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WASHINGTON — In a dispute with Republicans over how defense would be funded, President Obama plans to veto the 2016 defense policy bill due for a vote in the House on Thursday, a White House spokesman told reporters Wednesday.

All but one conference committee Democrat refused to sign the conference report, which reflects a compromise months in the making between House and Senate armed services committees conferees over differences between their two versions of the bill.

Senate Armed Services Committee Chairman John McCain, R-Ariz., and House Armed Services Chairman Mac Thornberry, R-Texas, with the ranking Democrats of each committee — Sen. Jack Reed, D-R.I., and Rep. Adam Smith, D-Wash. — announced the report was finalized at a cordial Capitol Hill press conference late Tuesday afternoon. Reed and Smith collaborated with Republicans on the measure, but said they could not support it.

Republicans have sought to meet Obama’s military budget request through the use of the wartime overseas contingency operations (OCO) account, which is exempt from sequestration budget caps, and which is part of the bill. Smith said this creates a disincentive to reach a deal on the federal budget that removes the caps.

“The lingering problem … is the OCO funding,” said Smith. “The budget caps are still in place. I agree that this is an appropriations issue, but it’s in our bill.”

The bill does not appropriate funding, but sets policy, creating authorization to spend money on a wide range of acquisition programs across the services. The bill also contains measures meant to provide lethal aid to Ukraine, ban torture, keep open the Guantanamo Bay detention facility, reform troop pay and benefits and overhaul acquisition rules.

After White House spokesman Josh Earnest said Wednesday Obama would veto the bill, Thornberry and McCain released statements blasting the president.

"It is unbelievable to me that an American president would threaten to veto a defense bill that supports our troops and gives him additional tools to use against aggressors, especially at a time when the world situation is spiraling out of control from Eastern Europe to the Middle East and South Asia," Thornberry said.  "This is a time to stand together for our nation’s security, rather than play cheap political games."

McCain accused the White House of putting "politics ahead of process," and as in the past, said the veto was ill-conceived. "It does not spend a dollar, and it certainly cannot raise the budget caps or deliver an agreement to fund the government," McCain said in the statement. "It is absurd to veto the NDAA for something that the NDAA cannot do."

Defense Secretary Ash Carter recommended the president veto the bill and he reiterated his objection to the bill over its “attempts to evade responsibility with the so-called OCO gimmick” during a Pentagon press conference on Wednesday.

Should the president veto the bill, what will happen to its substance is unclear. Senior aides for the House and Senate armed services committees acknowledged there were no plans at the staff level on how to deal with a veto.

In the event of a budget agreement that raises the top line, on the other hand, the bill contains language that would allow OCO funding to be moved into the base.

The conference report authorizes $515 billion in base funding, including $496 billion for the Department of Defense and $19 billion for national security programs outside the Pentagon’s purview. In line with the Senate budget resolution, the agreement authorizes $89 billion in OCO funding, $38 billion of which is made up of operations and maintenance funds that support readiness and troop training.

Air Force 

For the Air Force, lawmakers reduced cash for F-35 joint strike fighter procurement by nearly $100 million over concerns surrounding combat capability. Lawmakers limited funds to buy the service’s F-35As to $4.3 billion until the secretary of defense can certify to congressional defense committees that the 13 planes planned in fiscal 18 will have full combat capability, including the latest Block 3F hardware, software and weapons carriage.

Responding to the controversy surrounding the Air Force’s plan to transition its A-10 close-air support aircraft to backup flying status, lawmakers prohibited the service from moving more than 18 A-10s from the active component. The bill's language also bans the Air Force from using funds to retire any A-10s, EC-130H Compass Call aircraft, Joint Surveillance Target Attack Radar System planes or KC-10 tankers.

Also notable, lawmakers slashed funding for the Air Force’s Long Range Strike Bomber program by $460 million due to an over six-month delay in the contract award. The bill also decreases funds for the beleaguered KC-46 tanker recapitalization program by $200 million.

Navy/Marine Corps

Perhaps the most significant plus-up for the Navy is the addition of unrequested 12 F/A-18 E/F Super Hornet strike fighters, plus another six F-35B joint strike fighters for the Marines. The additional Super Hornets mean the Boeing/Northrop Grumman production line is likely to remain open another year.

Authorizers approved the full shipbuilding request and also provided the authority to purchase an additional Arleigh Burke-class destroyer.

The conference agreement also prevents the Navy from retiring any more cruisers or amphibious ships, only allowing the ships to be taken out of service for modernization or upgrades.

The agreement also supports the National Sea-Based Deterrence Fund (NSBDF), an account set up by authorizers to pay for the ballistic missile submarine Ohio Replacement Program. According to Rep. Randy Forbes, R-Va., primary sponsor of the fund, additional authorities are being provided to the fund that would authorize incremental funding authority, economic order quantity, contract authority, advance construction authority and the transfer of unobligated funds into the account.

The conference report supports development of an unmanned carrier-based aircraft “able to perform a broad range of missions in non-permissive environments,” providing further support for an aircraft capable of long-range strike.

Army

The NDAA conference negotiators plussed-up the Army’s Stryker combat vehicle funding $411 million above the president’s budget request for lethality upgrades. While the House version of the bill would have increased Stryker funding by $79.5 million, conferees aligned with a Senate amendment that further increased the funding.

The conferees’ decision to upgrade 81 Stryker vehicles is based on a request from US Army Europe to field upgraded Strykers to the 2nd Cavalry Regiment as security concerns rise due to Russia’s continued incursions in Ukraine. The conferees, however, expressed concern over the unit cost of the upgrades and urged the service to find ways to reduce that cost.

The negotiators also fully funded procurement of the Joint Light Tactical Vehicle program and increased funding for AH-64 Apache attack helicopter survivability against new threats. The NDAA authorizes $26 million in additional funding for Common Missile Warning System enhancements for the helicopters as well as an additional $24 million to develop its future Common Infrared Countermeasure system. Another $60 million would fund Apache survivability development. The Army had designated the enhancements as unfunded requirements.

The negotiators settled on House bill language that would limit the transfer of certain Apache helicopters from the Army National Guard to the active component until June 30, 2016.

Both the House and Senate agreed in their versions of the bill that the Army should not be allowed to transfer Apaches beyond the 48 authorized in fiscal 2015 until after the National Commission on the Future of the Army issues its report by Feb. 1 next year.

The National Guard has fought to keep its Apaches since the Army first proposed the move as part of a larger plan to restructure its aviation assets. The Senate originally wanted to halt further transfers until six months after the commission’s report is sent to Congress.

Ukraine

The bill also contains $300 million over two years in aid for Ukraine under the Ukraine Security Assistance Initiative, $50 million of which is specifically designated for “lethal aid.” The NDAA authorizes “lethal assistance of a defensive nature” by the US.

“The Conferees remain concerned that the President has not done enough to provide military training and assistance to Ukraine to allow it to defend itself and increase the costs to Russia for engaging in such aggressive behavior,” the conference summary states.

According to McCain, that aid could include anti-tank weapons, such as the shoulder-fired Javelin guided missile produced by a Raytheon and Lockheed Martin joint venture.

— Joe Gould, Lara Seligman, Chris Cavas, Jen Judson and Andrew Clevenger contributed to this report.

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