A Capitol View: October 2020
Updates from SMI
Bill Berl Joins SMI as a Vice President
by: Richa Patel
Strategic Marketing Innovations (SMI) is excited to welcome Bill Berl to the firm as a Vice President.
Mr. Berl brings over twenty years of expertise working national security, space, and international trade initiatives for clients of all sizes. After a twenty-two-year career in the Navy, retiring a Commander in the U.S. Naval Reserves, Mr. Berl then went on to serve Capitol Hill as the Legislative Director and National Security Advisor to members of Congress on the Appropriations and Armed Services Committees. Following his Congressional experience, he served in government relations for leading aerospace and defense companies, including Orbital ATK and IAI North America, designing and executing winning strategic campaigns for client growth.
“Bill’s experience has uniquely prepared him to add tremendous value to our clients at SMI,” said SMI Chief Operating Officer Bill McCann. “His career speaks for itself: military service, legislative experience, defense appropriations experience, and federal and agency marketing experience. We know that he will be a great advocate to clients – and a great colleague at SMI – and will allow us to expand and enhance our technical practice areas.”
Mr. Berl augments his lifelong interest in government by serving his community as a county election officer and a volunteer for local political candidates. He holds a BA in Political Science from the University of Illinois, a Masters in National Security Policy from George Washington University, and is a Graduate in Strategy & International Relations from the Naval War College.
SMI Team Presents at Webinar on COVID-19 Response Funding Opportunities
by: Aarzu Maknojia
Earlier this month, SMI’s Mark Gillman, Travis Taylor, and David Visi participated in a webinar on opportunities for COVID-19 response funding. They were joined by presenters from BDO USA and Rogers Joseph O’Donnell.
Various organizations received additional funding under the CARES Act passed by Congress earlier this year and many more are slated to receive funding if and when another supplemental spending bill passes. Congress is focused on minimizing the impact of the COVID-19 pandemic on businesses critical to the United States while working to control and resolve the pandemic itself.
The webinar discussed various governmental and non-governmental funding organizations including Operation Warp Speed, National Institutes of Health, the Biomedical Advanced Research and Development Authority, Medical CBRN Defense Consortium, Joint Program Executive Office for CBRN, National Science Foundation, Coalition for Epidemic Preparedness Innovations, and the Bill and Melinda Gates Foundation.
If you or an organization you know is interested in pursuing any of these funding opportunities, please reach out to Mark, Travis, or David for more information.
Updates from Washington
Update on a COVID-19 Relief Bill
by: Richa Patel
House Speaker Nancy Pelosi continues to work with Treasury Secretary Steven Mnuchin on a stimulus deal, which, even once reached, would still required being written and voted on and is unlikely to pass before November elections.
Pelosi believes they are “just about there” on reaching such a deal, although there are still issues that require consensus, including: liability protections for businesses, aid to state/local governments, and funding for the Census and election systems.
The relief package proposed by Democrats would cost roughly $2.2 trillion. Most Senate Republicans oppose another massive spending bill, making the type of package that could pass the Senate unclear. President Donald Trump further complicates the process through his changing stances on a relief bill. As of now, there still remains a chance of a relief bill passing before the start of a new congressional session.
DoD Inspector General Investigating CARES Act Spending
by: Aarzu Maknojia
Last month, SMI’s Ken Wetzel responded to a Washington Post article that reported that defense contractors have received hundreds of millions in pandemic aid while it was “meant for masks and swabs.” He noted that “ensuring defense contractors are able to successfully navigate an unprecedented crisis such as COVID-19 is directly related to the United States’ national security” because without investment, “it risk[s] losing access to domestically produced military critical equipment.”
Now, the DoD’s inspector general has begun an investigation to determine whether the Pentagon appropriately spent the funds it was appropriated, intended to provide COVID-19 relief as part of the CARES Act.
The IG notice notes that “the objective of this audit is to determine whether the DoD awarded [CARES] Act funding to increase the Defense Industrial Base manufacturing capacity in accordance with [f]ederal regulations and Defense Production Act authorities.”
This investigation comes after objections from some congressional Democrats following the article. The Pentagon has denied accusations that it spent money in a way that was inappropriate or improper. In its response, it cited Undersecretary Ellen Lord’s testimony before Congress as well as the Pentagon’s spending plan.
We will keep you up to date with any developments.
Polls to Watch for 2020 Election
by: Richa Patel
As the 2020 Elections are right around the corner, many Americans are wondering –what next? How likely is an administration or chamber change?
Most recent polls have Biden up. FiveThirtyEight’s aggregate polling data, as of October 26, has an average of Biden’s lead at +9. In the simulations the site runs, they have found that in 74 of 100 scenarios, Democrats win control of the Senate. As we all well know, however, polling data does not determine an election.
On a presidential level, there are still several states where it is clear the voters could go in either direction – these include Ohio, North Carolina, Arizona, Georgia, Iowa, Texas, Pennsylvania, Wisconsin, and Florida – where polling data consistently show a close race. Swing states will be the deciding factor of this election.
There are a host of very close Senate races as well that may determine who takes the chamber for the next session. Races to watch include Iowa’s Joni Ernst (R – Incumbent) against Theresa Greenfield (D), North Carolina’s Thom Tillis (R – Incumbent) against Cal Cunningham (D), Maine’s Susan Collins (R – Incumbent) against Sara Gideon (D), Montana’s Steve Daines (R – Incumbent) against Steve Bullock (D), South Carolina’s Lindsey Graham (R – Incumbent) against Jaime Harrison (D), and Georgia’s David Perdue (R – Incumbent) against Jon Ossoff (D) as well as its special election between Kelly Loeffler (R), Doug Collins (R), and Raphael Warnock (D). Races where polls are not favoring the incumbent include Arizona’s Martha McSally (R – Incumbent) against Mark Kelly (D), Alabama’s Doug Jones (D – Incumbent) against Tommy Tuberville (R), and Colorado’s Cory Gardner (R – Incumbent) against John Hickenlooper (D). Democrats need to win 3 Republican seats to take the Senate.
The 2020 election is Tuesday, November 3; not all states plan to report their results that night as they expect their counting process to take longer.
The Election’s Impact on Defense Funding
by: Aarzu Maknojia
DoD leaders have repeatedly stated that they need 3-5% annual real growth (that’s growth above inflation) in the defense budget in order to afford the National Defense Strategy that was put into place in 2018. Most recently, Secretary Esper spoke to the Heritage Foundation and reiterated that this growth will be necessary to “stay ahead of the challenges we face, especially from China.” The FY2021 budget request, despite being under a Republican president, does not come near this amount of growth.
If President Trump is reelected, we may see a slight increase in spending above current levels. However, these increases likely wouldn’t be sustained due to push back from Democrats and competing budget priorities (eg. small business, countering COVID-19, etc). Under a Biden administration, we may see some cuts to defense spending. However, they likely won’t be as dramatic as we expect them to be. While progressive Democrats have advocated for deep cuts to defense spending and recently indicated the likelihood of intra-party squabbles over the matter, Democratic party “establishment types,” including Biden’s presumptive Defense Secretary nominee Michele Flournoy, have argued for more effective defense spending with a focus on modernization. Additionally, Democrats would expect strong pushback from the Republicans, even if the latter becomes the minority. Both President Trump and Vice President Biden agree that China is a threat, contracting needs to be streamlined, and the domestic defense industrial needs to be strengthened.
Both candidates have acknowledged the threat of China to the US’ national security. Both administrations have interest in continuing investments in emerging and critical technology areas such as artificial intelligence, hypersonics, cybersecurity, and quantum computing in order to counter a Chinese threat.
Contracting will likely continue to be overhauled. There is a consensus that contracting is slow, bureaucratic, and a challenge for new industry partners to enter. Streamlining has been a goal and request from both industry and the government, and it is likely that a movement towards it will continue.
We can anticipate an emphasis on strengthening the defense industrial base. COVID-19 exposing the weaknesses in our supply chains combined with the 2018 report assessing the domestic industrial base and supply chain resiliency highlight that this is going to be a critical issue for years to come. President Trump has emphasized his “America Made” promise and Biden recently put out his “Made in All of America” plan.
It is expected that there will be changes to the budget priorities, regardless of who wins: Trump will continue prioritizing the National Defense Strategy, Biden would like to shift focus to issues like climate change; Trump will continue to support legacy systems, Biden will likely push back in favor of the new modernization priorities. In either case, quick sweeping change to the status quo is unlikely and defense contractors, especially sub-tier suppliers, should feel confident.