“Navy officials state that if the current CR, which expires on March 27, is extended through the end of the fiscal year on the basis of fiscal 2012 funding levels for [the Defense Department], and if this extended CR does not include sufficient transfer authority for DOD and/or special provisions . . . for fixing execution problems in specific DOD programs,” CRS reports, “the Navy will encounter significant funding shortfalls . . . that will result in the termination of numerous planned ship- and aircraft-maintenance actions and reductions in ship steaming days and aircraft flying hours.”
The CRS says another CR budget cap could create more headaches for the Navy than for other services. “Unlike the paragraphs for other DOD procurement accounts, [which not only state] the total amount of funding for the account,” CRS notes, the language “also explicitly delineates funding for individual shipbuilding programs within the account. It also divides some of those programs further, into separate line items covering procurement funding and advance procurement funding for that program.”
All of that is of major concern for Huntington Ingalls Industries (HII), the nation's largest Navy shipbuilder.
“From the beginning of this, we've been focused on the continuing resolution,” CEO Michael Petters says. “The degree of uncertainty is as high right now as I've ever seen it.”
He notes that the company has operated under continuing resolutions in the past, but the current situation is much different.
“Typically, we've had continuing resolutions with anomalies that would allow us to go start programs on time,” he says. “This hasn't happened this time, and this continuing resolution has been exceptionally long.”
While the company's major warship programs are not in jeopardy, he says, the timing and the costs are.
“The destroyer program was a bid that we put together last summer,” he says. “The Navy would've been able to evaluate those bids and make those awards before the end of last year, but because we had a CR, they have to push that off until the end of March or April.”
The Navy, he points out, cannot do a new start under the current law. “If we get an extension to the CR, then that award gets moved all the way out, past Oct. 1, 2014.”