Senator Carl Levin, the Michigan Democrat who heads the committee, told reporters.

“The bill was reported out by unanimous vote, again showing that the Armed Services Committee may be the last bastion of bipartisanship remaining in this Congress of the United States,” said Senator John McCain of Arizona, the panel’s top Republican.

The measure may face more opposition when it goes to the Senate floor. The costlier version the House passed last week is needed to prevent Obama’s defense strategy from becoming “a paper tiger,” House Armed Services Committee Chairman Howard P. “Buck” McKeon, a California Republican, has said.

The Senate bill includes the basic defense budget, war spending, defense activities in the Department of Energy and military construction, according to a panel summary. It compares with $635.2 billion in the House measure.

The Senate measure seeks to curb cost overruns and poor performance on weapons programs by prohibiting so-called cost- plus production contracts and requiring the Pentagon to ensure that payments to contractors are more closely tied to performance.

Automatic Cuts

The committee directs the Pentagon to specify by Aug. 15 the effects of $500 billion in automatic cuts to the defense budget over a decade resulting from failed negotiations to reduce the nation’s deficit. The Pentagon has said it hasn’t been planning for those cuts, which are scheduled to take effect in January unless Obama and Congress act to avert them.

After the committee measure is acted on by the full Senate, it must be reconciled with the House version. The negotiations may extend well beyond the bill’s mid-August deadline for the Pentagon to report on the budget cuts known as sequestration.

The panel endorsed the Pentagon’s request to buy 29 F-35 stealth jets made by Bethesda, Maryland-based Lockheed Martin Corp. (LMT:US) The Pentagon requested $9.1 billion for the F-35, its most expensive program, including $6.1 billion for procurement.

The Senate defense committee also backed the multiyear production of 10 DDG-51 Navy destroyers made jointly by General Dynamics Corp. (GD:US) and Huntington Ingalls Industries Inc.

The panel also authorized $153 million for the Special Operations Command to buy high-definition intelligence, surveillance and reconnaissance technology for its drones and piloted aircraft.

Second Submarine

The committee followed the lead of its House counterpart and added more than $700 million as a down payment on a second Virginia-class submarine. Construction would start in fiscal 2014. The Virginia-class submarine is built by Huntington Ingalls (HII:US), based in Newport News, Virginia, and the Electric Boat unit of Falls Church, Virginia-based General Dynamics.

Like the House, the Senate panel rejected Army plans to suspend production of upgraded Abrams tanks built by General Dynamics.

The Senate committee’s prohibition of cost-plus contracts for major weapons production and the review of payment levels are its latest efforts at acquisition reform. Cost-plus contracts require the Pentagon and military services to absorb most of an overrun. They are used more commonly in research and development contracts than during production.

Rebuff to Pakistan

Lawmakers also signaled their dissatisfaction with Pakistan’s government.

They included a provision barring U.S. funds for Pakistan’s armed forces unless the Pentagon certified that its government was keeping supply lines open, doesn’t support extremist groups such as the Haqqani network and isn’t detaining citizens such as a doctor who was convicted of treason after aiding the U.S. effort that tracked down Osama bin Laden, according to McCain.

The Senate committee authorized about $88.2 billion in war operations, mostly for the conflict in Afghanistan, according to a committee summary.

The committee agreed with the House on ending funding for the multinational missile-defense program known as the Medium Extended Air Defense System, according to a Senate aide, who spoke on condition of anonymity before all of the bill provisions were made public. The administration had requested a final $400 million for the program.

The committee disagreed with the House and didn’t mandate construction of an East Coast missile-defense site, the aide said. The U.S. currently has interceptor silos in Alaska and California.

To contact the reporters on this story: Roxana Tiron in Washington at rtiron@bloomberg.net; Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net


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  • GD
    (General Dynamics Corp)
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