Department of Defense (DOD) Secretary Ash Carter formally opened a Defense Innovation Unit Experimental office in Boston this week, dubbed DIUx 2.0. Secretary Carter said that they chose Boston because it is an area demonstrating great innovation in biotechnology and the biosciences. Bernadette Johnson, Chief Technology Officer at Massachusetts Institute of Technology’s Lincoln Labs, was appointed as DIUx’s Chief Science Officer, and Air Force Reserve Colonel Mike McGinley is becoming active duty to be the military lead in Boston.

Secretary Carter also announced nine new appointees to the Defense Innovation Advisory Board (DIAB). Previously he had announced that the board would be led by Chairman Eric Schmidt, Executive Chairman of Alphabet Inc, and would also include LinkedIn Executive Chairman Reid Hoffman, U.S. Special Operations commander Bill McRaven, and the Aspen Institute’s Walter Isaacson. The board has been tasked with identifying innovative private sector best practices that could be of use to DOD. These best practices could be organizational, technological, operational, or how people and talent are managed. The board’s recommendations are due this fall. The current and prospective Board members are:

• Eric Schmidt, executive chairman, Alphabet Inc. (DIAB chair)
• Jeff Bezos, president, chairman and CEO, Amazon Inc.
• Adam Grant, professor, Wharton School of Business
• Danny Hillis, computer theorist & co-founder, Applied Inventions
• Reid Hoffman, co-founder, LinkedIn, and partner, Greylock Partners
• Walter Isaacson, president & CEO, Aspen Institute
• Eric Lander, president and founding director, Broad Institute of MIT and Harvard
• Marne Levine, chief operating officer, Instagram
• Michael McQuade, senior vice president for science and technology, United Technologies
• William McRaven, chancellor, University of Texas System
• Milo Medin, vice president, Access Services, Google Capital
• Richard Murray, professor, California Institute of Technology
• Jennifer Pahlka, founder, Code for America
• Cass Sunstein, professor, Harvard Law School
• Neil deGrasse Tyson, astrophysicist and author

The program was originally launched last year with an office in Silicon Valley. It was created as a way for DOD to more easily partner with tech industries. The effort was rebooted in May of this year when Secretary Carter changed its leadership, had it report directly to him, and appointed a Defense Innovation Advisory Board.

The program now also has its own contracting capability and budget resources. DIUx is employing an innovation engagement mechanism called a Commercial Solutions Opening (CSO) to take advantage of flexible new authorities for prototyping granted by Congress. The CSO allows tech firms to bring ideas to DOD in the same way they would to other buyers of commercial technology, streamlining paperwork requirements and allowing the department to provide funding in less than 60 days after first contact with a firm and within 30 days after receiving a formal proposal.

The Secretary also said that DIUx is now divided into three teams: Engagement, Foundry, and Venture. The Engagement Team acts as a liaison between the military and business owners, introducing private industry innovators to the problems faced by the military. The Foundry team develops existing technologies until they can be put into use by the military. DIUX’s Warfighter-in-Residence and Entrepreneur-in-Residence programs match soldiers with industry engineers to rapidly design, prototype, and test new equipment and systems. And the Venture team seeks out new commercial technologies and attempts to adapt them to defense applications. They make research and development awards to companies ranging from start-ups to major tech companies. They also seek to match these projects with DOD customers for funding and staffing resources.

All of these new announcements are part of Secretary Carter’s efforts to ensure that the initiative lasts beyond his tenure at the helm of DOD.

With Congress about to go into recess at the end of next week until September and the Senate’s rejection of the cloture vote on their FY17 Defense spending bill, appropriators are once again talking about a year-end omnibus spending package as well as a continuing resolution (CR). There is already internal debate among lawmakers over how long a CR should last to keep the government running in the meantime. Senate Majority Leader Mitch McConnell (R-KY) has said that he would like to return to the appropriations process when they reconvene in September. Over on the House side, Conservatives in the Freedom Caucus are seeking a vote on a six-month CR next week, but House Majority Leader Kevin McCarthy (R-CA) said this week that they can still work on appropriations bills and that he doesn’t “think that’s the right time to do a CR.” Other senior appropriators like Rep. Tom Cole (R-OK) agreed with McCarthy and are pushing for a CR that would end by December allowing Congress to pass an omnibus in the lame-duck session.

House

Floor

The House passed its $21.7B FY17 Financial Services Appropriations bill this week by a vote of 239 to 185 (four Democrats voted for the measure and 7 Republicans voted against it). The President has threatened to veto the bill over spending cuts and policy riders. During consideration of the bill, the House adopted an amendment by a vote of 217 to 203 that would bar funding to change registration requirements for the Selective Service System. The amendment, in effect, prevents women from being able to register for a potential military draft, which was a provision included in the Senate’s FY17 National Defense Authorization Act.

House FY17 Financial Services Bill Text:

https://www.congress.gov/114/bills/hr5485/BILLS-114hr5485rh.pdf

House FY17 Financial Services Report Language:

https://www.congress.gov/114/crpt/hrpt624/CRPT-114hrpt624.pdf

Statement of Administration Policy:

https://www.whitehouse.gov/sites/default/files/omb/legislative/sap/114/saphr5485r_20160621.pdf

Next week the House will take up its $32.095B FY17 Interior appropriations bill on the House floor. The House Rules Committee will meet on Monday to determine which amendments will be considered.

House FY17 Interior Appropriations Bill Text:

https://www.congress.gov/114/bills/hr5538/BILLS-114hr5538rh.pdf

House FY17 Interior Appropriations Report Language:

https://www.congress.gov/114/crpt/hrpt632/CRPT-114hrpt632.pdf

Amendments Offered to House FY17 Interior Appropriations Bill:

https://rules.house.gov/bill/114/hr-5538

Labor HHS Education

The House Labor HHS Education Appropriations subcommittee marked up its $161.6B spending bill in subcommittee this week. The bill is $569M below the FY16 enacted level, $2.8B below the President’s FY17 budget request, and approximately $300M less than the Senate FY17 version. The bill was approved by voice vote and will be marked up in full committee next Wednesday. It is the 12^th and final bill to be considered by the House appropriations committee this year.

House FY17 Labor HHS Bill Text:

http://appropriations.house.gov/uploadedfiles/bills-114hr-sc-ap-fy2017-laborhhs-subcommitteedraft.pdf

House FY17 Labor HHS Summary:

http://appropriations.house.gov/news/documentsingle.aspx?DocumentID=394633

State Foreign Operations

The House State Foreign Operations Appropriations subcommittee marked up its $52B FY17 spending bill this week. The bill is $595M below the FY16 enacted level, $691M below the President’s FY17 budget request, and roughly $100M below the Senate’s FY17 funding level. Within the overall funding amount, Overseas Contingency Operations (OCO) funding totals $14.9B, which is equal to the FY16 enacted level. The bill was reported out of subcommittee unanimously despite the inclusion of policy riders related to abortion and climate change. The bill will be marked up in full committee next Tuesday.

House FY17 State Foreign Operations Bill Text:

http://appropriations.house.gov/uploadedfiles/bills-114hr-sc-ap-fy2017-stateforop-subcommitteedraft.pdf

House FY17 State Foreign Operations Summary:

http://appropriations.house.gov/news/documentsingle.aspx?DocumentID=394623

Senate

Floor

Democrats in the Senate blocked consideration of the FY17 Defense Appropriations bill in a cloture vote on the motion to proceed. The vote failed 50 to 44 with two Democrats (Donnelly and Manchin) voting for cloture. Sixty votes were needed to proceed. The bill had passed out of committee unanimously (30-0) on May 26. Senate Majority Leader Mitch McConnell (R-KY) said that the Senate would resume consideration of the motion to proceed to the spending bill next week.

FY17 Military Construction-Veterans Affairs and Zika Virus Funding Conference Agreement

With only one week left before the summer recess, Congress has not completed action on the FY17 Military Construction-Veterans Affairs (MilConVA) conference spending bill that includes emergency funding for the Zika virus. While the administration had requested $1.9B for Zika, Senate Minority Leader Harry Reid (D-NV) indicated this week that they would accept the $1.1B that the Senate had approved on a bipartisan basis last month. However, the administration still objects to the inclusion of restrictions on funding for Planned Parenthood and the funding offsets as well as the fact that the bill doesn’t represent a bipartisan compromise. Democrats also object to provisions in the MilConVA portion of the bill including the removal of environmental safeguards on pesticide spraying, reduced funding for veterans, and the removal of a provision prohibiting the flying of the Confederate flag at veterans cemeteries. Senate Majority Leader Mitch McConnell (R-KY) has promised another vote on the measure before the end of next week.

Subcommittee                     House                                      Senate

FY16 vs. FY17 302(b) Allocations

*Includes Overseas Contingency Operations (OCO) funding.