Threats of government shutdowns and stopgap funding measures seem to have become standard operating procedure for the U.S. federal budget process.
Far from a functioning appropriations process, Congress relies on continuing resolutions (CR) that maintain spending at prior year levels and massive “must sign” omnibus appropriations bills to keep the government open.
This is not a new trend.In fact, there have only been four years in the past 46 when all regular appropriations were enacted before the start of the fiscal year. And since 1977, the U.S. government has operated under 194 temporary CRs.
At a cursory glance, crisis budgeting clearly provides some basic operational continuity for our nation as Congress struggles to agree on annual funding legislation. But stopgap funding measures have significant impacts – creating uncertainty and risk for both government buyers and industry suppliers.
The Downsides of Crisis Budgeting
Federal agencies and government contractors are challenged under CRs in several areas. Not only are these organizations forced to limit or delay spending during CRs; new starts, simply, are not permitted.
These limitations delay key investment programs that support modernization efforts and the integration of new technologies to bolster the U.S. national security infrastructure. The impacts quickly translate to exposure and risk “ both to business and to national security.
The Department of Defense (DoD), in particular, is hamstrung under a CR, unable to begin new programs, ramp up production of capabilities, or reprioritize resources to meet the changing threat environment.
In a January 2022 Congressional hearing, top military officers presented the challenges created by CRs, emphasizing the negative impacts on retention, resiliency, and readiness as well as delays to modernization and development of future capabilities. They also highlighted implications for the defense industrial base, noting that this uncertainty can lead to reductions in production lines and contractor workforces.
In his statement at that hearing, U.S. Air Force Chief of Staff, General Charles Q. Brown, Jr. outlined the direct consequences of stopgap funding measures. “Our competitors’ rate of change,” he said, “is enabling them to approach parity with many of our warfighting capabilities and concepts endangering key development and manufacturing capabilities.”/p>
Navigating the Challenges
As our nation collectively faces yet another year with stopgap funding measures, the challenges of weathering the impacts loom for government agencies and suppliers.
Through our unique combination of expertise, experience, and insights, The Chertoff Group can offer these organizations some assistance in navigating the storm.
- Our informed and targeted market analysis, for instance, can help companies determine who to talk to and what programs are likely to accelerate when funds are appropriated.
- Delayed appropriations compress the time that agencies have to spend funds. The Chertoff Group can provide actionable engagement strategies to help companies position for this “use it or lose it” spending spree.
- The challenges associated with CRs and omnibus appropriations also introduce business risk. Mitigating that risk is especially important for small businesses that hold the promise of delivering cutting-edge capabilities and technologies. Our team’s understanding of the acquisition landscape and innovation ecosystem can guide organizations to funding opportunities, existing contracts to leverage, and partnership strategies“ even during a CR
A Critical Juncture
For decades, our nation has been forced to operate with funding uncertainty. Clearly, budget reform needs to be a national security imperative. Stopgap funding measures not only create unnecessary risk for government agencies, suppliers, and contractors; they do not align with the evolving needs of U.S. national security. The impacts, as General Brown described, are allowing our competitors to gain precious ground.
As organizations face these challenges, The Chertoff Group’s expert insights and transparency into agency processes, priorities, and people can help them mitigate business risk and move forward in supporting efforts that contribute to maintaining our critical national security edge.
