Welcome back to Holland & Knight's monthly defense news update. We are pleased to bring you the latest in defense policy, regulatory updates and other significant developments. If you would like additional information on anything in this report, please reach out to the authors or members of Holland & Knight's National Security, Defense and Intelligence Team.
LEGISLATIVE UPDATES
NDAA Update
As covered in the December 2023 Holland & Knight Defense Situation Report, Congress passed the National Defense Authorization Act (NDAA) for fiscal year (FY) 2024, the 63rd consecutive NDAA passage. The Senate and House passed the compromise measure on a bipartisan basis, and President Joe Biden signed the bill into law on Dec. 22, 2023. The FY 2024 NDAA included a topline funding level of $886 billion, which matched the Biden Administration's budget request to Congress that was sent in March 2023. The topline funding level in the FY 2024 NDAA represents a $28 billion increase over levels in the FY 2023 NDAA. View the full text of the FY 2024 NDAA conference report.
Almost immediately after passing the FY 2024 NDAA, members of congress turned their attention to the FY 2025 NDAA. The House Armed Services Committee (HASC) accepted requests from its members from Feb. 1 to March 1, 2024, with HASC members soliciting requests from stakeholders who wanted to influence the FY 2025 bill.
On May 13, 2024, the HASC released the Chairman's mark and the seven subcommittee marks for the FY 2025 NDAA. As covered in the April 2024 Holland & Knight Defense Situation Report, the HASC made quality of life policies for servicemembers and their families the centerpiece for this year's authorizing legislation. The legislation – H.R. 8070, the Servicemember Quality of Life Improvement and National Defense Authorization Act for Fiscal Year 2025 – included a topline funding level of $895 billion. This is a 1 percent increase over FY 2024 defense and national security funding levels and is in line with levels negotiated to increase the debt limit by President Biden and then-Speaker Kevin McCarthy (R-Calif.) under the Fiscal Responsibility Act (FRA, P.L. 118-5). Despite bipartisan calls that the topline levels be increased, ultimately HASC Chairman Mike Rogers (R-Ala.) acknowledged that sticking to the budget caps puts Congress and the U.S. Department of Defense (DOD) in a tough position, as Congress wants to robustly fund defense and national security programs while also providing a much-needed down payment on servicemembers and their families.
HASC NDAA Markup
On May 22, 2024, the HASC held a markup of the FY 2025 NDAA, with the committee reporting the bill favorably by a vote of 57 to 1, with Rep. Ro Khanna (D-Calif.) voting against advancing the legislation. Though usually a marathon affair that can go into the early hours of the morning, this year's markup ended much quicker. This can be attributed to electronic voting that the Committee began last year. More important, however, it is also because Chairman Rogers and HASC Ranking Member Adam Smith (D-Wash.) held a relatively noncontroversial markup that left most of the contentious social policy issues on the sidelines in favor of providing a bipartisan NDAA. This is in part due to the political realities that carried over from the FY 2024 process in that the Senate is still majority Democrat, in line with the White House, and that all legislation must be bipartisan. It is also in part due to the fact that a vacancy left by former Rep. Mike Gallagher (R-Wis.) was not filled, leaving Republicans on the committee with a two-vote margin, meaning that any contentious vote could be defeated with just one Republican voting with all Democrats.
Speaking to the press after the markup on the process and the bill being much less partisan, Chairman Rogers said, "If we couldn't keep those provisions in last year, what makes us think we can do it this year?" He continued: "There's no reason to go through that exercise again when we know it's futile ... and that's kind of the advice I'm giving to our members as we lead up to the floor vote." Ranking Member Smith said in a statement, "Perhaps most importantly this bill sends a critically important message to the American people that bipartisanship is still possible."
Before the full House chamber will consider a vote on the floor, which is expected the week of June 10, 2024, the House Rules Committee must send a rule of debate and comb through hundreds of amendments filed by all members of the House, not just those on the HASC. The House Rules Committee announced that amendments to the FY 2025 NDAA, as reported by the HASC, are due by May 31, 2024.
Should you or your organization have any questions about the NDAA process, specific amendments or how Holland & Knight might assist, please do not hesitate to reach out to Holland & Knight Defense Situation Report authors.
SASC NDAA Update
The Senate Armed Services Committee (SASC) plans to mark up its version of the FY 2025 NDAA on June 12, 2024. However, this is a closed-door process whereby debate is not public. After the SASC reports out its version of the NDAA, Senate priorities and topline funding levels should become clearer. Nonetheless, SASC Ranking Member Roger Wicker (R-Miss.) has said that he plans to propose a $55 billion increase to the FY 2025 NDAA over a three-year period. Though he did not share further details of this proposal, this would be a significant increase above the budgetary caps outlined by the debt deal.
Defense Appropriations
As covered in the March 2024 Holland & Knight Defense Situation Report, Congress completed the FY 2024 appropriations process, fully funding the federal government through the remainder of the fiscal year ending Sept. 30, 2024. The FY 2024 Defense Appropriations bill – which was included within the second of two "minibus" appropriations packages – included a total funding agreement of $825 billion when accounting for mandatory funds, according to the measure's joint explanatory statement. This funding is an increase of $26.8 billion above FY 2023 levels.
The federal government's FY 2025 begins on Oct. 1, 2024, and Congress has already begun the appropriations process for the next fiscal year. Because Congress is unlikely to pass the FY 2025 bills before the end of the calendar year and before the next Congress begins on Jan. 3, 2025, uncertainties are already present. Notably, Rep. Kay Granger (R-Texas), who announced her retirement from Congress effective at the end of her term, also announced she would step down as chair after Congress passed the FY 2024 bills and signaled that it is best that the committee is served by someone who will be in Congress next year. As such, the House Republican Conference selected Rep.
Tom Cole (R-Okla.) to serve as the next chair of the House Appropriations Committee. Rep. Cole, who was already a member of the Defense Appropriations Subcommittee, has numerous defense interests within his district.
Because of the contours of the Fiscal Responsibility Act that stipulate a national defense spending cap of $895 billion for FY 2025, Chair Cole will now need to address changes that defense hawks want to make to increase President Biden's FY 2025 budget, as well as address likely policy riders that hardright legislators will seek to include within the appropriations bills.
Chairman Cole Announces 302(b) Allocations
On May 16, 2024, House Appropriations Committee Chair Cole previewed interim subcommittee 302(b) allocations for FY 2025, which were developed using the caps outlined in the Fiscal Responsibility Act of 2023. According to the committee, defense funding would increase 1 percent, which is an increase of nearly $9 billion, with nondefense spending decreasing by 6 percent and an overall total federal government budget of just over $1.6 trillion. The total defense budget under Chair Cole's 302(b) allocations are $895 billion, which equals the amount previewed in the FY 2025 NDAA. Though $895 billion would go toward overall defense spending, the DOD would receive $832 billion on the funding, with other agencies with national security and defense interests seeing the remainder.
On May 23, 2024, the House Appropriations Committee approved the 302(b)s by a party-line vote of 30 to 22, with Democrats voting against the levels because they decrease nondefense spending.
Because Senate leaders have signaled that they would like to see an increase of funding, particularly of nondefense spending, it is anticipated that another drawn-out appropriations process will take place, with the 2024 fiscal year spending expiring on Oct. 30, 2024.
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