FY2018 Defense Spending Under an Interim Continuing Resolution

FY2018 Defense Spending Under an Interim Continuing Resolution

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February 20, 2018
FY2018 Defense Spending Under an Interim Continuing
Resolution
Background
on the amount of budget authority made available under the
On September 8, 2017, Congress passed and the President
prior year’s appropriations, reduced as required to comply
signed H.R. 601 (P.L. 115-56), the Continuing
BCA limits.
Appropriations Act, 2018, and Supplemental
The FY2018 CR provides budget authority for FY2018 for
Appropriations for Disaster Relief Requirements Act, 2017.
most projects recent years, the reference level has generally
In addition to providing supplemental appropriations in
been based on the amount of budget authority made
response to Hurricane Harvey and temporarily suspending
available under the prior year’s appropriations, reduced as
the statutory limitation on public debt, the bill provided
required to comply and activities at the rate at which they
temporary funding in FY2018 for certain programs and
were funded during FY2017 minus 0.6791% effective
activities typically funded by regular appropriations bills.
October 1, 2017, through March 23, 2018. The law funds
Commonly referred to as an interim continuing resolution
Overseas Contingency Operations (OCO) at the full
(CR), Division D of H.R. 601 provided budget authority for
FY2017 rate (not subject to the 0.6791% reduction).
continuation of certain projects or activities funded in
FY2017.
Table 1 provides an annualized FY2018 CR rate―an
estimation of the budget authority provided to DOD if the
Division D of H.R. 601 was extended through March 23,
terms of the FY2018 CR were extended until the end of
2018 by four measures: Division A of H.J.Res. 123 (P.L.
FY2018. This estimated annualized CR rate is
115-90); Division A of H.R. 1370 (P.L. 115-96); Division
approximately 9% less than the President’s budget request.
B of H.R. 195 (P.L. 115-120); and Division B of H.R. 1892
The rate for operations provided under the CR is 13%
(P.L. 115-123). Division C of H.R. 1892 also increased the
below the President’s budget request for Operation and
discretionary spending limits set by the Budget Control Act
Maintenance (O&M) accounts—funding that provides for
(BCA/P.L. 112-25) for FY2018 and FY2019.
readiness activities such as training, equipment
maintenance, logistics and civilian personnel pay. Research,
Division D of H.R. 601 as extended will be referred to
development, test and evaluation (RDT&E) funding is 15%
herein as the FY2018 CR.
below the requested funding amount for FY2018.
Funding Rate
Potential Effects of a CR on DOD Programs
An interim CR typically funds activities under a formulaic
Interim CRs typically are designed to preserve
approach that provides budget authority at a restricted
level―not a specified amount. This method of providing
congressional funding prerogatives until annual budgetary
decisions are made, while avoiding a government
budget authority is commonly referred to as a funding rate.
shutdown. By its very nature a CR provides funding quite
The funding rate for a project or activity is calculated as the
differently from a regular appropriations bill, if only
total amount of budget authority annually available based
because funding levels are set to continue at or near the
on a reference level, multiplied by the fraction of the fiscal
previously appropriated level.
year for which the funds are made available in the CR. In
recent years, the reference level has generally been based
Table 1. DOD Base Discretionary Budget Authority and Estimated CR Budget Authority (Select Accounts)
FY2017
FY2018 CR
FY2018
FY2018 CR vs.
Percent
Appropriation Account
Enacted
Annualized Rate
Request
FY2018 Request
change
Military Personnel
$128.7
$127.8
$133.9
-$6.1
-4.8%
Operation and Maintenance (O&M)
$167.6
$166.5
$188.6
-$22.1
-13.3%
Procurement
$108.4
$107.7
$113.9
-$6.2
-5.8%
Research and Development (R&D)
$72.3
$71.8
$82.7
-$10.9
-15.2%
Revolving and Management Funds
$1.5
$1.5
$2.1
-$0.6
-41.0%
Defense Health Program
$33.8
$33.6
$33.7
-$0.1
-0.4%
Total Selected Accounts
$512.3
$508.8
$554.9
-$46.0
-9.1%
Source: H.Rept. 115-219, Committee Report to Accompany Department of Defense Appropriations Bill, 2018, and H.R. 601(P.L. 115-56).
Notes: The annualized FY2018 CR rate is an estimate of the budget authority provided if the terms of H.R. 601were extended until the end of
FY2018. Does not include Overseas Contingency Operations funding. Dollars in billons; totals may not reconcile due to rounding.
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FY2018 Defense Spending Under an Interim Continuing Resolution
The Government Accountability Office testified before the
 DDG-51 program
Senate Committee on Homeland Security and
 CVN-78 aircraft carrier program
Governmental Affairs on March 13, 2013, that CRs can
 Littoral Combat Ship program
create budget uncertainty, complicating agency operations
 F-15C and F-16 upgrades
and causing inefficiencies, and that agency officials report
taking “varied actions to manage inefficiencies resulting
No Increase in Production Rates
from CRs....” DOD faces these challenges, as do other
The FY2018 request includes funding for many programs
federal agencies. DOD also faces unique challenges
scheduled to increase production quantities from FY2017
operating under a CR while providing the military forces
levels. In addition to prohibiting new starts, Section 102
needed to deter war and protect U.S. national security. In a
also prohibits the increase in production rates above the rate
December 8, 2015, DOD press release, then-Secretary of
sustained with FY2017 funds. Select DOD programs that
Defense Carter said that CRs put commanders in a
would be restricted include the following.
“straight-jacket” that limits their ability to adapt, or keep
 Small Diameter Bomb procurement (Air Force)
pace with complex national security challenges while
 Hellfire missile procurement
responding to rapidly evolving threats like the Islamic

State.
MH-47 Chinook Renew program
 CH-53K King Stallion helicopter procurement
Anomalies
 Columbia-class ballistic missile submarine program
Congress may include exceptions— called anomalies—in
 Virginia-class submarine procurement
the duration, amount or purpose of funds provided under a
 Littoral Combat Ship module weapons
CR. Anomalies may be provided in consideration of a
 Joint Light Tactical Vehicle procurement
request from the executive branch and may be based on a
 T-X Advanced Pilot Training aircraft program
variety of factors associated with a specific program or
 Joint Strike Fighter procurement
activity. For example, H.R. 2028 (P.L. 114-254)—the
CR Effects on Readiness
second FY2017 CR which lengthened the period of
operation under a CR to 210 days— included several
While operating under a CR, DOD typically realigns
anomalies at the request of the Secretary of Defense. H.R.
budgetary resources within the scope of its authorities to
2028 specified a rate of operations for the Columbia-class
prioritize funding for combat operations and other essential
Ballistic Missile Submarine program above the CR funding
operations of the combatant commands. Doing so causes
rate, provided multiyear procurement authority for the AH–
direct and indirect consequences in many of DOD’s regular
64E attack helicopter and UH–60M Black Hawk helicopter
activities (e.g., routine operations, maintenance actions,
programs, and provided funding for the KC–46A tanker at a
training, supply and logistics actions, contracting, and
rate of operations necessary to support the President’s
personnel actions (military and civilian)). Even short-term
budget request.
delays or deferrals in many of these activities have a
Effects of the FY2018 CR on DOD
second-order effect of creating a backlog that, in some
cases, may carry forward for a year or more. Among the
In a September 8, 2017, letter response to a query from
readiness effects noted by the Secretary are:
Senate Armed Services Committee Chairman John McCain,
 Delayed shipyard induction for maintenance of 11 ships
Secretary of Defense James Mattis expressed concern that

the FY2018 CR will impact many DOD programs and
Postponement of noncritical maintenance work orders
activities—and overall force readiness. The letter
and deferred supply transactions

specifically cited contracting restrictions, training,
Restriction or elimination of flying hours, steaming
personnel, and maintenance efforts. H.R. 1892 (Bipartisan
days, and training events
Budget Act of 2018/P.L. 115-123), which extended the
 Curtailment of recruitment and hiring actions for
FY2018 CR through March 23, 2018 included an anomaly
civilians and military
to address concerns raised by the Air Force regarding the
 Delays and deferrals in professional development and
effects of the CR on certain FY2018 construction
training activities
requirements.
Curtailment of noncritical travel (including permanent
change of station moves)
No Funding or Authority for New Starts
The Administration’s FY2018 budget request includes
Additional Resources
funds for a number of new starts that are prohibited by
CRS Report R42647, Continuing Resolutions: Overview of
Section 102 of the FY2018 CR. Select DOD programs that
Components and Recent Practices, by James V. Saturno and Jessica
would be restricted by Section 102 include the following.
Tollestrup.
 Armored Multi-purpose Vehicle (AMP-V) program
CRS Insight IN10817, Impact of the Budget Control Act Discretionary
 Paladin Integration Management Improvement program
Spending Caps on a Continuing Resolution, by Megan S. Lynch and
 Interim combat service rifle procurement
James V. Saturno.
 Multi-role Anti-armor Anti-personnel Weapon System


Lightweight 30 mm cannon procurement
 Small Diameter Bomb procurement (Navy)
Lynn M. Williams, lmwilliams@crs.loc.gov, 7-0569
 Harpoon missile program

IF10734
B-2 bomber modernization efforts
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