1. 2013 National Association of Ordnance Contractors (NAOC) General Membership Meeting November 19 – 22 San Antonio, TX

2. FY 2014 Appropriations and Authorization FY '14 Authorization & Appropriation Status President's Budget FUDS - $237,443,000 BRAC Combined Account - $451,357,000 ER - Army - $298,815,000 ER - Navy - $316,103,000 ER - Air Force - $439,820,000 HouseSenateConference Defense Authorization H.R. 1960 S.1197 Passed Subcommittee 5/23/13Passed Subcommittee 6/11/13FUDS - Passed Full Committee 6/6/13 on a vote of 59-2Passed Full Committee 6/13/13 on a vote of 23-3BRAC - Passed House 6/14/13 on a vote of 315-108FUDS - $237,443,000ER-Army - FUDS - $237,443,000BRAC - $451,357,000ER-Navy - BRAC - $451,357,000ER-Army - $298,815,000ER-Air Force - ER-Army - $298,815,000ER-Navy - $316,103,000 ER- Air Force - $439,820,000 Does not authorize a new BRAC round Full Senate to consider week of November 18th Defense Appropriations H.R. 2397 Passed Subcommittee 6/5/13Passed Subcommittee 7/30/13 on a voice voteFUDS - Passed Full Committee 6/12/13Passed Full Committee 8/1/13 on a vote of 22-8ER-Army - Passed House 7/24/13 on a vote of 315-109FUDS - $287,443,000 (+50 million)ER-Navy - FUDS - $262,443,000 (+ $25 million)ER-Army - $298,815,000ER - Air Force ER-Army - $298,815,000*ER-Navy - $316,103,000 ER - Air Force - $439,820,000 Does not fund/authorize a new BRAC round * Jackson Lee amendment decreasing ER-ARMY by $500K for Defense Health Account was accepted on the floor ($298,315,000) Milcon Appropriations H.R. 2216 Passed Subcommittee 5/15/13Passed Subcommittee 6/18/13 BRAC - Passed Full Committee 5/21/13Passed Full Committee 6/20/13 on a vote of 23-6 Passed House 6/4/13 on a vote of 421-4BRAC - $451,357,000 Does not authorize a new BRAC round Continuing Resolution Debt Ceiling Increase H.R. 2775 Funds federal government until January 15, 2014 Passed House 10/16/2013 on a vote of 285 - 144Passed Senate 10/16/2013 on a vote of 81 - 18 Funding levels determined by the agencies

3. For FY 2014: House Appropriations Committee has passed 10 of 12 bills The Full House has passed 4 appropriations bills – Defense – Energy and Water – Homeland Security – Military Construction, Veterans Affairs and Related Agencies The Full House has passed the FY 2014 National Defense Authorization Act

4. For FY 2014: Senate Appropriations Committee has passed 11 of 12 bills The Full Senate has passed 0 appropriations bills The Full Senate is considering the FY 2014 National Defense Authorization Act this week. However as of this morning the bill is stalled over a disagreement on the number of amendments that will be accepted

5. FY 2014 Topline Numbers The House and Senate are basing their respective appropriations bills on 2 different topline numbers. The House Budget number is $967 billion The Senate Budget number is $1.058 trillion The Continuing Resolution passed on October 16 th calls for the Budget Conference Committee to come up with an agreement by December 13 th. The House and Senate Appropriations Chairs sent a letter to the Conference Committee asking that they come up with a topline number by November 22 nd. It is also important to remember that as it stands now, sequestration will remain in place for FY 2014 and beyond.

6. In NAOC’s October letter, we asked that the Congress: – Resolve Country’s Fiscal Crisis – Return to regular order

7. What is regular order?

8. President submits his Budget to Congress, which is due by the 1 st Monday in February. House and Senate draft and pass their own Budget Resolutions which are then conferenced. Under regular order this should be completed by mid-April. Spending allocations are made for the 12 Appropriations bills. House and Senate Appropriations Committees, beginning at the subcommittee level, hold hearings on Agency Budgets and then develop and pass the individual bills. This is generally done in the June/July time frame. Appropriations bills go to the House and Senate floors for consideration. If there are differences in the two appropriations bills, they are sent to a Conference Committee to reconcile the differences. The conferenced bill is again voted on by the two chambers. All 12 bills need to be completed by the end of the fiscal year on September 30 th. If this does not happen, then a Continuing Resolution (CR) is needed to keep the government running. Completed bills are sent to the President who has 10 days to sign or veto the legislation. If he does nothing, the bill becomes law after 10 days. If he vetoes it, it is sent back to Congress and requires a 2/3rds vote in both chambers to override the veto.

9. Authorization In regular order, before the appropriations process begins, the House and Senate Armed Services Committees hold hearings on proposed budgets. They then draft and pass authorization bills. Authorization legislation establishes, continues, or modifies an agency or program, and authorizes the enactment of appropriations for that purpose. This is where language about policy changes is inserted. Authorizations may be temporary or permanent, and their provisions may be general or specific, but they themselves do not provide funding in the absence of appropriations actions. Defense programs must be authorized before the agencies are allowed to spend appropriated dollars.

10. Committees of Jurisdiction House Armed Services – Subcommittee on Readiness Senate Armed Services – Subcommittee on Readiness and Management Support House Appropriations – Subcommittee on Defense – Subcommittee on Military Construction, Veterans Affairs and Related Agencies Senate Appropriations – Subcommittee on Defense – Subcommittee on Military Construction, Veterans Affairs and Related Agencies

11. What is preventing Congress from returning to Regular Order? Divided government Leadership vs. Appropriations Chairs Different visions of what is “Good for the Country” both between the 2 parties and within each of the parties 2014 is an election year All 435 Members of the House and 34 Senators up for election/reelection (21 Democrats and 13 Republicans)

12. QUESTIONS?