The Senate Appropriations Committee’s draft FY 2022 defense spending bill includes a provision calling on the Government Accountability Office (GAO) to review the Navy Department’s budget request tactics that appear to under-request critical programs under the assumption Congress will ultimately restore funding.
The committee’s budget report underscored that the Navy’s FY ‘22 budget request proposed breaking a multi-year procurement contract (MYP) for the Arleigh Burke
-class (DDG-51) destroyers by procuring only one vessel instead of the planned two.
Deputy Assistant Secretary of the Navy for Budget Rear Adm. John Gumbleton told reporters in May the Navy said budgetary constraints led the department to cut the ship from the plan. Breaking the multi-year procurement contract to build 10 destroyers would result in millions of dollars in penalties (Defense Daily, June 2).
However, the Navy also listed that second destroyer as its top unfunded priority for $1.7 billion in an annual list sent to Congress. The committee noted this five-year MYP was authorized in fiscal year 2018 at the request of the Navy.
“Failure to fully budget for this MYP, therefore, implies a lack of understanding of the full five-year funding requirements, and creates an unnecessary risk to the predictable and stable funding required for this MYP,” the committee said.
The committee said it is concerned this shows a trend by the Navy that “deliberately underfund programs deemed by the Navy to be critical, with the expectation that the congressional appropriations committees will restore funds for these programs within the budget allocation for the Department of Defense.”
It noted a similar instance in the FY ‘21 budget request, when the Navy requested only one Virginia-class attack submarine under a separate MYP authorized in FY ‘18 despite previous plans to procure two (Defense Daily, Feb. 10, 2020).
Congress ultimately added $2.6 billion in additional funds to procure the second submarine.
“As a result of these repeated budgetary maneuvers, the Committee questions whether the Navy’s budget requests accurately reflect the service’s most important priorities,” the committee said.
The report said it is particularly concerned by these budget tactics because the service is also planning to start and ramp up other major acquisition programs in the next few years including the Columbia-class ballistic missile submarine, the Next Generation Air Dominance Family of Systems, the DDG(X) Destroyer, Constellation-class frigate, and next-generation attack submarine, SSN(X).
“At the same time, the Navy is struggling to manage cost on several major acquisition programs, including the Columbia Class submarine, certain subsea and seabed warfare programs, and the TAO fleet oiler, revealing significant cost increases for each of these programs in the fiscal year 2022 budget submission,” the report continued.
Therefore, the bill would direct the Comptroller General, which leads the GAO, to review the Department of the Navy’s and Cost Assessment and Program Evaluation’s (CAPE) processes for identifying and budgeting funds required to fully fund, multi-year procurement contracts during the department’s programming, planning, and budgeting processes. GAO is to provide the congressional defense committees a report on this within 90 days of the bill’s enactment.
In this process, CAPE generally provides cost estimates for multi-year procurement contracts.
This report would include an analysis on treatment of MYP funds for Navy programs in the FY ‘21 and ‘22 president’s budget submissions.
The committee likewise encouraged the Navy to finalize a follow-on contract for another DDG-51 multi-year procurement contract starting in FY ‘23. This is in line with plans Navy leadership has indicated it is ready for.
In June, then-Acting Secretary of the Navy Thomas Harker told the Senate Appropriations Defense subcommittee the Department plans to sign another DDG-51 Flight III multi-year procurement contract covering FY ‘23 to ‘27 (Defense Daily, June 25).
The report reiterated the committee is “troubled” by the Navy’s decision to underfund the destroyer program in its FY ‘21 budget request, “despite identifying the ship as the Navy’s highest unfunded priority.”
“The Committee expects the Navy to honor the commitments it has made to our domestic shipbuilding industrial base, and avoid paying unnecessary penalties that increase the cost of shipbuilding programs.”
The committee also said it was “deeply concerned” the Navy keeps reducing the procurement profile for Flight III destroyers despite several delays to the successor Large Surface Combatant program.
The report said this “undercuts naval maritime superiority and injects unnecessary risk into the industrial base. The Committee believes that the lack of a predictable and stable acquisition strategy for the current large surface combatants is inconsistent with previously stated shipbuilding objectives and will result in a reduction of force-level goals during a period of increasing demand.”
The committee encourages the Navy to finalize the follow-on DDG-51 destroyer multi-year procurement contract starting in fiscal year 2023.
The report said the committee expects the Navy to structure the next DDG-51 MYP to maximize the number of destroyers that can be procured, “with the understanding that the shipbuilding industrial base can support at least three ships per year, if adequately funded.”
The committee recommends the bill include an extra $120 million in advance procurement to start funding the follow-on multi-year procurement contract.