Continuing Resolutions and Sequestration Flashbacks
If “space is hard” is the industry’s favorite adage, the runner up cliche is that we have a “do nothing Congress.” Dysfunction on the Hill has resulted in a series of rolling Continuing Resolutions, or CRs, that keep the government funded but only temporarily and at the same funding level as the prior year. Yesterday’s CR – the fourth this year – punts a government shutdown until March 22, giving the government another month to pass a budget for a fiscal year that was supposed to begin last October.
For military leaders, the threat of a year-long CR has emerged as a worrisome possibility, giving flashbacks to 2013 when sequestration hamstrung new programs. The space industry is acutely affected by CR funding levels because several transformational programs have been shifting into high gear. But, without commensurate funds, failure to launch is assured. Key risks include:
• Pausing seven launches. The Space Force planned to purchase 10 launches in FY24, but until the budget passes, there is only funding for three. Per Frank Calvelli, Space Force acquisition chief, that means satellites sitting on the ground accumulating storage fees.
• Not buying 28 PWSA satellites. Since forming in 2019, the Space Development Agency (SDA) has defied expectations by maintaining a 30-month cadence between “spirals.” Until now. SDA announced that it is pausing the solicitation for 20 T2TL Gamma communications satellites and eight “FOO Fighter” missile defense satellites. The ensuing delays will inevitably flow to subsequent spirals and present challenges for constellation planning.
• Tranche 1 delay risk. Satellites in the SDA’s Tranche 1 program that were already ordered need to go through assembly, integration and testing that comes with “large milestone payments,” according to agency director Derek Tournear. The agency may not have funds to pay vendors to complete satellites it already bought, introducing delay risks.
The Space Force could see a 17% hit to most programs, according to DoD leadership. The implication for space companies is that their most stable customer is becoming unstable. The U.S. government is relied upon as a buyer that consistently pays its bills, smoothing out cyclical buying patterns from commercial companies and offsetting erratic startup contracts. That uncertainty has a sweeping impact, from making defense primes nervous about their core business to unsettling investors in space startups with DoD as an anchor customer. Turns out the only force that has more influence on space than gravity is politics.
SOURCE: https://breakingdefense.com/2024/02/with-a-year-long-cr-a-real-possibility-the-service-under-secretaries-sound-the-alarm/