Bloomberg News

Senate Defense Panel Approves $604.5 Billion Bill

July 31, 2012

The U.S. Senate panel that oversees defense spending today approved a $604.5 billion spending package for the fiscal year beginning Oct. 1 that includes $380 million for a Lockheed Martin Corp.-led international mobile missile defense program.

The measure approved by the Senate Appropriations subcommittee on defense also includes war spending. On July 19 the House passed legislation giving the Pentagon $607.1 billion in the 2013 fiscal year for weapons purchases, personnel and war operations in Afghanistan, or about $2 billion more than requested by the Obama administration.

The panel backed the full F-35 jet request and added $777 million for a second Virginia-class submarine to be bought in 2014 to be built by Huntington Ingalls Industries Inc. (HII:US) of Newport News, Virginia, and General Dynamics Corp. (GD:US) of Falls Church, Virginia. The House bill contains similar submarine funding.

The full Senate Appropriations Committee is to take up the panel’s recommendation on Aug. 2. A floor vote hasn’t been scheduled.

In one of its most widely watched actions, the Senate subcommittee approved $380 million for the Lockheed Martin-led Medium Extended Air Defense System, or MEADS. The three other defense panels that authorize and appropriate defense dollars denied the funding.

Panetta’s Request

Congressional critics say the system, designed to intercept medium-range ballistic missiles, cruise missiles and drones, has been plagued by cost overruns and performance failures. Defense Secretary Leon Panetta last month wrote to Senator Daniel Inouye, the Hawaii Democrat who is chairman of both the full appropriations committee and the defense subcommittee, urging that he approve the final installment.

“Funding this final year of MEADS development is the right thing to do for the country,” panel member Republican Senator Richard Shelby of Alabama said in an e-mail statement.

“Withholding funding at this point would damage our alliances, expose us to costly and unproductive litigation and cut us off from access to all the transformational MEADS technology we have helped to develop,” said Shelby. The North Atlantic Treaty Organization’s MEADS program office is located in Huntsville, Alabama.

Still, the Senate panel, in approving $380 million of the $400 million, directed the Pentagon to decide whether the money will be used to pay for continued U.S. participation in the “proof of concept” demonstration or be allocated for costs associated with ending U.S. participation.

Development of the MEADS program is managed from Orlando, Florida, by MEADS International Inc., a joint venture of Lockheed Martin, based in Bethesda, Maryland; Lfk- Lenkflugkoerpersysteme GmbH, based in Schrobenhausen, Germany; and MBDA, based in Valenton, France. MBDA is jointly owned by BAE Systems Plc (BA/), European Aeronautic Defence and Space Co. and Finmeccanica SpA. (FNC)

To contact the reporter on this story: 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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Companies Mentioned

  • HII
    (Huntington Ingalls Industries Inc)
    • $97.49 USD
    • 0.65
    • 0.67%
  • GD
    (General Dynamics Corp)
    • $126.42 USD
    • 2.53
    • 2.0%
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