Washington, we have a budget! With lawmakers passing a one-year spending bill for fiscal year 2023, all eyes are turning to 2024 and the question of whether a divided Congress can get anything done. As of Tuesday afternoon, House Republicans had yet to select a speaker after two attempts.
First, let’s quickly talk about the fiscal 2023 budget. Defense spending is set to increase about 10 percent under the $858 billion spending plan. The Pentagon’s investment accounts — procurement and research and development — will grow 14 percent, according to Cowen analyst Roman Schweizer.
Although the 2023 budget arrived only a quarter late, the Biden administration appears on track to send its fiscal 2024 budget to Capitol Hill on, dare I say, regular schedule. That means Congress must take up the budget in early February, with stay hearings to follow shortly.
The past two years have been anything but a normal budget cycle, with the White House sending Congress historically late budget proposals and lawmakers given plenty of extra time to pass appropriations bills.
After two years of Democrats controlling both houses of Congress, the GOP’s takeover of the lower house means Senate Democrats and House Republicans must agree on a defense budget number that is likely to include agreement on non-defense spending. Something else to keep an eye on is military aid to Ukraine. House Republicans are divided over aid to Ukraine. If US arms shipments to Ukraine slow due to a gridlocked Congress, Europe and Asia-Pacific countries could help fill the gap, Capital Alpha Partners analyst Byron Callan wrote in a note to investors on Tuesday. South Korean defense companies have already entered Poland.
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ICYMI: The Sikorsky-Boeing team that lost the U.S. Army’s Future Long-Range Attack Aircraft competition is appealing the decision. Now, the Government Accountability Office will review the Army’s agreement. Meanwhile, Bell, the chosen contractor, must sit on its hands pending the GAO’s decision, which is expected by April 7. The Army chose the Bell V-280 over the Defiant X fielded jointly by Sikorsky and Bell. Worth noting: Less than 15 percent of GAO protests are sustained, Schweizer writes.
The Lockheed-Boeing decision is hardly surprising, but we note that GAO protests have an extremely low success rate (<15%).
ICYMI, part two: Left out of the $1.7 trillion, the omnibus bill is a restoration of an R&D tax break much sought by the defense industry.
The US State Department has approved a $180 million deal to send a truck-laying anti-tank mine to Taiwan. “This proposed sale serves U.S. national, economic, and security interests by supporting the recipient’s ongoing efforts to modernize its armed forces and maintain a credible defense capability,” the U.S. Security Cooperation Agency Defense, the arm of the Pentagon that oversees foreign arms sales. said in a statement. “The proposed sale will help improve the recipient’s security and help maintain political stability, military balance and economic progress in the region.”
Egypt has ordered 12 new Chinook helicopters. The US military awarded Chinook manufacturer Boeing a $426 million contract on behalf of the Egyptian Air Force. Cairo will replace the CH-47D with new CH-47F helicopters. “The F-model aircraft will enhance Egypt’s Chinook capabilities and help effectively meet its heavy lift objectives,” Ken Eland, Boeing vice president and H-47 program manager, said in a statement.
The Pentagon has awarded Lockheed Martin a $30 billion contract for up to 398 F-35 stealth fighters. Meanwhile, Lockheed missed its F-35 delivery target, falling seven aircraft short of its goal. “The F-35 team was on track to meet the commitment of 148 aircraft as planned; however, due to a temporary pause in flight operations, which is still in effect, the necessary flight acceptance tests could not be performed,” the company said in a statement. An F-35 crashed at the production plant of the Fort Worth, Texas, company last month.The pilot ejected.
