WASHINGTON — The terms in office of Defense Secretary Ash Carter and Navy Secretary Ray Mabus might be nearing their ends, but the two are exchanging a final series of pot shots as the federal budget preparation season reaches its climax. Carter, in the view of many, is preparing a fiscal 2018 defense budget built around cost restrictions imposed by the Budget Control Act — commonly known as sequestration — while Mabus is defiantly submitting a Navy budget anticipating the lifting of those restrictions as the Trump administration takes over in January.

The Department of the Navy budget submitted Thursday afternoon to the Office of the Secretary of Defense (OSD) is reportedly billions more than the marks set by Carter, sources told Defense News. The figures cited range from a $17 billion overage over the course of the Future Years Defense Program (FYDP) — the current year plus the following five years — to as much as $40 billion, depending on how the money is counted.

Pentagon sources said the Navy objected to OSD directives to cut ships from the shipbuilding program — in part to pay for more submarines — while an OSD source accused the Navy of using "creative interpretation" in following budget rules. The OSD source characterized the $17 billion overage as a Navy refusal to make cuts in that amount across the FYDP.

Not only that, the OSD source said, but the Navy responded by adding a number of items to its budget, including 58 F/A-18 Super Hornet strike fighters, six P-8A maritime multi-mission aircraft and $14 billion in readiness accounts. About $2.5 billion of the potentially $40 billion shortfall, the OSD source said, is from Marine Corps accounts, while another $3.5 billion is for congressionally directed cruiser modernization.

Another source reported that the Navy’s Force Structure Assessment (FSA), a monthslong effort to address what forces make up the fleet and how many of each are needed, will expand the fleet size from today’s 308 total ship goal to more than 340 ships, coming very close to the 350-ship level cited as a goal by the Trump camp and by Randy Forbes, chairman of the House Seapower subcommittee and the widespread presumed nominee to succeed Mabus as Navy secretary.

There is little doubt that the Carter-Mabus standoff is also driven by each man’s personality, with each casting an eye on their legacies.

As Thursday’s 5 p.m. budget submission approached, Mabus sent a memo to Carter — copied to Deputy Defense Secretary Robert Work and numerous Navy and OSD officials — outlining his thinking in submitting a Navy budget that is so out of line with OSD direction. A copy of the memo was obtained by Defense News.

"You and I both know that this budget is almost totally a symbolic one, given the time this Administration has left in office," Mabus wrote to Carter. "My budget submission will be the bridge to future budgets that reflect a new Force Structure Assessment.

"I have no intention of changing course now. If you ultimately decide to submit a budget that takes away the ability of the Navy and Marine Corps to do their job, it will not have my support, and I will make my objections widely known."

Within the Navy department and at OSD, viewpoints are split on Mabus’ course of action. Some view the moves as disrespectful, even insubordinate, of OSD, while others consider preparing a budget based on sequestration restrictions that appear all-but-certain to be removed to be a waste of time.

Although not speaking directly to the Carter-Mabus rift or the budget imbalance, Adm. Bill Moran, the vice chief of naval operations, might have given some insight into the Navy department’s thinking when he spoke Dec. 6 with a small group of reporters.

"The reality is that no matter what we put forward today we’re going to redo in February, March and April," Moran said. "We’re spending frankly less time worrying about what we put in today and trying to anticipate what we might see in February and March and then making sure we’re ready to potentially execute."

In the immediate future, Moran said, the Navy doesn’t necessarily need more money for ships, but rather for the "immediate readiness of the fleet. Maintenance and modernization for ships, submarines and aircraft are at the top of our list. In the strike fighter shortfall world, we need to keep buying Super Hornets to offset the delay in F-35 and the material condition of our current fleet."

Moran referred to the effects of preparing different budgets for the outgoing and incoming presidential administrations.

"Our term of art is we’re trying not to kill the villagers," Moran said, "with the [Navy] staff trying to do two budgets simultaneously with one that’s not going to survive contact with the next administration."

Navy sources indicated they expect a return memo from Carter.

Below is the full text of Mabus' memo:

December 8, 2016

MEMORANDUM FOR SECRETARY OF DEFENSE

SUBJECT: Department of the Navy’s FY18 Budget Estimate Submission

Throughout my tenure as Secretary of the Navy, I have worked to ensure the United States Navy and Marine Corps are ready to conduct prompt and sustained combat operations at sea while also being ever present to keep sea lanes open and respond to natural disasters and provide humanitarian assistance. From air operations in Libya, Operation Tomadachi in Japan, the Ebola crisis in West Africa, earthquake and flood relief in Nepal, New Zealand, Haiti and the Philippines, and the global counter-terrorism fight, the Navy and Marine Corps have always given the President immediate, agile and lethal response options.

As directed by the current Defense Strategy, I have maintained a maritime force that can accomplish the naval missions of defending the homeland, deterring conflict, defeating aggression, protecting the maritime commons, and providing humanitarian assistance and disaster relief. I have prioritized missions uniquely performed by naval forces – maritime security; maritime intelligence, surveillance and reconnaissance; sea-based missile defense; and sea-based strategic deterrence. I have submitted budgets that balance capability, readiness and capacity. I have heard the needs of our Sailors and Marines and budgeted for personnel programs to make them more capable warfighters while also being able to balance the needs of their families with the needs of the nation.

Maintaining this maritime superiority is critical in a dynamic security environment in which the United States is facing a return to great power competition. Both Russia and China have advanced their military capabilities and capacities to act as global powers and non-state actors and acquired greater access to advanced technologies that power new threats to our armed forces. This national security environment is undeniably more demanding than any we have experienced in the previous two decades, requiring a more capable and ready Marine Corps and a larger Navy Fleet.

For those reasons, as we look to the end of this Administration, I will not submit a budget for POM18 that reverses the progress we have made over the last seven and one-half years. I will not forward a budget that cuts ships, degrades readiness, and suspends modernization due to the forced cancellation of the maintenance availabilities where modernization occurs. The magnitude of the proposed bill to the Navy will require severe cuts to capability, capacity and readiness and will result in a Navy that cannot support our national strategies. The instruction your office conveyed directed cuts that would reduce the Navy’s and Marine Corps’ essential role as a forward-deployed and forward-stationed force to a fleet confined to its homeports with infrequent overseas deployments.

In order to build some types of ships, I will not cut other ships, regardless of their function in the fleet. That is not how you maintain a Navy, one of our nation’s most precious assets. Shipbuilding reductions are irreversible and have significant negative impacts on our Navy’s ability to do the work this nation requires of its as well as on our shipyards, our shipbuilders, our foundational industrial base, and their employees and families.

The lesson is not one that we should have to learn twice. It is illustrative to recall that from 2001 to 2008 only 41 ships were put under contract, which meant that with ship decommissionings, the fleet declined from 316 to 278 ships. Since I became Secretary in 2009, for the exact same number of fiscal years, we have put 86 ships under contract. The efforts of this Administration have assured that the fleet will reach 300 ships by 2019 and 308 ships – our current Force Structure Assessment – by 2021. Our fleet size today is a result of decisions made a decade or more ago and the decision we make today will impact our nation in the 2020s and beyond. This Administration has made good decisions and laid the groundwork for the success of those who will be in our seats in 2021, but more importantly, those decisions have laid the groundwork for the success of our Navy and our country.

As the world’s only global Navy, the size and composition of our fleet is critical. The United States Navy projects power, reassures allies, deters adversaries and provides humanitarian assistance and disaster relief precisely when and where it is needed. The reason we are able to perform this crucial role, the reason we are the world’s only global Navy, is because of our unique ability to provide presence – to be in the right place not just at the right time, but all the time. The dynamic, specialized requirements of the Navy’s mission demand a properly sized fleet.

It is equally imperative that you consider the economic effects of cutting ships. Under this Administration we have dramatically driven down the costs of every type of ship and we are rebuilding a balanced, capable fleet after years of decline and neglect. In part, these cost reductions result from the increased certainty and transparency we were able to provide our industrial partners every year through the last fiscal year and in part, the reductions have resulted from the inherent competitiveness of a vibrant industrial base.

Cutting ships will not save money since lower production numbers will inevitably lead to higher costs per ship. In the end, this proposal will mean we will get fewer ships for more money

– hardly a good financial decision.

Additionally, fifteen years of war have created ship maintenance and readiness impacts that must be corrected to assure the Navy can uniquely provide presence and timely maritime options for the President. We have made wise budget decisions over the last couple of years, such as increasing the number of shipyard workers, to address these shortfalls. However, the impacts of your proposed budget are so severe on ship depot maintenance and ship and air operations that we may not be able to recover. Therefore, at the same time this budget would cut ships, it would also harm readiness.

You and I both know that this budget is almost totally a symbolic one, given the time this Administration has left in office. The new Administration has stated its direction, it will tailor a budget to its requirements, and Congress is planning to operate under a Continuing Resolution into at least March. The current Administration has provided significant support to building our Navy, and you should not undermine that accomplishment, even symbolically, as a final act. Instead of wasting valuable resources and time in developing a budget that leads to a hollow Navy – as this would certainly do – this budget should make the case as to how to best support the Navy and the nation. Given the global developments since the last Force structure Assessment review in 2014, I know the new FSA that will be delivered soon will clearly show that we need more, not fewer ships to do the tasks the nation expects of its Navy to help maintain peace and prosperity. To say that our Navy fleet should be smaller simply ignores the reality of the global environment in which we operate.

Therefore, recognizing the growing gap between national security demands and the solutions available to address them, I have directed the Department of the Navy (DON) to submit a budget that can meet the DON’s role in the ten missions in the Defense Strategic Guidance; sustain the momentum to a 308-ship Navy as reflected in our current 30-Year Shipbuilding Plan; and begin to undo the cumulative impacts of underfunding Navy and Marine Corps requirements that result from the limitations imposed by the Budget Control Act and Bipartisan Budget Acts. We have adhered to the FY17 Overseas Contingency Operations rules that were provided to us by OSD in the 2018-2022 Defense Planning Guidance. Finally, my budget submission will be the bridge to future budgets that reflects a new Force Structure Assessment and builds the Navy and Marine Corps the nation needs to maintain American influence, assure allies and partners and protect critical pathways of trade and commerce.

We have worked extremely hard for almost eight years, and have succeeded in building the best and most formidable Navy the world has ever known. That was the course I and this Administration chose nearly eight years ago, and that is why the Navy is sure to have enough ships to continue in this role, despite a shrinking topline. I have no intention of changing course now. If you ultimately decide to submit a budget that takes away the ability of the Navy and Marine Corps to do their job, it will not have my support, and I will make my objections widely known.

Ray Mabus