ARRP Package a Boon to Military Construction

January 29, 2009

Government Relations Update - Defense

As the $825 billion economic stimulus package makes its inexorable push through Congress in the coming weeks, military construction appears to be one of many industries that stand to receive a significant boost under the American Recovery and Reinvestment Package (ARRP).

Last night, the full House passed by a vote of 244-188 their version of the economic stimulus package (H.R. 1), which allocates $8.8 billion to DoD and $1 billion for the construction and modernization of VA medical facilities.

In contrast, the Senate version (S.1)—passed this week by the Senate Appropriations and Finance Committees and now headed for the full Senate’s consideration—contains $11.6 billion for defense, homeland security and veterans projects, including $5.6 billion to the DoD and $3.4 billion to the VA. The following chart provides the key differences between DoD and VA infrastructure spending in both the House and Senate versions of the ARRP:

DoD/VA Project

House

Senate

Difference

DoD Medical Facility Construction and Renovations

$4.2 billion

$819.5 million

House: + $3.4 B

DoD Facility Renovations

$2.1 billion

$3.2 billion

Senate: + $2.1 B

DoD Troop/Family Housing Construction and Renovations

$1.4 billion

$966.5 million

House: + 430 M

DoD Child Development Centers

$360 million

$353.8 million

House: + $6 M

DoD Guard and Reserve Facilities

$400 million

$260 million

House: + $140 M

VA Medical Facility Construction and Renovations

$950 million

$3.3 billion

Senate: + $2.4 B

VA National Cemetery Construction and Renovations

$50 million

$171.5 million

Senate: + $122 M

SECDEF Returns to Capitol Hill

Testifying before Congress as a member of President Obama’s cabinet for the first time, Secretary of Defense Robert Gates appeared in front of the House and Senate Armed Services Committees yesterday to discuss the myriad challenges facing his department in the new administration.

One of the chief concerns among lawmakers was the annual DoD budget, as Gates revealed to HASC members that he expects the second FY09 war supplemental appropriations bill—funding estimates range from $70-90 billion—to be sent to Congress "within two or three weeks," and for the President’s FY10 DoD budget request to be completed by the end of March.

Throughout the day, the Secretary remained both sober and candid about pending budgetary issues that will be confronted during the Pentagon’s upcoming Quadrennial Defense Review (QDR), citing his plans to "critically and ruthlessly separate appetites from real requirements," and emphasizing his preference for the termination of entire weapons programs, as opposed to the imposition of across-the board cuts.

"There is no silver bullet…the spigot of defense spending that opened on 9/11 is closing," Gates said. "We will not be able to do everything and buy everything. I believe the [FY10] budget must make hard choices, [and] any necessary changes should avoid across-the-board adjustments, which inefficiently extend to all programs."

The Army's Future Combat Systems (FCS), the Navy’s Littoral Combat Ship (LCS), and the Air Force’s new bomber program were all cited as programs to be reviewed during the QDR process, as Gates expects program eliminations to be drawn up in two rounds—one occurring this spring and potentially affecting the FY10 budget, and another occurring next fall that will affect the FY11 budget. Despite the potential for such cuts, the Secretary did state, however, that "LCS or [an] LCS-like ship is really needed for us" in meeting current and future conflicts.

Afghanistan also remained a hot-button issue during the hearings, as Gates predicted that three additional combat brigades could be deployed by late summer as a part of a long-term strategy that is currently being developed at the Pentagon. According to Gates, the speed of deployments has been slowed by infrastructure deficiencies, such as bases, hospitals and logistics centers.

Deputy SECDEF Nomination Stalls Amidst Further Questions

Last Friday, the Obama administration issued a waiver to Deputy Secretary of Defense nominee William J. Lynn after an executive order signed last week by the President created an ethical quandary that cast doubt on Lynn’s confirmation.

Under the executive order, a two-year moratorium is placed on lobbyists entering the Obama administration from engaging in policy or with government agencies to which they formerly lobbied. Since Lynn was a registered lobbyist for Raytheon during the first quarter of 2008, the President’s executive order would have limited Lynn’s ability to make day-to-day decisions on a number of defense issues that may pose an ethical conflict. According to the Pentagon, the new waiver requires Lynn to be subject to ethics reviews during his first year at the DoD, but does not require his recusal from issues that potentially impact his former employer.

Senate Armed Services Committee Chairman Carl Levin (D-MI) says he still supports the Lynn nomination, but several key senators, including John McCain (R-AZ) say they need additional answers from the Obama administration before confirmation can be granted.

Notice: The purpose of this newsletter is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This alert should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel