The Insider

Senate Armed Services Committee Chairman John McCain (R-AZ) said today he plans to offer an amendment to the fiscal year 2017 defense authorization bill to increase total defense spending by $18 billion when the legislation reaches the floor next week.

When advancing the bill through committee, McCain did not support a plan championed by House authorizers and appropriators to shift $18 billion from the Pentagon's overseas contingency operations to its base budget to pay for increases in weapon systems and military end strength. The OCO-to-base funding shift would be made, however, in the hopes that a new presidential administration would authorize emergency supplemental spending before the OCO account runs dry next April. The account is the primary source of funding for U.S. operations in the Middle East and elsewhere.

The bill that came out of McCain's committee and is due to reach the Senate floor next week sticks to the president's budget request.

Still, McCain plans to offer his own amendment to the bill to raise total defense spending without transferring OCO funds.

"The Senate [bill], at present, conforms to last year's budget agreement. But when the legislation comes to the floor next week, I will offer an amendment to increase defense spending above the current spending caps, reverse short-sighted cuts to modernization, restore military readiness, and give our servicemembers the support they need and deserve," he said during a speech at the Brookings Institution in Washington.

"I do not know whether or not this amendment will succeed," he continued. "But the Senate must have this debate. And senators must choose a side."

McCain, who in the past has criticized OCO budget maneuvers, said he and his colleagues in the House had the same objective.

"The president's defense budget request follows the Bipartisan Budget Agreement, which is $17 billion less than what the Department of Defense planned for last year," he said. "My friends in the House and I share the same goal of restoring these arbitrary cuts to military capability and capacity. The House has adopted one approach. The Senate has adopted a different path to reach the same objective."

In the end, McCain said, Congress must repeal the 2011 Budget Control Act and the spending caps that forced lawmakers to tie themselves into fiscal knots on an annual basis.

"For the past five years, the Budget Control Act has imposed arbitrary caps on defense spending. This year's defense budget is more than $150 billion less than fiscal year 2011 and the world has only grown more complex and dangerous over the past five years, not less so," he said. "Despite periodic relief from these budget caps, including the Bipartisan Budget Act of last year, each of our military services remains underfunded, undersized, and unready to meet current and future threats."

AT&L cut defended

McCain also defended a provision in the Senate authorization bill that seeks to eliminate the post of under secretary of defense for acquisition, technology and logistics (AT&L), which Defense Secretary Ash Carter recently criticized.

AT&L "has grown too big, tries to do too much, and is too focused on compliance at the expense of innovation," he said. "That is why the [bill] seeks to divide AT&L's duties between two offices: a new under secretary of defense for research and engineering and an empowered and renamed under secretary of management and support, which was congressionally mandated two years ago."

McCain praised the bill as a whole and, using a term popularized by presumptive GOP presidential nominee Donald Trump, said: "We're gonna make America great again and it's gonna be huge."

The Sea-Air-Space expo and the House version of the FY-17 defense policy bill are among the highlights in this Thursday INSIDER Daily Digest.

Continued coverage from this week's Sea-Air-Space expo:

Downselect decision gives shipbuilders more 'trade space' on frigate design

The Pentagon's decision to choose between Austal USA and Lockheed Martin to build the future frigate, rather than having both contractors build the ships, has forced the Navy to give the shipbuilders more "trade space" in designing the vessel, according to a program official.

That OCO provision in the House version of the FY-17 defense policy bill won't be easy to get passed:

Thornberry hopes to convince Senate on $18B OCO-to-base funding shift

House Armed Services Committee Chairman Mac Thornberry (R-TX) hopes to convince his Senate counterparts to support a fiscal maneuver in the lower chamber's version of the defense authorization bill that shifts $18 billion from the Pentagon's overseas contingency operations account to its base budget.

Looks like the Pentagon is on track to meet its audit-ready deadline:

DOD on track to be audit-ready by September 2017 deadline

The Pentagon is on track to be audit-ready by its deadline next fall, according to a recent report signed by Defense Department Comptroller Mike McCord and Assistant Deputy Chief Management Office David Tillotson.

House lawmakers want more info from DOD on cloud computing:

House panel seeks details on DOD's plans to define cloud computing

Expressing concern over recent findings that the Pentagon failed to establish a standard cloud computing definition and an integrated repository for cloud computing contracts, House appropriators are calling for the Pentagon's chief information officer to provide details on how these efforts are going.

House appropriators want to bump up DOD's ISR funding:

House appropriators provide $500M for ISR fund

The House Appropriations Committee seeks to provide $500 million to an intelligence, surveillance and reconnaissance fund to help the combatant commands enhance their ISR needs.

Keep an eye out for a DARPA RFP for a robotic on-orbit satellite:

DARPA to release robotic on-orbit satellite servicing RFP within weeks

The Defense Department's advanced research wing plans to release a solicitation in the next few weeks seeking industry partners in an effort to develop an autonomous, robotic space vehicle capable of servicing on-orbit satellites.

Textron could get more Navy orders for the Common Unmanned Surface Vehicle:

Textron, Navy discussing additional orders for unmanned surface vehicle

The Navy and Textron Systems are discussing additional orders of the company's Common Unmanned Surface Vehicle after the service decided earlier this year the unmanned boat would play a larger role in the Littoral Combat Ship's mine countermeasures mission package, according to a Textron executive.

The Army could be getting a vehicle-mounted weapon meant to shoot down aerial drones:

Army wants vehicle-mounted weapon for hunting aerial drones

The Army plans to develop a mobile weapon system designed to destroy low-flying enemy drones and -- later -- people, rockets and bullets, according to a newly published solicitation for industry.

Following the release of a Pentagon instruction on services acquisition, Defense Acquisition University is "finalizing development" of a new, web-based, distance learning course on defense acquisition of services, according to a blog post.

The post is written by Bill Kobren, director of DAU's logistics and sustainment center.

Kobren notes that he participated as a student in the pilot for the new course, called ACQ 165 Defense Acquisition of Services. The class is planned to deploy this summer.

"ACQ 165 is designed for individuals who need to improve their knowledge of developing and defining service requirements, supporting business strategies, coordinating review and approval of services contracts, and effectively managing the resulting contractor performance," the post adds. "However, this course may also serve as an opportunity for experienced acquisition personnel to improve their understanding of the Service Acquisition process, approval levels and reporting requirements.”

The full House passed the fiscal year 2017 defense authorization bill last night by a 277-147 vote.

The vote count is not enough to override a presidential veto, which the administration has theatened to do if a certain provision isn't removed.

That provision calls for shifting $18 billion in the Defense Department's overseas contingency operations account to the base budget in the hopes that a new administration will add emergency supplemental funds before the OCO budget runs dry next April. The OCO account is the primary source of funding for troop operations in the Middle East and elsewhere. As Inside Defense previously reported:

If presented with the bill, President Obama's senior advisers would recommend that he veto it, according to a White House statement of administration policy issued May 17.

"The bill's funding approach attempts to unravel the dollar-for-dollar balance of defense and non-defense funding increases provided by the Bipartisan Budget Act (BBA) of 2015, threatening future steps needed to reverse over $100 billion of future sequestration cuts to DOD," the statement reads, adding: "By gambling with warfighting funds, the bill risks the safety of our men and women fighting to keep America safe, undercuts stable planning and efficient use of taxpayer dollars, dispirits troops and their families, baffles our allies, and emboldens our enemies.”

The OCO-to-base funding shift also has the support of House appropriators. Senate authorizers, however, did not adopt the same funding scheme in their approach.

"Not only is this approach dangerous, but it is also wasteful," according to the White House. "The bill would buy excess force structure without the money to sustain it, effectively creating hollow force structure that would undermine DOD's efforts to restore readiness."

The bill's support among House Democrats has been tenuous at best, with many worried about the OCO provision, according to a congressional aide:

"It's a Ponzi scheme which will have to be paid next year with a supplemental," the aide said. "And that is incredibly problematic especially considering the new administration, and it's very risky given the return of the [Budget Control Act of 2011] and the sequester in the years that follow."

Smith is also concerned about language that could make it more difficult to transfer detainees out of Guantanamo Bay, the aide said, noting that the bill does a number of good things as well.

Smith has been "supportive of the bill because he sees the need to push the bill forward," the aide said, noting that if the committee did not pass the bill then there is a bigger problem. "He is right now still supportive of the bill, but we will not know where he finally stands until we get off the floor because the floor could make this bill much more difficult for him."

It's time to lift the decades-old ban on selling weapons to Vietnam, according to a U.S. senator who spent years as a prisoner of war in that country.

President Obama is scheduled to visit Vietnam this week, and Senate Armed Services Committee Chairman John McCain (R-AZ) says in a statement that the trip "represents another positive development in the partnership between our two countries. Today, Vietnam is an important emerging regional partner that is committed to upholding the principles of the ruled-based order in the Asia-Pacific: freedom of the seas, open trade, and peaceful resolution of international disputes."

McCain wants the United States to pursue three lines of effort in the years ahead to encourage a greater role for Vietnam in promoting stability and security in the region:

* "First, the United States must continue to work with partners like Vietnam to enhance maritime information sharing and response capabilities throughout the South China Sea. Over the last year, the Senate Armed Services Committee has led the way in creating the Maritime Security Initiative (MSI), a half-billion dollar effort that will work alongside the State Department’s Foreign Military Financing program to enhance the capabilities of countries like Vietnam and the Philippines as they seek to respond to increased maritime coercion.

* "Second, we will need to enable Vietnam’s ability to contribute to the maritime space by finally removing the prohibition on the sale of lethal military equipment to the Government of Vietnam. This symbolic ban of weapon sales is a product of our past history and an inhibitor of our future relationship. Vietnam should be allowed to purchase land and sea-based platforms that facilitate the Vietnamese armed forces' ability to operate more effectively on, above, and within its territorial waters. We cannot ask our partners to contribute more while continuing to take steps to directly limit the level of their contribution. The time has come for a full lifting of this prohibition.

* "Third, the United States Pacific Fleet and Vietnam People’s Navy (VPN) must move to expand their relationship, including increased port visits by U.S. naval vessels to Vietnamese ports and participation of the VPN in bilateral and even multilateral naval exercises."

In Booz Allen Hamilton’s fiscal year 2016, which ended March 31, the company saw sales rise nearly 3 percent from the prior year to hit $5.4 billion.

Profit increased about 26 percent to reach $294 million.

“Without a doubt, FY-16 was a turning point in that our revenue began to grow after three years of contraction,” Horacio Rozanski, Booz Allen’s chief executive, said during a Wednesday call with analysts.

He said the contractor has sought to increase the technical content of its work and move closer to its customers, ensuring it’s managing projects important to government agencies.

“The market out there is still very uncertain. We’re heading into an election cycle,” Rozanski said. “But our clients have gotten particularly adroit at making sure the key priorities in their mission get funded first.”

Booz Allen also noted that its backlog hit $11.8 billion, up from $9.4 billion at the same time last year. “The majority of the growth is in priced options,” the company said. “The improvement in total backlog was due to greater investments in bid and proposal activity in a more stable government contracting environment.”