At long last, the White House has announced a firm date for sending the FY2014 budget request to Congress:  April 10.

It is unusual to have a budget request released on a Wednesday — typically it is a Monday — but there is nothing usual about this budget season in Washington.  Congress was nearly six months late completing action on the FY2013 budget.   The White House is about two-and-a-half months late submitting the FY2014 request — it should have been sent to the Hill on February 4.   And the budget request will arrive after instead of before the House and Senate passed their budget resolutions, which are blueprints for FY2014-2023.

Strictly speaking Congress has until the end of FY2013 on September 30 to complete work on the FY2014 budget request.   It has been many years since it has met that deadline and considering how late the request is, the outlook is no better this year.

All things considered, however, everyone seems to be working together slightly better in the sense that legislation is being passed rather than stuck in political gridlock.

Here is where fiscal matters stand at the moment:

• Fiscal Cliff.   The fiscal cliff that combined deep budget cuts and stiff tax increases was avoided as 2012 turned into 2013 by agreement to raise taxes, but delaying decisions on spending.
• Debt Limit.  The issue of raising the debt limit was postponed when Congress agreed to suspend the debt limit until May 18.  That is the new date by which Congress must make a decision.  Time will tell if this becomes an edge-of-your-seat political drama.
• FY2013 Budget and Sequester.   Congress completed action on the FY2013 budget last week, avoiding a government shutdown.  However, the agreement kept the much-feared sequester in place at least for the rest of FY2013.   Attention has been focused on the sequester’s impact in FY2013, but the deep cuts will last through 2021 under the 2011 Budget Control Act.
• FY2014 Budget Resolutions.   The House and Senate have each passed their FY2014 budget resolutions.  The Senate has been unable to pass a budget since 2009 so merely passing the bill is an achievement.   The two chambers now are supposed to reconcile their differences and pass a single budget resolution that governs their budget decisions, but the two versions could hardly be more different.  The budget targets in the House version are lower than those under the sequester; using spending cuts alone, the budget would balance in 10 years.   The Senate version does away with the sequester and through a combination of tax increases and spending cuts would reduce, but not eliminate, the deficit in those10 years.  The budget resolutions passed each chamber by very close, almost party-line, votes.  Little hope is seen for compromise.

For the first time since 2009, the Senate passed a budget after a marathon session that lasted until about 5:00 am ET this morning.  The vote was a squeaker:  50-49. 

All 45 Republicans and four Democrats voted against the $3.7 trillion 10-year plan (FY2014-2023).  The four Democrats were Mark Pryor (Arkansas), Kay Hagan (North Carolina), Mark Begich (Alaska) and Max Baucus (Montana).   A fifth Democrat, New Jersey’s Frank Lautenberg, did not vote.

The Senate budget plan would reduce, but not eliminate, the deficit over the next 10 years by a combination of spending cuts and tax increases.   The spending cuts do not include the sequester.  Although attention has focused on the effects of the sequester for this year (FY2013) — for which it remains in place — pursuant to the Budget Control Act of 2011 it lasts until FY2021.

The House version of the budget resolution, which passed two days ago, is completely different from the Senate’s version.  It balances the budget over 10 years through spending cuts alone.  Many agency budgets would be reduced even below the level required by the sequester.   It also passed by a close margin, 221-207, with  211 Republicans in favor, 197 Democrats and 10 Republicans against, and three Democrats and one Republican not voting.

In theory, the two chambers would now negotiate a single compromise version to govern spending decisions on both sides of Capitol Hill.  Because the two are so different, however, few expect it to happen and each will adhere to its own version.   Budget resolutions set top-line spending levels for the government divided into about 20 different categories of federal spending called budget functions (e.g., “national defense” or “general science, space, and technology”) rather than on an agency-by-agency basis.  The funding figures in the budget resolutions are then allocated to the 12 appropriations subcommittees based on their jurisdiction, and those subcommittees recommend more specifically how the money should be spent.

The vote is a victory for Senate Majority Leader Harry Reid who was been strongly criticized by Republicans for his inability to pass a budget in four years.   Pundits are saying that several vulnerable Democrats who are up for reelection in 2014 may be hurt by their votes in favor of the package, especially since it does not balance the budget.  Senator Patty Murray (D-Washington), chair of the Senate Budget Committee that produced the budget resolution, argues that it is balanced in a different way — between spending cuts and tax increases, instead of using only cuts to reduce the deficit like the House.

The House agreed to the Senate version of the new FY2013 Continuing Resolution (CR) this morning, clearing the measure for the President.   He is expected to sign it, funding the government for the remainder of FY2013.

The good news is that agencies now know how much money they have to spend this year.  The fiscal year began on October 1 and agencies have been operating under a 6-month CR at their previous year’s funding levels since then.  The new CR, H.R. 933, funds the government for the rest of the year (through September 30) and agencies included in five of the regular appropriations bills actually get completely new FY2013 appropriations bills instead of being constrained by what passed last year.   DOD, NASA and NOAA are among the agencies getting new appropriations bills.  (The five regular appropriations bills incorporated into the CR are Defense, Military Construction/Veterans Affairs, Commerce-Justice-Science, Agriculture, and Homeland Security).

The other good news is that passage of the CR avoids the possibility of a government shutdown, which could have occurred if Congress did not agree on a new CR by March 27 when the current law expires.

How much good news is contained in the bill in terms of funding levels and flexibility is a mixed bag.   Although precise numbers will have to await calculations by the respective agencies, NASA will get about $16.65 billion for FY2013, a reduction of more than $1 billion from its FY2013 request of $17.77 billion or its FY2012 appropriated level of $17.8 billion.   NOAA’s funding for satellite procurement will be about $1.68 billion compared to its request of $1.8 billion, which included a significant increase from FY2012 in order to begin procurement of launch vehicles for its next generation geostationary weather satellites (the GOES-R series).  

The numbers can be difficult to discern looking at the language in the bill and the accompanying explanatory statement.   One must factor in provisions at the very end (sections 3001 and 3002) that make clear everything is still subject to the sequester (5 percent for non-defense agencies, 7.8 percent for defense) as well as across-the-board rescissions (1.877 percent for agencies in Division B, the part of the bill that pertains to NASA and NOAA).  The funding figures shown in the bill and explanatory statement for NASA and NOAA therefore must be reduced by 6.877 percent, and for DOD, generally by 7.8 percent (funding for military construction/veterans affairs is subject to an additional 2.513 percent  rescission, but not the rest of DOD).

The total amount of funding provided in the bill is $984 billion after the $1.043 trillion is adjusted for the sequester.  The vote was 318-109. Many Democrats oppose the sequester, but split 115-82 in favor of the bill.  Republicans were split 203-27 in favor.

At the end of the day, some programs may fare better than others because of language in the bill or explanatory statement that instructs agencies on how to fund specific activities.  For example, the explanatory statement has rather extensive language about NOAA’s GOES-R and JPSS programs as well as a number of NASA programs.   Also, the sequester and rescission are intended to be applied equally to all budget accounts as well as the programs, projects and activities (PPAs) within those accounts.  Agencies may interpret the meaning of a PPA differently, however.

Some programs also may be exempt from the sequester either by law or policy.  NASA Administrator Charlie Bolden said at a House Appropriations subcommittee hearing yesterday that he has excluded NASA’s top three priorities as well as funding for security, safety and export control compliance from across-the-board cuts.  The three priorities, agreed to in 2011 by key Senators and the Administration, are the James Webb Space Telescope, the Space Launch System and Orion spacecraft, and the International Space Station augmented by commercial cargo and commercial crew.

Consequently, until NASA and other agencies issue operating plans or otherwise make public how they plan to distribute the funds, the precise dollar amounts for each program cannot be determined.

NASA Administrator Charlie Bolden outlined actions he is taking in response to concerns highlighted by Rep. Frank Wolf (R-VA) on access to NASA facilities and information by Chinese nationals.   Bolden testified at a hearing chaired by Wolf this afternoon.

Wolf has called NASA officials to task for allowing Chinese nationals access to NASA’s Ames Research Center in Moffett Field, CA and Langley Research Center (LaRC) in Hampton, VA particularly.  Wolf chairs the House Appropriations subcommittee that funds NASA and announced earlier this week the arrest of a Chinese national who worked for an LaRC contractor.  

Bolden emotionally responded that he takes his responsibility to protect sensitive information very seriously. “This is about national security, not NASA security, and I take that personally,” he said.   Bolden is a retired Marine Major General and subcommittee ranking member Rep. Chaka Fattah (D-PA) spent some time laying out Bolden’s military career to underscore his service and dedication to the nation.

Wolf is an unrelenting critic of the Chinese government and said today that five NASA employees had come to him with concerns about Chinese access to Ames and LaRC because they were afraid to talk to their NASA supervisors.  Bolden said he was was “bothered” about the effectiveness of his leadership if even five of his 18,000 NASA employees “don’t trust me.”   Wolf replied “I would trust you.”

On March 7, Wolf issued a seven step “remediation plan” for NASA to address what he called “systemic security issues.”  Although he is laser-focused on China, he also has raised concerns about access by nationals from the State Department’s other seven “countries of particular concern”  — Burma, Eritrea, Iran, North Korea, Saudi Arabia, Sudan and Uzbekistan.

Bolden publicly responded to those steps today.   Among the actions he is taking is a review of access that nationals from those countries have to NASA facilities led by Associate Administrator Robert Lightfoot, which is in addition to a review by the NASA Inspector General (IG).   Once those reports are completed, Bolden said he would consider requesting an independent review by an outside group, as recommended by Wolf.  Bolden also said he had closed the NASA technical reports database until the agency could determine if export-controlled documents are included in it, created a moratorium on any new access to NASA facilities by nationals from the countries of concern, ordered that remote access to NASA computers by people from those countries be terminated while under review, and is reemphasizing to supervisors the need to strictly adhere to export control regulations.

Wolf seemed satisfied with Bolden’s response in general, but pressed him on the issue of having an independent, outside review.   Wolf recommended previously that an organization like the National Academy of Public Administration would be an appropriate body to conduct an independent review and suggested it be chaired by someone like former Attorney General Dick Thornburgh.   Bolden replied that he did not want to make that commitment until his own review and the NASA IG’s review are completed, but that he is likely to do that.

Wolf had harsh words for NASA’s IG, Paul Martin, today, as he did last week at a hearing where Martin testified. He feels the IG office failed in its duty to investigate access by Chinese nationals to NASA facilities.

The hearing also exposed a difference in interpretation of language included in NASA’s appropriations act that sharply restricts NASA’s interactions with China.   Bolden said his understanding was that it prohibited bilateral, but not multilateral, meetings with Chinese space program officials.  Wolf was irritated earlier this month upon learning that China would participate in a meeting of the Committee on Earth Observation Satellites (CEOS) chaired by NASA at LaRC.  Bolden said he would have his staff work with Wolf’s to clarify the matter.

China issues were in the forefront at the hearing today, but other topics were also addressed.  Ordinarily, this would be a hearing where NASA and the subcommittee discussed the budget request for the upcoming fiscal year, but the Obama Administration has not yet submitted that request.   At the American Astronautical Society’s Goddard Memorial Symposium in Greenbelt, MD this morning, Bolden was asked “what can you say about the budget” and he joked “I’d like to have one.”

Without a request for FY2014, the hearing more generally discussed NASA’s ongoing programs and the interests of particular subcommittee members.  Bolden passionately defended the James Webb Space Telescope (JWST) after Wolf commented that the Government Accountability Office (GAO) issued a report praising improvement in NASA’s program management except for that program.   Bolden insisted that NASA now has that program well in hand.   When Wolf said that it would be extremely difficult to cancel the program at this point, Bolden disagreed and said that if some major unanticipated technical problem was discovered, the agency would have to reassess the program.  “Nothing is too big to fail,” Bolden asserted. 

As for NASA priorities, Bolden stressed that Congress and the Administration already agreed on NASA’s top three priorities:  JWST, the Space Launch System (SLS) and Orion for sending humans beyond low Earth orbit, and the International Space Station (ISS) augmented by commercial cargo and commercial crew.   He insisted that the agency will not take money from “the big three” to deal with budget constraints, but all bets are off if sequestration remains in effect for the next 10 years (as current law requires):  “What could affect them is sequestration. Ten years of that … could have devastating effects on all our programs.”

Mike Gold warned his space industry colleagues today not to jump the gun by assuming that satellite export control reforms already are in place.  Congress passed a law that will loosen satellite export controls, but it will be quite some time before new regulations are in place and now would be the worst time for anyone to make a misstep, he said.

Gold is the Director of DC Operations & Business Growth for Bigelow Aerospace and a long time champion of reforming export controls for commercial satellites, which are currently governed by the International Traffic in Arms Regulations (ITAR).  After a decade-long effort, Congress finally passed export control reform at the end of the 112th Congress in the FY2013 National Defense Authorization Act (NDAA).  During a panel session at Satellite 2013 today, key participants in that effort from Congress, the Administration, and industry shared stories of what it took to reach this point and the many steps yet to be taken.

Tony Dearth of the State Department and Kevin Wolf of the Commerce Department laid out the complicated and time-consuming regulatory process that is now underway to actually move items off of the State Department’s strict ITAR-controlled U.S. Munitions List (USML) and onto the Commerce Department’s more flexible Commerce Control List (CCL).  They expressed hope that the rulemaking process would be completed in the October-November time frame, followed by a 180-day waiting period for the new rule to go into effect to give industry time to adjust its own processes.

The message from Gold, who brought a half bottle of champagne to celebrate the occasion — joking that he would have brought a full bottle except for sequestration — was that the reforms have not gone into effect yet.  He worries that smaller companies, in particular, may simply be reading headlines that the law passed and do not realize how much more is left to be done.    Consequently, someone may inadvertently violate the existing regulations, which remain in effect, and undo all the gains especially if it involves China.  

Satellite exports to China are not permitted under the current export control regime and that prohibition will remain in effect in the new regime.  China was “the third rail” in the discussions and any “giant mistake or blunder…particularly with regard to China … could derail this thing yet,” Gold stressed.

He particularly thanked David Fite of the House Foreign Affairs Committee, a key figure in achieving what Gold called a “miracle.”  Fite was also on today’s panel and recounted the numerous twists and turns in Congress over the past decade that eventually led to success.  Panel moderator Patricia Cooper, President of the Satellite Industry Association (SIA), was also singled out for praise (and was presented with the champagne).

The key message from Gold, though, was “Don’t think that because the NDAA passed that it’s over.”  Passing the law was “an incredible victory” but the “fight isn’t over yet.” 

SIA and the Aerospace Industries Association issued a fact sheet explaining what lies ahead.