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Navy Encouraging Program Offices to be Upfront on Continuing Resolution Impacts

Arleigh Burke-class guided missile destroyer (DDG-51) under construction. HII Photo

Arleigh Burke-class guided missile destroyer (DDG-51) under construction. HII Photo

WASHINGTON, D.C. – Navy acquisition chief Sean Stackley asked program managers to be upfront about challenges they face as a result of operating under a continuing resolution instead of a proper Fiscal Year 2017 budget.

Stackley, at the American Society of Naval Engineers’ Combat Systems Symposium at Washington Navy Yard, called CRs “debilitating” for acquisition offices and the rest of the service. Program offices have learned to assume they would start each fiscal year under a short-term CR, and therefore not plan any major contract actions for the beginning of the year, he said, but this year’s seven-month CR – or longer –makes it challenging to execute their plans.

The CR language proposed this week includes an “anomaly” that would allow the Ohio Replacement Program to move from research and development into Navy shipbuilding and conversion funding, even though a move like that would not typically be allowed under a CR. Stackley said the Pentagon requested 100 of these anomalies to keep defense acquisition on track in FY 2017, and only about 10 were granted, including the ORP anomaly.

“It’s going to be tough sledding,” he said of the long-term CR.
“The thing that I’m counting on from [program executive officers] and program managers is, understand exactly where you are today, what the limitations are that are imposed by the CR, and fire a flare – do not come back six months from now and say you would have if, you would have but. Fire a flare today and make it clear what the limitations are and how it’s going to impact your program so we can deal with it as best we can under this rule set.”

The combination of ongoing spending caps and annual continuing resolutions in recent years has created headaches for many program offices. For example, in FY 2016 Congress wanted to help the Navy buy three Arleigh Burke-class destroyers instead of the planned two. However, due to spending caps the lawmakers couldn’t find the full sum of money. Instead, they allotted about a billion dollars and gave permission to incrementally pay for the ship, with the idea being that the remainder of the money would be allocated in FY 2017. When it came time to craft the FY 2017 defense and spending bills, however, spending caps prevented the Senate and House armed services committees from being able to squeeze the remaining $433 million into their defense bill, so instead they gave only $50 million.

“The $50 million is meant to show our continued commitment to the third destroyer,” a congressional staffer with knowledge of the situation told USNI News.
“There wasn’t enough to go around to retain the full $433 million needed. $50 million is to show that we want the third DDG, both to the Navy and to the appropriators.”

A senior armed services committee staffer told USNI News that the 2017 defense bill could not accommodate additional shipbuilding funds beyond the president’s request – such as the remainder of the money for the third FY 2016 DDG – but the staffer added that the Senate and House appropriators could take another crack at trying to find the money in their 2017 spending bill. However, the appropriators started off the fiscal year with a continuing resolution and are poised to extend that CR until late April, meaning the fate of this third FY 2016 DDG is being pushed back until the spring or even FY 2018.

A U.S. Navy official told USNI News that no money had been spent yet on this third DDG, even though it has been more than a year and a half since lawmakers first floated the idea and more than a year since the billion dollars was given to the Navy. Without the full funding for the ship, the Navy may choose to not take the risk of beginning construction on a ship that is not fully funded. Shipbuilding money can be saved for up to five years, so it remains to be seen if or when the Navy will eventually get the remainder of the money to buy this additional DDG.

One congressman today said he is hopeful that 2017 will present the right confluence of events to let lawmakers reach a budget deal that would end sequestration spending caps and put an end to relying on CRs every year.

Rep. Rob Wittman (R-Va.), chairman of the House Armed Services readiness subcommittee, said Wednesday at the U.S. Naval Institute’s Defense Forum Washington that the CR proposed this week, which would fund the government at last year’s spending levels through the end of April 2017, sets up an interesting situation in the spring: the CR will end and Congress will have to attempt to pass an actual appropriations bill for the remainder of Fiscal Year 2017, around the same time as the Trump Administration is crafting its FY 2018 budget submission and lawmakers vote on a FY 2018 budget framework.

“I think there is a significant opportunity for us” to use that confluence of events to try to eliminate defense spending caps that have been imposed since the FY 2011 sequestration.
“If we’re going to find a way to set aside the sequester, it has to be a broader budget deal and it has to include, I believe, the autopilot spending programs of Social Security and Medicare. I think there’s an opportunity for us to do that, but that’s the only way we’re going to get to an overarching budget deal, to actually be able to set aside those artificial restraints on defense spending. It’s the only way the new administration is going to be able to realize their direction in how we rebuild our United States military. I think that that has to happen – I think that it can happen – but the complicating factor is all these things that have to happen in a fairly short period of time.”

Wittman said 2017 would be the time to pass a budget deal that repeals sequestration, if it’s going to happen, because 2018 is a congressional election year and therefore any kind of major compromise is unlikely.