FY2018 Defense Spending Under an Interim Continuing Resolution

February 20, 2018

FY2018 Defense Spending Under an Interim Continuing

Resolution

Background

On September 8, 2017, Congress passed and the President

signed H.R. 601 (P.L. 115-56), the Continuing

Appropriations Act, 2018, and Supplemental

Appropriations for Disaster Relief Requirements Act, 2017.

In addition to providing supplemental appropriations in

response to Hurricane Harvey and temporarily suspending

the statutory limitation on public debt, the bill provided

temporary funding in FY2018 for certain programs and

activities typically funded by regular appropriations bills.

Commonly referred to as an interim continuing resolution

(CR), Division D of H.R. 601 provided budget authority for

continuation of certain projects or activities funded in

FY2017.

Division D of H.R. 601 was extended through March 23,

2018 by four measures: Division A of H.J.Res. 123 (P.L.

115-90); Division A of H.R. 1370 (P.L. 115-96); Division

B of H.R. 195 (P.L. 115-120); and Division B of H.R. 1892

(P.L. 115-123). Division C of H.R. 1892 also increased the

discretionary spending limits set by the Budget Control Act

(BCA/P.L. 112-25) for FY2018 and FY2019.

Division D of H.R. 601 as extended will be referred to

herein as the FY2018 CR.

Funding Rate

An interim CR typically funds activities under a formulaic

approach that provides budget authority at a restricted

level―not a specified amount. This method of providing

budget authority is commonly referred to as a funding rate.

The funding rate for a project or activity is calculated as the

total amount of budget authority annually available based

on a reference level, multiplied by the fraction of the fiscal

year for which the funds are made available in the CR. In

recent years, the reference level has generally been based

on the amount of budget authority made available under the

prior year’s appropriations, reduced as required to comply

BCA limits.

The FY2018 CR provides budget authority for FY2018 for

most projects recent years, the reference level has generally

been based on the amount of budget authority made

available under the prior year’s appropriations, reduced as

required to comply and activities at the rate at which they

were funded during FY2017 minus 0.6791% effective

October 1, 2017, through March 23, 2018. The law funds

Overseas Contingency Operations (OCO) at the full

FY2017 rate (not subject to the 0.6791% reduction).

Table 1 provides an annualized FY2018 CR rate―an

estimation of the budget authority provided to DOD if the

terms of the FY2018 CR were extended until the end of

FY2018. This estimated annualized CR rate is

approximately 9% less than the President’s budget request.

The rate for operations provided under the CR is 13%

below the President’s budget request for Operation and

Maintenance (O&M) accounts—funding that provides for

readiness activities such as training, equipment

maintenance, logistics and civilian personnel pay. Research,

development, test and evaluation (RDT&E) funding is 15%

below the requested funding amount for FY2018.

Potential Effects of a CR on DOD Programs

Interim CRs typically are designed to preserve

congressional funding prerogatives until annual budgetary

decisions are made, while avoiding a government

shutdown. By its very nature a CR provides funding quite

differently from a regular appropriations bill, if only

because funding levels are set to continue at or near the

previously appropriated level.

Table 1. DOD Base Discretionary Budget Authority and Estimated CR Budget Authority (Select Accounts)

FY2017

Enacted

FY2018 CR

Annualized Rate

FY2018

Request

FY2018 CR vs.

FY2018 Request

Percent

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%

$512.3

$508.8

$554.9

-$46.0

-9.1%

Appropriation Account

Total Selected Accounts

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

Senate Committee on Homeland Security and

Governmental Affairs on March 13, 2013, that CRs can

create budget uncertainty, complicating agency operations

and causing inefficiencies, and that agency officials report

taking “varied actions to manage inefficiencies resulting

from CRs....” DOD faces these challenges, as do other

federal agencies. DOD also faces unique challenges

operating under a CR while providing the military forces

needed to deter war and protect U.S. national security. In a

December 8, 2015, DOD press release, then-Secretary of

Defense Carter said that CRs put commanders in a

“straight-jacket” that limits their ability to adapt, or keep

pace with complex national security challenges while

responding to rapidly evolving threats like the Islamic

State.

Anomalies

Congress may include exceptions— called anomalies—in

the duration, amount or purpose of funds provided under a

CR. Anomalies may be provided in consideration of a

request from the executive branch and may be based on a

variety of factors associated with a specific program or

activity. For example, H.R. 2028 (P.L. 114-254)—the

second FY2017 CR which lengthened the period of

operation under a CR to 210 days— included several

anomalies at the request of the Secretary of Defense. H.R.

2028 specified a rate of operations for the Columbia-class

Ballistic Missile Submarine program above the CR funding

rate, provided multiyear procurement authority for the AH–

64E attack helicopter and UH–60M Black Hawk helicopter

programs, and provided funding for the KC–46A tanker at a

rate of operations necessary to support the President’s

budget request.

Effects of the FY2018 CR on DOD

In a September 8, 2017, letter response to a query from

Senate Armed Services Committee Chairman John McCain,

Secretary of Defense James Mattis expressed concern that

the FY2018 CR will impact many DOD programs and

activities—and overall force readiness. The letter

specifically cited contracting restrictions, training,

personnel, and maintenance efforts. H.R. 1892 (Bipartisan

Budget Act of 2018/P.L. 115-123), which extended the

FY2018 CR through March 23, 2018 included an anomaly

to address concerns raised by the Air Force regarding the

effects of the CR on certain FY2018 construction

requirements.

No Funding or Authority for New Starts

The Administration’s FY2018 budget request includes

funds for a number of new starts that are prohibited by

Section 102 of the FY2018 CR. Select DOD programs that

would be restricted by Section 102 include the following.

 Armored Multi-purpose Vehicle (AMP-V) program

 Paladin Integration Management Improvement program

 Interim combat service rifle procurement

 Multi-role Anti-armor Anti-personnel Weapon System

 Lightweight 30 mm cannon procurement

 Small Diameter Bomb procurement (Navy)

 Harpoon missile program

 B-2 bomber modernization efforts









DDG-51 program

CVN-78 aircraft carrier program

Littoral Combat Ship program

F-15C and F-16 upgrades

No Increase in Production Rates

The FY2018 request includes funding for many programs

scheduled to increase production quantities from FY2017

levels. In addition to prohibiting new starts, Section 102

also prohibits the increase in production rates above the rate

sustained with FY2017 funds. Select DOD programs that

would be restricted include the following.

 Small Diameter Bomb procurement (Air Force)

 Hellfire missile procurement

 MH-47 Chinook Renew program

 CH-53K King Stallion helicopter procurement

 Columbia-class ballistic missile submarine program

 Virginia-class submarine procurement

 Littoral Combat Ship module weapons

 Joint Light Tactical Vehicle procurement

 T-X Advanced Pilot Training aircraft program

 Joint Strike Fighter procurement

CR Effects on Readiness

While operating under a CR, DOD typically realigns

budgetary resources within the scope of its authorities to

prioritize funding for combat operations and other essential

operations of the combatant commands. Doing so causes

direct and indirect consequences in many of DOD’s regular

activities (e.g., routine operations, maintenance actions,

training, supply and logistics actions, contracting, and

personnel actions (military and civilian)). Even short-term

delays or deferrals in many of these activities have a

second-order effect of creating a backlog that, in some

cases, may carry forward for a year or more. Among the

readiness effects noted by the Secretary are:

 Delayed shipyard induction for maintenance of 11 ships

 Postponement of noncritical maintenance work orders

and deferred supply transactions

 Restriction or elimination of flying hours, steaming

days, and training events

 Curtailment of recruitment and hiring actions for

civilians and military

 Delays and deferrals in professional development and

training activities

Curtailment of noncritical travel (including permanent

change of station moves)

Additional Resources

CRS Report R42647, Continuing Resolutions: Overview of

Components and Recent Practices, by James V. Saturno and Jessica

Tollestrup.

CRS Insight IN10817, Impact of the Budget Control Act Discretionary

Spending Caps on a Continuing Resolution, by Megan S. Lynch and

James V. Saturno.

Lynn M. Williams, lmwilliams@crs.loc.gov, 7-0569

www.crs.gov | 7-5700

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