The Department of Defense once again finds itself operating at reduced funding levels due to a continuing resolution (CR) enacted at the start of the 2024 fiscal year. A CR locks the government at the previous year’s funding levels and place restrictions on the launch of new start programs. Many programs also end up with the wrong amount of funding under a CR, which creates complications for projects that are ramping up or being scaled down. Navy officials recently said they would be left with $26 billion in misaligned funds under a full-year CR, reflecting a tenth of the service’s entire budget. The Navy would also face a cut of nearly $15 billion if a full budget isn’t passed.
What does that mean for specific programs in the Navy’s $32.9 billion FY24 shipbuilding request? Forecast International’s FY24 Budget Spotlight shows that the shipbuilding account is underfunded by around $900 million under the current CR. That figure doesn’t include another one percent cut that would be implemented as a sequester penalty if Congress fails to pass a full budget by the end of the calendar year.
Fincantieri’s Constellation class frigate is subject to a 50 percent reduction under the CR. The Navy requested two ships in FY24, but only one ship was funded in FY23. Construction of the second ship depends on passage of a full FY24 budget. The ships are being built in Marinette, Wisconsin.
A new start submarine tender program is also on hold. The Navy is competing for construction of a new AS(X) tender to support Virginia class and Columbia class submarines. The service requested $1.7 billion for the first tender in FY24. A contract award is expected in May, but it would be delayed under an extended CR. In 2022, the Navy awarded AS(X) design study contracts to L3Harris Technologies, General Dynamics National Steel and Shipbuilding Company (NASSCO), and Huntington Ingalls.
Navy officials said the Virginia class submarine would also be impacted by the lack of a full FY24 budget. The service requested $10.3 billion for two subs, which are constructed by General Dynamics Electric Boat and HII’s Newport News Shipbuilding.
One key shipbuilding program is moving forward unscathed for the time being, despite the complications arising from the CR. The stopgap spending bill currently keeping the government running included $621 million specifically for the Columbia class submarine to ensure construction of the second submarine in the class, the future USS Wisconsin (SSBN 827), is not delayed. The program is a critical priority for the Navy, and there is little room for schedule delays. The lead boat, the future USS District of Columbia (SSBN 826), is already under construction at Electric Boat and Newport News Shipbuilding.
More Defense Budget Data
To keep you informed throughout the tumultuous FY24 defense budget process, Forecast International is now offering its defense budget spotlight in one easy-to-use dashboard – for FREE. This dashboard will help provide a glimpse into the FY24 congressional budget cycle and reveal how defense committee proposals will impact Pentagon acquisition efforts. Use the registration link to access the FY24 dashboard
As editor of International Military Markets, North America, Shaun has cultivated a deep understanding of the vast defense markets in the United States and Canada. Shaun's perspective on defense procurement and budget issues has been cited in a variety of defense periodicals, including Defense News and National Defense Magazine. Further, Shaun played an integral role in the development of Forecast International's U.S. Defense Budget Forecast product, which offers an unprecedented level of insight into the Pentagon's acquisition budget. In addition to providing original analytical content for the U.S. Defense Budget Forecast, Shaun oversees an internal defense budget forecasting process involving Forecast International's team of skilled systems analysts following release of the DoD's annual budget request. Shaun is also in charge of managing Forecast International's Weapons Inventory database.
