As soon as Monday, the Senate will vote to authorize $611B in FY18 DoD baseline budget authority, 6.4% more than requested by the Administration and fully 17% more than currently permitted by the Budget Control Act (BCA). The bill also authorizes $60B in OCO spending, $4B less than requested. Total spending of $671B would be an increase of 10.7% over the final amount for FY17.
Key aspects of the Senate version of the NDAA may be found in the official summary here. From our clients' point of view, the most significant takeaway is the proposed increase in procurement: Baseline procurement would be funded at $140B, over $26B or 23% more than the $114B requested by the Administration. The NDAA would add an additional $8.4 in OCO procurement for a total of $148.7B, $30B or 25% more than the FY17 total.
The Senate version of the FY18 NDAA is very similar to the House version and should go quickly to the President for signature.
The NDAA establishes policy and authorizes how programs will spend their money if appropriated. There is an age old Washington battle between appropriators and authorizers as to primacy. Appropriations cannot be spent without authorization but if there is no appropriation, the authorization is moot. Within the Pentagon the NDAA is considered important for its policy pronouncements on everything from the endstrengths of each of the services to how the Pentagon is managed.
Last week, the House passed its version of DoD's FY18 appropriations bill. The House bill differs from the apparent NDAA only in the proportion of baseline to OCO with essentially the same total ($~668B). With the House now complete on the NDAA and appropriations and the Senate essentially complete on the NDAA, the focus of action is the Senate Appropriations Committee. SAC Chairman Thad Cochran has stated that his committee will begin its markup of the DoD bill during the week of 25 September and will, at least initially, mark the appropriations bill to a baseline topline in accordance with the BCA, $522B.
Bottom Line: Although Congress is clearly tracking toward a large increase in DoD spending in FY 2018, particularly in procurement, the DoD appropriation is captive to the larger fiscal discussion. Without a change to the BCA, sequestration will automatically limit DoD baseline spending to $522B. The discussion about how to eliminate or, at a minimum, change the BCA will grip Washington from now until December 8 when the current Continuing Resolution expires.
