Another CR, Another Blow to National Security

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What’s so bad about an extended, or worse, a year-long continuing resolution? While some see saved dollars due to spending at prior-year levels or merely delays that accelerated contracting and financing later in the year can mitigate, the insidious effects of a long-term CR mean fewer warriors with lower readiness, slowed fielding of capabilities, and a defense industrial base yet again burdened by delays and uncertainties.

Despite a two-year budget deal signed early this past summer establishing defense toplines for fiscal years 2020 and 2021, we have no National Defense Authorization Act or a signed defense appropriations bill.

Funding uncertainty followed by a year-long CR could mean $22 billion in lost purchasing power the Defense Department gained under the two-year budget agreement. That’s purchasing power needed to continue the readiness recovery along with funding critical investments, especially by the Army, to realign resourcing to the 2018 National Defense Strategy.

The continuing resolution that was in place at the beginning of this fiscal year blocked 79 new program starts and 39 planned program increases. When starting the new fiscal year with a continuing resolution became apparent, the department asked for “anomalies” to execute these actions, but Congress provided none. And, even if there is a year-long CR with some anomalies allowed, history shows the Defense Department gets that for only about 20 percent of those actions.

Doing business with the federal government is already hard. The tomes of regulations, the burdensome business requirements, the sometimes Kafkaesque contracting and oversight procedures, and compressed margins make this a sector that has seen a net outflow of companies. Add to that the uncertainty of if and when a full-year defense appropriations measure and NDAA get signed into law, more companies will reassess their participation in the defense industrial base.

The government disincentivizes new, innovative entrants into the defense sector even though the policy of the Defense Department places a priority on doing the exact opposite in order to bring in new ideas, new capabilities and greater competition.

Fiscal year 2018 marked the ninth year in a row to begin with a CR. The Navy alone reported over $10 billion lost in inefficient acquisitions over that time period. Additionally, the Center for Strategic and International Studies noted over 11,000 companies had left the defense industrial base during that period. But, with a budget deal and a recognition that CRs are no way to maintain national security, Congress passed and the president signed the fiscal year 2019 defense funding bill and NDAA before the beginning of the fiscal year, allowing real progress across department priorities and investments by industry.

Unfortunately, the learned lesson was short-lived, and we find ourselves again beginning the fiscal year with a CR, no NDAA, and talk of that extending through the whole of the fiscal year with all the concomitant harm and inefficiencies that come with it.

Most of the inefficiencies and many of the exits from the industrial base result from delayed or canceled contracting starts. Many will understand that a delayed start can lead to aggravation for larger contractors, but that aggravation becomes existential for smaller prime contractors and companies down the supply chain. The effect of that has a human face and a long-term impact.

Take the example of a company contracted on a previously approved new-start program. To execute the contract, despite the tight labor market and a shortage of workers with the required security clearance, that company has recruited and hired a workforce and trained them to exacting standards. With a CR now in place, that company has to choose from two very bad options. It can either pay that workforce to stand idle — some small business owners do this by taking out second and third mortgages on their own homes — or it can let those workers go, unlikely to return, while losing that upfront investment and placing it in danger of not being able to perform the contract as promised once a full-year budget passes.

It is no wonder why so many companies left the defense industrial base during the last long run of CRs. Over time, though, it means our national security is at risk.

According to Rep. Steve Womack, R-Ark.,“When Congress fails to provide stable funding, we hinder our warfighters and neglect our constitutional duty of providing for the common defense. We can’t continue to hold our military hostage — and anything less than sustained, predictable appropriations will damage national security.” This is especially true in an era of great power competition.

Our National Defense Strategy calls out two specific competitor nations: China and Russia. Neither of these countries have ever worried about a CR. Instead, our delays enable them to take advantage of time, time we will never get back, and time they will use to continue to chip away at the advantages America has invested in, trained for, and brought to bear in the defense of the nation and its interests.

In today’s national security environment, we cannot afford a long-term CR. We cannot afford to hamper readiness recovery efforts, delay capabilities to warfighters, postpone investments in advanced technologies, or allow the defense industrial base to erode.

Wesley P. Hallman is NDIA’s senior vice president for strategy and policy.

Topics: Defense Department