Mobile-based shipbuilder Austal USA stands to benefit from the latest version of a defense appropriations bill that exceeds the Navy's shipbuilding requests by billions of dollars.
Rather than pass an all-encompassing omnibus appropriations bill for fiscal year 2019, Republican leaders in Congress have pursued a strategy of breaking the process into several "minibus" bills.
The House and Senate passed the first of these, H.R. 5895, last week. Now awaiting the president's signature, it provides a total of $147 billion for Energy and Water, military construction and Veterans Affairs and Legislative Branch operations. The biggest area of increase was a $5 billion, 6.2 percent budget hike for the Department of Veterans Affairs.
Ala. Sen. Richard Shelby, chairman of the Senate Appropriations Committee, and Rep. Bradley Byrne both hailed passage of that first minibus bill as a major bipartisan success.
Also last week, the House Appropriations Committee released the final conference version of a second minibus, an $842 billion package covering Defense ($674 billion) plus Labor, Health & Human Services and Education ($178 billion in discretionary funding). H.R. 6157 includes a shipbuilding plan that could well benefit Austal.
Throughout the 2019 budget process, between Trump administration goals, Navy requests and House and Senate versions of bills, discussion has ranged from one to three of the Littoral Combat Ships built by Austal and Lockheed-Martin. The John S. McCain National Defense Authorization Act, passed in August, provides for three.
The authorization act lays out a spending strategy; appropriations acts, such as this year's minibus bills, actually assign money. There can be variations between the two, but the final conference version of the defense minibus bill funds three LCS contracts to be issued in 2019. (It doesn't say how they'll be allocated between the two manufacturers.)
For Austal, there is one very notable difference between the Authorization Act passed in August and the appropriations bill nearing approval.
Austal also builds a high-speed multipurpose catamaran called the Expeditionary Fast Transport (designated EPF). Plans have called for 12 of the ships, and in August the 10th completed its acceptance trials. The 11th and 12th are under construction.
The fiscal 2018 budget included money for a 13th, though that contract has not yet been awarded.
There was no guarantee the 2019 budget would add any more. The Authorization Act passed in August did not include one, despite support from Shelby, Byrne and others. The Appropriations bill does, meaning the EPF program could continue with a 14th ship.
According to a summary by the House Appropriations Committee, the conference version of the bill allocates a base of $135.4 billion for equipment purchases, $4.8 billion more than the Navy's original request. $24.2 billion covers three guided missile destroyers, two submarines, the three LCSs, one expeditionary sea base, one EPF, two oilers and one towing/salvage/rescue ship.
The House and Senate now have to pass the appropriations bill. A third minibus, H.R 6147, will cover the Department of the Interior and the EPA. A fourth is expected to cover remaining areas such as the Departments of Commerce, Justice, State and Homeland Security.
The Fiscal Year 2018 budget ultimately included three LCS contracts to be awarded this year. It has not yet been revealed how they will be divided between Austal and Lockheed Martin.
Note: As originally published, this story omitted funding for a 13th EPF. Funding was approved for fiscal 2018, but as of Sept. 18, 2018, the contract has not been awarded.