House-Senate Defense Conference Agrees on $640.7 Billion

House and Senate negotiators agreed on U.S. defense legislation authorizing about $640.7 billion in the current fiscal year for the Pentagon and related programs at agencies such as the Energy Department.

The annual authorization legislation calls for added economic sanctions on Iran, while giving President Barack Obama more time to implement them, lawmakers told reporters yesterday at the Capitol. The administration had said it was too soon to add to the sanctions already in place.

Representative Howard P. “Buck” McKeon, the California Republican who heads the House Armed Services Committee, said the measure will be brought to the House floor for final approval tomorrow, followed by a Senate vote that would clear the bill for the president to sign.

The measure includes provisions that would require defense contractors to report computer security breaches and would reduce restrictions on exports of commercial satellites.

The bill authorizes $633.3 billion under the direct jurisdiction of the congressional defense committees, or about $1.7 billion more than requested by Obama. The bill also includes $88.5 billion to continue funding for combat in Afghanistan.

The legislation asks the Pentagon to weigh three options for an East Coast missile-defense system, delaying action on that issue. The U.S. currently has interceptor silos in Alaska and California. The measure also would prohibit the transfer to the U.S. of detainees from the U.S. military prison at Guantanamo Bay, Cuba, where accused and suspected terrorists are held.

Veto Prospects

Senator Carl Levin, the Michigan Democrat who heads the Senate Armed Services Committee, predicted yesterday that Obama will sign the final bill. Aides to the president had warned that they might recommend he veto an earlier version over a number of provisions.

The spending outlined in the authorization bill won’t take effect unless funding is provided later by the congressional appropriations committees. The measure also doesn’t account for the possibility of automatic defense cuts that would be required under the process called sequestration.

Those across-the-board cuts would reduce defense spending by about $500 billion over a decade, starting Jan. 2, unless Obama and Congress agree on a deal to avert the combination of tax increases and spending cuts known as the fiscal cliff.

In a time of budget cuts, the negotiators approved plans for five-year purchases of major weapons systems including the Marine Corps’ V-22 Osprey tilt-rotor aircraft, the Navy’s Virginia-class attack submarine and DDG-51 Arleigh Burke destroyer and the Army’s CH-47 Chinook heavy-lift helicopter.

V-22, Destroyer

The measure would benefit defense contractors including Textron Inc. (TXT) and Boeing Co. (BA), makers of the V-22, and submarine and destroyer producers Huntington Ingalls Industries Inc. (HII) and General Dynamics Corp. (GD)

The bill also would terminate payments for the multinational missile-defense program known as the Medium Extended Air Defense System, which the U.S., Italy and Germany agreed to develop seven years ago to replace the Patriot defense system.

The administration had requested a final $400 million to phase out MEADS. Defense Secretary Leon Panetta, the German ambassador to the U.S. and the Italian defense minister all wrote lawmakers urging them to preserve the funding.

Lawmakers moved to cut off MEADS because “we’re not going to use it,” Levin said in an interview. “We don’t see the value outweighs the cost.”

The measure also would provide a 1.7 percent pay increase for military personnel, as requested by the administration.

The defense authorization bill is H.R. 4310.

To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net; Tony Capaccio in Washington at acapaccio@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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