Good News For Boeing And Lockheed Martin In 2010 Defense Funding Bill
Details are starting to leak out about the 2010 defense appropriations bill. Congress hopes to have this passed by Friday the 18th to avoid the need to continue Continuing Resolution Actions (CRA). Over the weekend the House and Senate passed an omnibus bill that funded most of the rest of the discretionary funding for the Federal Government and now this is the last bill to be done.
Some of the decisions from the Conference Committee continue to go against the wishes of the Obama Administration. Supposedly the bill will fund a further ten C-17 transports which are made by Boeing (BA) on top of the six included in the last 2009 supplemental. Obama and Secretary of Defense Gates had wanted to end this program citing that the Air Force's quantities had been met.
The C-17 enjoys a great deal of support in Congress as without it the Boeing plant in Long Beach, CA would have to close costing several thousand jobs. There is also a demonstrated need for heavy lift as the U.S. relies on it greatly to support Iraq and Afghanistan. Boeing will also use these aircraft to make up for the end of the F-22 program.
Lockheed Martin (LMT) will also gain a little as the House was able to keep money to continue using the VH-71 aircraft already purchased for some development work. The program for a new Presidential and VIP aircraft remains canceled with funding to end the contract but there is about $100 million to do some work with the assets already acquired. This will mitigate the effect on Owego, NY and Lockheed. This had been something the local Democratic Representative, Maurice Hinchey, had been fighting for.
Finally in direct conflict with the White House there will be almost half-a-billion dollars to keep the second engine for the F-35 going. This had been requested to end as an unnecessary risk reduction and there had been threats of a veto over this if it was included. The second engine is being developed by Rolls-Royce (RR) and General Electric (GE) as an alternate to the Pratt & Whitney primary engine.
Complicating matters for Obama is that the debt ceiling increase and the second "stimulus" bill may be attached to the defense budget. He would have a hard time vetoing it just for those reasons alone as they are two of his primary goals in the near term. Without the debt increase it will be hard for the Government to keep going in the near term.
By Friday more of the details and a feel for how this will go will be apparent. It seems as with many of these bills that the Congressional compromises will have to be accepted by the Executive Branch due to the need for the bills passage. In the long run a few billion more spending here-or-there will not matter.