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...