Welcome to the October edition of A Capitol View
It’s been a particularly challenging year for the congressional appropriations process. And the political jockeying is far from over — and the end game is very much in flux.
“Debt ceiling negotiations, impacted by a vulnerable House speaker, and opposition from fiscal hawks, have resulted in topline limitations not seen since 2010,” SMI COO Ken Wetzel recently reported to clients.
The fiscally and culturally hawkish House Freedom Caucus has thwarted the legislative process since the passage earlier this year of the Fiscal Responsibility Act, which suspended the debt ceiling through the 2024 election.
It capped discretionary spending at $1.578 trillion, including $886 billion for defense and $704 billion for non-defense programs and the two chambers remain at loggerheads on how exactly to disperse that funding.
Stop and go and stop: A 45-day temporary funding bill keeping to current funding levels was adopted to avoid a government shutdown on Oct. 1.
But the rifts have not been closed. House conservatives are not expected to easily relinquish demands to overturn DoD abortion policy and climate initiatives, strip additional military aid to Ukraine, and make additional cuts to social programs.
Where things stand: The GOP-led House Appropriations Committee marked up its FY24 spending bills to $1.471 trillion, nearly $100 billion below the agreed-upon limits. That includes $826.4 billion for defense and $644.6 billion for non-defense.
The panel reduced funding for the Departments of Labor, Health and Human Services, and Education by $60 billion compared to FY23 and the Defense, Homeland Security, and Military Construction/Veterans Affairs spending bills were the only ones to get more proposed funding. But the only bill to be approved so far by the full chamber is the MILCON/VA, while most others have yet to be scheduled for floor action.
In the Senate: The Democratic-controlled Senate Appropriations Committee marked up its FY24 spending bills to a total of $1.590 trillion, slightly above the agreed spending limits. That includes $831.8 billion for defense – or $5.1 billion more than President Joe Biden requested — and $762 billion for non-defense. That’s an increase of $100 billion over FY23 for non-defense spending and $48 billion over the Fiscal Responsibility Act’s limits.
Senate leaders had previously advanced legislation to temporarily fund the government that included $6 billion for Ukraine, with the anticipation of approving more aid later. In August, Biden called on Congress to provide an additional $24 billion for Kyiv’s defense against the Russian invasion.
In the coming weeks, the Senate’s staunchest Ukraine allies will attempt to push a stand-alone funding bill, potentially setting up a new clash with the House Freedom Caucus.
More cuts looming: If Congress does not pass all FY24 appropriations bills before Jan. 1, an indiscriminate one percent cut is mandated for all spending bills.
Policy bill update: Things appear to be faring better for the House and Senate versions of the National Defense Authorization Act, the legislation that sets defense policy, despite similar efforts from the House Freedom Caucus.
House Armed Services Committee Chair Rep. Mike Rogers told POLITICO that conservatives who insisted on anti-abortion and other measures be included in the bill know they won’t fly in the Senate. He predicted they would be dropped in negotiations on a final bill, which he said should be completed by Thanksgiving.
“We’re gonna bring a bill out of conference committee that’s gonna get 350 to 380 House votes and 90 or more Senate votes,” he said. “We are committed to that.”
UP FOR GRABS: Sowing more chaos, Rep. Kevin McCarthy (R-CA) was ousted from the House – the first time in history – in a revolt led by Rep. Matt Gaetz (FL).
The GOP conference will hold a candidate forum next week in the hopes of quickly choosing a new speaker. Rep. Patrick McHenry (NC) is serving as acting speaker, but in the meantime, all floor action is on hold.
DEFENSE
SCRUB-A-DUB-DUB: The Missile Defense Agency has entered a new phase in the competition for the Next Generation Interceptor program to develop a new homeland defense against ballistic missiles.
SMI client Northrop Grumman and Lockheed Martin submitted proposals for the nearly $18 billion effort in 2021. In September, MDA initiated a more intensive design review of both proposals, beginning with Lockheed’s and Northrop’s to follow in January.
The competition is expected to extend beyond 2025 before MDA selects a winning design, but the two prime competitors will have the opportunity to fine-tune their designs in hopes of winning the award.
COMMON CONNECTIONS: The Pentagon has selected regional hubs in Massachusetts, Indiana, California, North Carolina, Arizona, Ohio, and New York to accelerate the prototyping and transition of new semiconductor technologies to spur economic growth.
The “lab-to-fab” Microelectronics Commons program, backed by $2 billion through 2027, is focused on bridging the infamous “valley of death” between R&D and production, said Deputy Secretary of Defense Kathleen Hicks.
She said the effort demonstrates how the U.S. government “is committed to ensuring that our industrial and scientific powerhouses can deliver what we need to secure our future in this era of strategic competition,” she added.
Winners: SMI client Samtec is part of the Silicon Crossroads Microelectronics Commons Hub in Indiana, while the University of Michigan is on the Ohio-based Midwest Microelectronics Consortium. In all, some 360 companies and organizations will be participating as members of the hubs.
Read up: DOD Aims to Close Gap in Bringing U.S. Tech Innovation to Market.
In case you missed it: AIA Emerging Advanced Capabilities 2023 Priorities, via Aerospace Industries Association.
Also: DoD Announces Release of 2023 Strategy for Countering Weapons of Mass Destruction, via Department of Defense.
SAVE THE DATE
MATERIAL WORLD: SMI and the Office of the Secretary of Defense are co-hosting a technical meeting on advanced materials in Washington, DC on January 8-9, 2024.
“Accelerating the Deployment of Structural Material Systems for Global Competitiveness in the 21st Century” will bring together stakeholders from government, industry, trade associations, and nonprofits to collaborate on scaling up and transitioning advanced materials to support the warfighter.
Give and take: Meeting participants will hear directly from government and industry leaders about capability gaps and provide input so that DoD can more effectively align its resources and roadmaps.
The workshop will be held at the controlled unclassified information (CUI) level and adhere to International Traffic in Arms Regulations (ITAR) regulations and take place at SMI’s conference center at Capitol Crossing.
A registration website and formal agenda will be disseminated soon. For more information, contact Ken Wetzel at ken@strategicmi.com.
SMI SPOTLIGHT
SMI is thrilled to welcome Emma Modesitt as an analyst specializing in clean energy policy and sustainability.
She holds a B.S. in Astrophysics and B.A. in Public Policy from the University of North Carolina at Chapel Hill, where she captained UNC’s water polo team, doubled the roster, and expanded the team’s campus involvement.
Emma is also a graduate of the University of Sydney’s inaugural Sustainability Program, and she has consulted for the Environmental Defense Fund.
LIFE SCIENCES
DATA DUMP: SMI is tracking a new funding opportunity from the Advanced Research Projects Agency for Health at the Department of Health and Human Services for biomedical data analysis.
The goal of the effort is to develop a “toolbox” that the agency hopes “will help make research data easier to use, reduce the effort for data integration, and enable new capabilities and models that can be applied across disciplines and generalized across disease domains.”
Proposals are expected to tackle automated data collection; AI-assisted curation; human-centered dashboards for diverse researchers and decision-makers; and testing to evaluate usability.
BUFFER ZONE: SMI client Civica Rx testified before the House Energy and Commerce Subcommittee on Health in September about a series of policy solutions to address shortages of antibiotics and other generic drugs
Senior VP Allan Coukell addressed approaches for “adequate buffer inventory,” sustainable pricing for generic injectable drugs, and direct investments in manufacturing “to ensure adequate capacity and redundancy to ensure a resilient supply of these essential medicines.”
Civica, a nonprofit founded by U.S. health systems and philanthropies, currently delivers more than 80 drugs chosen by hospitals due to their risk of shortage.
MANUFACTURING
TIEING THE KNOT: SMI client Advanced Functional Fabrics of America held its membership summit in Boston in late September, where leading textile manufacturers heard from top policymakers and industry leaders about new investments and breakthroughs that could transform traditional fibers, yarns, and textiles into sophisticated and networked devices and systems.
On the stage: Some of the headliners were Tracy Frost, director of the DoD’s Manufacturing Technology Program; Michael Molnar, director of the Advanced Manufacturing Office at the National Institute of Technology and Standard; and Brig. Gen. David Trybula, deputy commander of the Combat Capabilities Development Command at Natick Soldier Systems Center.
Also participating in the summit are SMI clients UMASS Lowell and Drexel University, which have Fabric Discovery Centers, along with New Balance and Specialty Materials, Inc.
Specialty Material’s chief business officer Rick Rommel lauded AFFOA for its help in securing a $2.3 million grant from the Massachusetts Manufacturing Innovation Initiative, which has better positioned the company to win DoD and aerospace contracts.
SHIP SHAPE: SMI client Global Secure Shipping recently broke ground on a 15,000-foot expansion in Old Town, Maine, to produce additional models of secure shipping containers and create scores of new jobs in the area.
New industries: The investment “is about seaport security, but it also is about transitioning from research and development to manufacturing to create new industries, with new opportunities and good jobs,” Sen. Susan Collins (R-ME) said at the event.
CEO Bob Lindyberg credited Collin’s support “at nearly every stage in the journey from the initial concept and research on secure shipping containers to the recent production scale-up activity.”
GSS was founded in 2018 as a spinoff from the University of Maine to commercialize the hybrid composite secure shipping container developed with the Department of Homeland Security.
ENERGY
MINE THE GAP: The Department of Energy’s Office of Fossil Energy and Carbon Management is soliciting proposals for critical materials innovation, efficiency, and alternatives to help reduce U.S. dependency on foreign entities, from mining to recycling.
Up to $150 million will be awarded to boost the critical minerals and materials supply chain, next-generation technologies, and alternative methods for meeting the growing demand for critical minerals and materials needed to advance the Biden administration’s clean energy and climate goals.
Act fast: Proposals are due Nov. 10.
PERMIT, PLEASE: A Biden Administration Interagency Working Group on mining laws, regulations, and permitting released 65 recommendations for improving the domestic exploration and development of critical minerals.
The recommendations range from improving mineral exploration and development planning and permitting; increasing engagement with stakeholders and potentially affected communities; expanding consultation and engagement with tribal authorities; obtaining fair compensation for taxpayers for minerals extracted from federal lands; protecting taxpayers from the cost of abandoned mine reclamation; and revitalizing domestic mining and other issues.
The report aims to amend existing laws and streamline the current procedure for mineral exploration and development.
Current law, it states, “fails to direct mineral exploration and development towards areas that are appropriate for development and away from sensitive resources. It fails to promote the timely development of mineral claims. It fails to promote early and meaningful engagement between mining interests, government agencies, and potentially impacted communities. And it fails to provide the American taxpayer with any direct financial compensation for the value of hard rock minerals extracted from most publicly owned lands.”
Plus: SMI clients Li Industries Inc., Nth Cycle, Koura Global awardees of AMMTO funding, via Department of Energy.
MORE CLIENTS IN THE NEWS
Oshkosh Defense RCV Selected for Platform Prototype Design & Build, via ASDNews.
A Key American Plant Making Antibiotics for Kids Risks Shutting Down, via Bloomberg.
