Defense-Spending Bill Enters Uncharted Waters

By NATHAN HODGE

Political upheaval in Washington has upended the Pentagon's traditional budget cycle, creating serious uncertainty for the military and the defense industry.

At issue is passage of two bills that set spending priorities for the Pentagon: the national defense authorization act and the defense appropriations bill. In an unusual turn of events, neither bill has been passed for the new fiscal year, which began Oct. 1.

Legislators returning to Washington for a "lame duck" session following the Nov. 2 elections have a dwindling number of days to pass the bills, and defense contractors are worried that delays could potentially imperil some weapons-buying programs.

The defense authorization bill traditionally has been considered a "must-pass" piece of legislation because it sets defense policy on everything from military pay and benefits to starting new weapons-buying programs. In September, however, the bill stalled in the Senate after Republicans blocked a Democratic attempt to repeal a ban on gays and lesbians serving openly in uniform.

Rep. Howard "Buck" McKeon (R., Calif.), the man in line to become chairman of the House Armed Services Committee in the next Congress, told reporters on Monday he thought it unlikely Congress would pass an authorization bill before the end of the legislative session. "It means for the first time in probably 40 years we will not have an authorization bill passed," he said.

"The 16 years I've been on the committee, that's always been the push: We need to get it done, and we need to get it done before the appropriators get their work done, so we can maintain relevance," Rep. McKeon added. "Well, they didn't get any appropriations bill done either."

As a stopgap measure, the government currently operates under a continuing resolution, or CR, that expires on Dec. 3. If Congress fails to pass any appropriations before adjourning, it could extend the current continuing resolution into early next year and complete the bill in a new Congress.

That option would not please the Pentagon. In a recent briefing, Department of Defense spokesman Geoff Morrell said, "We'd much prefer to get an appropriations bill, an authorization bill, passed, rather than have to extend the CR again and potentially have to deal with appropriations and authorizations come next year with a new Congress."

A defense-industry executive said that scenario could also force the Pentagon to "reprogram" money, shifting funds to more urgently needed items until Congress is back in 2011 and can pass an appropriations bill.

Defense contractors and their lobbyists are now handicapping the chances for passage before the current session ends. Michael Herson, president of American Defense International, a defense-industry lobbying firm, said delays could stall new contract awards and create potential cost overruns

"From what I can tell, this threat is pretty serious," he said. "The whole supply chain gets affected, and troops in the field get affected by this. Many [defense] program managers are starting to get nervous."

Several Capitol Hill insiders said the likely focus of the lame-duck session would be expiring tax cuts, not national defense. They raised the possibility that defense-appropriations legislation could be folded into an omnibus spending bill, or packaged with other items like homeland-security spending in a "mini-bus" bill. Prospects for passage of a massive omnibus bill are uncertain, especially with a new Congress arriving in Washington next year in a budget-cutting mood.

"I think having Republicans taking the House and tightening things up in the Senate throws a wrench in Democratic plans to have the omnibus in lame duck session," said a defense lobbyist.

For some watchdog groups, either an omnibus or a "mini-bus" approach doesn't square with pledges by candidates to encourage more fiscal restraint.

"Omnibus spending bills always decrease oversight and increase the potential of wasteful spending," said Laura Peterson, senior policy analyst with Taxpayers for Common Sense, a group that advocates for reining in wasteful spending.

"Mini-bus bills covering national security are no better: They're like giant snowballs that pick up more junk as they get rolling," Ms. Peterson said. "Every spending bill should get a full hearing on the floor, and since the last Congress failed to accomplish that, their goal should now be passing as many as possible by Dec. 3 since the process might get even messier come January."