GAO’s review of the impact of continuing resolutions falls short

Continuing resolutions (CRs) provide interim funding at the same level as the previous year when Congress fails to agree on a new budget. This may happen again on Sept. 30. The Government Accountability Office’s (GAO) new evaluation of the effect they are having on the Department of Defense (DOD) could have been useful but falls short in four key ways that are critical to understanding the real effects of delaying annual defense funding year after year. 

First, GAO’s conclusion itself – that DOD is largely able to mitigate the effects of routine CRs – seems unintentionally misleading. The DOD has operated under these improvised measures for 11 of the last 12 fiscal years. While it is unfortunately true that CRs have become routine, it does not mean they are benign. The fact that CRs routinely occur is the problem. The lost time, money and competitiveness resulting from CRs are taken for granted, creating an expectation for on-time funding that is so low that the costs of mitigating destructive disruptions are not even captured for reporting.

General John E. Hyten, vice chairman of the Joint Chiefs of Staff, recently stated that “stability in the budget will create more than 5 percent efficiencies every year.” With a budget of $715 billion, saving 5 percent means regaining almost $36 billion in buying power. For context, that could buy 150 F-35A Joint Strike Fighters, two Virginia Class submarines and still leave $12 billion left over for space, cyber, hypersonics and research and testing of other disruptive technologies. 

Similarly, the “activities directly related to preparing for and operating under CRs – developing legislative anomaly proposals, creating spending plans for various CR scenarios, and adjusting contracts to reflect CR funding availability” – that GAO notes in its report consume valuable DOD time that could be spent on more important things.

Second, the GAO discussion of the harmful effects of CRs continually leads to explanations of how DOD has been able to mitigate them instead of noting the consequences of program delays and incremental funding. For years top defense officials have testified that CRs are debilitating and negatively affect both readiness and morale. Despite an abundance of military service officials reporting that CRs can cause a multitude of problems in major defense acquisition programs, including delays and cost increases, GAO’s main finding is that the programs they looked at were not greatly affected because DOD has developed practices that minimize the effects of CRs. 

The creativity and dedication of DOD personnel, combined with the flexibility of its partners, allows them to find incremental solutions to the problems that arise from unpredictable funding but does not make such unpredictability inconsequential.

Third, GAO reviewed only a small subset of DOD activities that were the most insulated from the churn of unpredictable funding created by CRs. In particular, the report glosses over annual CR provisions that prohibit funding for projects or activities that were not previously funded . The Department has 29 new programs and 10 production increases in the fiscal year 2022 budget request, which a CR would delay. The GAO also spent very little time on the more extreme disruptions that occur in the Department’s one-year Operations and Maintenance accounts. Looking only at quarterly execution rates, as the GAO does, misses the impact of unpredictable funding and incremental contracting that takes place on every base, post and installation across the country.

Fourth, the GAO did not look at the CRs’ impact on the defense industry. We know some of these effects from other sources. According to the National Defense Industrial Association’s (NDIA) Vital Signs 2021 report, because of disruptive budget uncertainty, urgent contract awards and future acquisition planning have been delayed. 

The NDIA report also reveals that in identifying the most important thing the government could do to help the defense industry, nearly a third of all respondents indicated “ensure budget stability.” It was also the second-highest selected answer after “streamline the acquisition process.”

CRs are also contributing to a reduction in small business in the defense industrial base. As Deputy Secretary of Defense Kathleen Hicks recently warned, “data shows that if we continue along the same trend, we could lose an additional 15,000 suppliers over the next 10 years.”

While GAO deserves praise for looking at such a vital issue, critical gaps in the report miss the mark in informing Congress of the short- and long-term consequences of CRs.

The use of CRs conveys a clear message: America’s national security workforce, its mission and military competitiveness are less important than the political concerns of a Congress that is unable, or unwilling, to complete its primary responsibility on time. Taxpayers, and those who ensure the nation’s security, pay the price.

Elaine McCusker is a senior fellow at the American Enterprise Institute (AEI). She is a former Acting Under Secretary of Defense (Comptroller). Emily Coletta is a project coordinator and research assistant at AEI.