Lockheed Martin CEO Marillyn Hewson on Tuesday urged Congress to pass a budget for the full fiscal year and warned if lawmakers fail to do so it could potentially impact the defense giant's future orders.
The current short-term spending bill, or continuing resolution, was passed last month and keeps the federal government operating through early December but doesn't provide for the remainder of fiscal 2018, which started Oct. 1. It also keeps the Pentagon budget essentially at last year's levels, potentially impacting new defense start programs and creating other issues that could have consequences for military readiness.
"The federal government is currently operating under a continuing resolution for fiscal year 2018 that limits the Department of Defense expenditures to previous fiscal year levels through Dec. 8," said Hewson in remarks during the defense giant's third-quarter earnings conference call. "With a large portion of our backlog work already funded from prior fiscal years, we do not expect significant impacts to our 2017 financials for this current short-term CR."
Hewson added, however, "Should the continuing resolution and its associated budget constraints be extended beyond Dec. 8, we would anticipate some level of an impact against our 2018 orders profile and corresponding backlog levels with the potential of other impacts depending on the duration of the CR."
Still, the CEO said she was "encouraged" to see both chambers in Congress pass their versions of the National Defense Authorization Act "in a broad show of support" for higher defense spending. The NDAA sets forth the Pentagon's budget and major programs for the next fiscal year.
Indeed, the House in July passed an NDAA with a base defense budget of about $593 billion and the Senate last month approved a bill with a target of about $611 billion, before so-called Overseas Contingency Operations war funding. In fact, the NDAA bills passed exceeded the current statutory budget caps and are above President Donald Trump's $575 billion request.
"We have been a strong voice on the Hill ... trying to get our lawmakers to address the budget caps," said Hewson.
A conference committee is currently working to resolve differences between the two NDAA bills before sending the legislation to the president.
"It remains to be seen which measures will be adopted in the final National Defense Authorization Act and what levels of funding will be provided in a separate appropriations process," said Hewson.
The Lockheed executive noted that since the NDAA amounts exceeded the current budget caps there is legislation required to adjust the spending limits. At least 60 votes in the Senate are needed to repeal the caps or adjust them, meaning there will need to be some Democrats supporting the effort since the GOP controls 52 seats at present.
"Passage of this legislation will require bipartisan support," Hewson said. "We continue to urge our lawmakers to work towards an agreement, which modifies the budget caps, provides the defense funding required to capitalize our military assets and delivers to our military the resources vital to our nation's security."