Come the end of this week, the Federal government might actually—for real this time—shut down for lack of a budget. Congress is debating a measure today that would fund the Feds for another week, and the Pentagon until Sept. 30, provided that billions are cut from other parts of the federal budget. Even if this happens, military leaders and analysts say that the continuing resolutions (CR) have already done damage to their modernization programs—damage that may be permanent.
“Even at this point if we get a full FY11 appropriations bill,” says Todd Harrison, an analyst with the Center for Strategic and Budgetary Assessments, says, “the DoD will still spend the next half of the fiscal year trying to clean up the mess that’s already been created in terms of not being able to ramp up programs like they had planned.”
Robert Hale, the DoD comptroller and chief financial officer, told a Senate budget hearing—for the fiscal year 2012 budget—last week that “we are forcing our contracting officers to go to short term contracts to preserve capability, we've got several hundred military construction projects on hold as well as a number of procurement actions,” he reported, adding that “our bases are signing short term contracts, because they don't know what funding they will have in two months.” Those short-term contracts “are just inherently inefficient,” and Pentagon planners will have to try to catch up with projects once they’re given a new yearly budget.
The overall defense budget requested by President Barack Obama for fiscal 2011 was $548 billion, and Defense Secretary Robert Gates has estimated that the Pentagon needs at least $540 billion in order to meet its needs before the fiscal 2012 budget cycle begins.
But the pinch of relying on just-in-time funding is being felt everywhere, even if it’s not always obvious at first blush. The Pentagon’s acquisition chief, Ashton B. Carter, said recently that even well-managed programs have been hit hard, since “they were already on a razor's edge—that's where you want them … you knew exactly what you were doing, exactly when you were going to do it and exactly how you were going to do it.”
Of particular concern are some of the bigger-ticket programs that only produce a few systems. Programs like the Navy’s Virginia-class submarine, which has already secured several extensions on its contract, and the Air Force’s GPS III satellites, are of particular concern. Erin Conaton, undersecretary of the Air Force, told the House Armed Services Committee in March that the service is keeping the GPS III program going by reprogramming $80 million in FY10 funds “to avoid costly programmatic delays and contract renegotiation.”
As far as the two Virginia-class subs that the Navy was scheduled to buy this year, the CSBA’s Harrison says that since the Navy has already secured several extensions on the contract, “they can wait a little longer [but] at some point they’re not going to get any more extensions from their vendor, and that opportunity will be lost this year.”
For many of the weapons systems that have seen their production schedules hit by the budget mess, “we’ll see some permanent schedule slips that can’t be recovered,” Harrison says, “and I think we’ll see some cost inefficiencies that are going to persist as contracts that have been negotiated lapse because we haven’t been able to obligate the money in time. So there are going to be some long-term impacts for having to manage finances this way.”