House CR includes MEADS funds — to cover termination costs

This year the Defense authorization bill signed by President Obama included a restriction
on funding MEADS.

{mosads}“The prohibition in the NDAA is law, and nothing in this
bill or report overrides or changes that fact,” Rogers said on the floor
Wednesday.

The Pentagon has warned Congress against cutting funds for MEADS
because it could lead to penalty costs for breaking its contract with Italy and
Germany, and it would also leave the military without anything to show for its
investment thus far.

“Unilateral U.S. withdrawal and termination of the program
would ensure the Department and its international partners receive nothing for
our MEADS investment, at a cost comparable to completing the restructured Proof
of Concept effort,” then-acquisitions chief Ash Carter wrote to Senate Armed
Services Carl Levin (D-Mich.) in 2011.

The German and Italian Defense chiefs wrote to the Pentagon
in January warning that contract termination costs would be paid for the by
United States if its actions kill the program.

“We assure you, that this is not negligible. In a first
estimate the current U.S. position results in an economic damage to Germany and
Italy of more than $400 million,” the Italian and German defense ministers
wrote.

MEADS International, the venture behind the missile defense
system that’s comprised of Lockheed Martin and several European defense firms,
said in a statement that the final verdict on MEADS was not assured.

“The FY’13 funding process is still ongoing and we remain
hopeful that the U.S. will meet its [Memorandum of Understanding] commitment to
the program and fund the last year of the Demonstration of Capabilities,” the
group wrote. “MEADS provides next-generation air and missile defense
capabilities that address the current threat environment and reduce demand for
manpower and airlift.”

An Appropriations aide said that when the committee included
funding in its bill last year, it was not intending to take a position on
continuing the MEADS program. The money was included in order to either fund
the program or to pay for termination costs, the aide said, because the Armed
Services Committees had not finished the NDAA at that point.

The continuing resolution passed by the House included $348 million for MEADS and $53 million for the program’s U.S. office.

The issue is not settled yet, as the Senate still has to
pass its measure to fund the government through the end of the fiscal year,
which it’s looking to do next week.

The White House had listed MEADS as one of the reasons it threatened
to veto the NDAA last year, but Obama signed the bill in January.