The House, Senate and White House agreed today that they will enact a 6-month Continuing Resolution (CR) to keep the government operating from October 1, 2012 to March 31, 2013.  

A CR is necessary because the 12 regular appropriations bills for fiscal year 2013 have not cleared Congress.  The House has passed seven, but the Senate has not passed any.   The House and Senate both will begin a 5-week recess on Friday and will not return until September 10, after the Republican and Democratic conventions in late August and early September.  That will leave little time for work to be completed on the regular appropriations bills before FY2013 begins on October 1.

In a rare sign of unity, all agreed today on avoiding the brinkmanship that has characterized much of Washington politics in the past year and a half.  The CR itself is not scheduled to be brought to the floor of either the House or Senate until September, but by announcing their agreement now, agencies can better plan on what their spending levels will be for the first half of FY2013.  The agreement is to fund the government at $1.047 billion, the level agreed upon in last year’s Budget Control Act.

Some members of the appropriations committees reportedly are unhappy with the agreement because they wanted a shorter term CR and passage of the bills that they have been carefully crafting for the past several months.  Some conservatives apparently are unhappy that funding will be at the $1.047 trillion level instead of the $1.028 trillion they voted for earlier this year.   However, the Republican and Democratic leadership on both sides of Capitol Hill agreed that this is the best course of action and must believe they have the votes to pass the bill.

This deal does nothing to avoid the sequester that looms on January 2, 2013, but the spirit of compromise evidenced today may bode well for resolving that issue as well.

Editor’s note: The statements from House Speaker Boehner and Senate Majority Leader Reid clearly state that it is a 6-month CR.  Curiously, the White House statement says it will fund the government “for the first quarter” of FY2013, which is only 3 months.   We are inquring as to the reason for the discrepancy, but every news account we have perused says it is a 6-month CR.

The Government Accountability Office (GAO) gave the Department of Defense (DOD) mixed grades on how well the department is responding to earlier GAO recommendations on how to improve its acquisition of Evolved Expendable Launch Vehicles (EELVs).

DOD had been planning to buy 40 core EELVs — Atlas V and Delta IV rockets — to be launched over 5 years.   Both vehicles are produced and sold by the joint Lockheed Martin-Boeing United Launch Alliance (ULA).   One rationale was that a block buy of that magnitude would help stabilize the industrial base.   Other companies, notably SpaceX, objected that such a contract would preclude “new entrants” from competing for a share of the government launch market. 

GAO issued a report last year that was critical of DOD’s acquisition strategy.  In particular, GAO found that DOD was relyingon  contractor data rather than independent analysis about the state of the industrial base.  GAO made seven recommendations and in the FY2012 defense authorization act, Congress directed DOD to report on how it was complying with them and for GAO to assess that information.   The new report provides GAO assessment.

Of the seven recommendations it made, GAO reports that DOD completed two, has action underway on two others that it expects DOD to complete, has action underway on another two that GAO assesses needs more work, and one where no action has been taken.  GAO noted that DOD concurred with its assessment. 

The two that are completed were for DOD to work closely with NASA to ensure it had adequate information about NASA’s heavy lift launcher program to facilitate DOD’s ability to negotiate EELV contract prices that maximize the government’s investment, and to refrain from waiving government contracting requirements for contractor and subcontractor certified cost and pricing data.

The two that GAO expects DOD to complete are conducting an independent assessment of the health of the U.S. launch industrial base, and to reassess the length of its new block-buy contract.

The two that need more work are for DOD to ensure that mission assurance activities “are sufficient and not excessive” and to incentivize the prime contractor to implement efficiencies without affecting mission assurance, and to examine how greater interagency coordination might increase efficiencies and cost savings.

The one recommendation on which DOD has taken no action is to develop a science and technology plan for improving and evolving launch technologies.

GAO did not make any new recommendations in this report. 

July 23 must be a good day for mergers and acquisitions.   In addition to the announcement earlier today that DigitalGlobe and GeoEye will merge, GenCorp announced that it is acquiring Pratt & Whitney Rocketdyne (PWR). GenCorp is the parent company of Aerojet, until now a major PWR competitor.

GenCorp Chief Executive Officer (CEO) Scott Seymour said the combined company would be “better positioned to compete in a dynamic, highly competitive marketplace, and provide more affordable products for our customers.”    GenCorp will pay $550 million to acquire PWR, financed with a combination of cash on hand and issuance of debt.   The acquisition must obtain regulatory approval and is expected to close in the first half of 2013.

PWR and Aerojet are the major U.S. producers of rocket engines among other business lines.

At the same time, Aerojet announced that Warren M. Boley Jr. will become its new president on August 20, 2012, succeeding Seymour who also had served as Aerojet’s president on top of his GenCorp duties since April 2010.    Boley spent 27 years with the Pratt & Whitney business unit of United Technologies Corp. and most recently served as a Director of Boley Tool and Machine Works, Inc.