WASHINGTON - The U.S. Senate passed its version of the FY18 defense authorization bill on September 18 by a vote of 89-8. The legislation recommends a sizeable increase in military spending in FY18, but the Budget Control Act and continued congressional gridlock will prevent that increase from coming to fruition.

The Senate Arms Services Committee is calling for $700 billion in total national security spending, including $640 billion in the base budget and $60 billion for Overseas Contingency Operations. The Pentagon's base budget accounts for approximately 95.7 percent of all national security spending. The $640 billion figure comprises $610.9 billion for the Pentagon, $21.2 billion for defense programs in the Department of Energy, and $7.9 billion for other defense-related activities. The combined national security spending exceeds BCA caps by $91 billion.

The SASC increased DoD acquisition coffers by nearly $28 billion in its markup. Unlike its counterpart in the House, the SASC included all of the additional funding in the base budget. The committee recommends procurement funding increases of $11.4 billion for the Navy, $6.7 billion for the Army, $5.7 billion for the Air Force, and $627.1 million for Defense-Wide agencies. RDT&E funding rises by a combined $3.3 billion in the Senate bill.

The House version of the defense policy bill recommends around $696 billion in total national security spending, comprising $667.4 billion for the Pentagon, $20.9 billion for the DoE, and $7.9 billion for other activities. The Pentagon funding includes $74.6 billion in the OCO account, which is not subject to spending caps.

House appropriators, meanwhile, included $658.1 billion for the Pentagon in their budget markup earlier this year, which includes $73.9 billion in the OCO account. Senate appropriators have not released their markup of the FY18 budget, but they have indicated that they will adhere to BCA spending limits. In the end, it is the appropriators who have the final say on defense spending, as they do not have to adhere to levels established in the authorization bills. Despite the fact that both armed services committees are calling for massive increases in FY18 spending, but final appropriations bill will likely fail to even approach those levels. In fact, the final FY18 appropriations bill may actually fall below the amount requested by the White House, depending on how negotiations over BCA spending limits proceed over the coming months.

Source: Forecast International - International Military Markets
Associated URL: http://www.forecastinternational.com
Author: S. McDougall, Defense Analyst