Quick Hit – July 25, 2018

Appropriations Update: FY19 NDAA clears Conference Committee as House enters its last week in session before summer recess

Chairman of the House Armed Services Committee Rep. Mac Thornberry (TX), left, pictured with acting Chairman of the Senate Armed Services Committee Sen. James Inhofe (OK), right (Source: House Armed Services Committee Republicans)

FY19 NDAA Defense Funding Levels (in billions)

DoD Discretionary Base$616.9
DoE Discretionary Base$21.8
Other Non-Defense$0.3
NDAA Authorized Base Topline$639
Overseas Contingency Operations (OCO)$69
NDAA Authorized Topline w/OCO$708.1
Defense-Related Activities Outside NDAA Jurisdiction$8.2
National Defense (050) Topline w/OCO$716.3

FY19 NDAA Resolved Bill Summary

This week, Congress released the full conference report for the reconciled FY19 National Defense Authorization Act (NDAA) after Congressional negotiators from both chambers reached an agreement on the policy bill earlier Monday. The NDAA aims to effectively implement the 2018 National Defense Strategy by aligning the budget request with the priorities it outlined in the 2018 National Defense Strategy (NDS) and through organizational reform. The NDAA also covers innovation in research and engineering, strategic competition and effective deterrence of Chinese and Russian aggression, reinforcement of our alliances, modernization of the Joint Force, and retention of our all-volunteer force. Notably, the bill establishes the first U.S. policy on cyber warfare and establishes a sub-unified command for space under the U.S. Strategic Command. The NDAA  now awaits final approval, and the House is expected to adopt the measure this week before it enters its summer recess. The Senate is likely to follow as early as August, having decided to extend and work through the month.

Many provisions in the compromised bill go directly against the recommendations of Defense Secretary Mattis and the White House, including a temporary ban on transfers of Lockheed Martin’s F-35 to Turkey, the imposition of a government-wide ban on equipment and services from ZTE, Huawei and other Chinese telecommunications companies, and limitations on support to the Saudi campaign in Yemen. However, other provisions of contention with White House policy were dropped, like the removal the National Nuclear Security Administration from direct control of the Energy Department, and a Trump-backed provision regarding Russian sanctions waiver language was included despite pushback from the Senate.

Differences Resolved in the Final Version 

  • Authorization for the Huntington Ingalls’ Ford-class aircraft carrier designated CVN-81, if the Secretary of Defense submits a certification to the congressional defense committees
  • $7.6 billion to procure 77 Lockheed Martin F-35 Joint Strike Fighters
  • $1.6 billion to procure a total of 3 Littoral Combat Ships (2 over administration request)
  • $2.4 billion to procure 15 KC-46 aircraft
  • $904 million to procure 5 E-2D Advanced Hawkeyes (1 over administration request)
  • $508 million for 8 Ship to Shore Connectors (3 over administration request)
  • $203.4 million to procure 69 General Dynamics’ Stryker upgrades (66 over administration request)
  • Prohibits the retirement of any E-8C Joint Surveillance Target Attack Radar (JSTARs) Aircraft, but doesn’t fund the JSTARs recapitalization program
  • Authorizes the National Command Authority to direct U.S. Cyber Command to take appropriate and proportional action through cyberspace to disrupt, defeat, and deter systematic and ongoing attacks by Russia, China, North Korea, and Iran in cyberspace
  • Will not eliminate the Washington Headquarters Services, as specified in House-passed version
  • Requires the development of a Militarily Critical Technologies List to inform technology protection, export control, and research investment decisions

The Bottom Line: With an impending deadline to get passage in the House before recess, conferees were able to come together and compromise on the FY19 NDAA, which is expected to pass before the start of the fiscal year for the first time in over a decade. With $24 billion for shipbuilding and increases in procurement over administration recommendations, Congress has attempted to increase U.S. core capabilities and address 2018 NDS objectives. Following the appropriations process, the next step will be for movement on the FY19 Defense Appropriations Act in both chambers. 

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