UPDATE This story has been updated to reflect the accurate total funding spent on Southwest border operations. The Army under secretary provided an incomplete total in Tuesday’s briefing and later corrected the record.

The U.S. military may run out of personnel funds before the end of the year, be forced to scale back operations and see ongoing modernization efforts harmed if Congress fails to pass a defense spending bill by the end of next week, service leaders warned Tuesday.

The undersecretaries of the Army, Navy and Air Force said they’d have billions of dollars in “misaligned” funds — money that exists but not in the right budget lines to support their current spending needs — if they’re stuck with a full-year continuing resolution that keeps fiscal 2023 spending levels through the rest of 2024.

They agree that they’d have to prioritize current operations first, then people and then acquisition and modernization in a CR.

“You see sailors and Marines across the globe today, performing important missions: the Red Sea is an excellent example of how current operations take precedence,” Navy Under Secretary Erik Raven told reporters at the Pentagon.

Without sufficient funds, he said, “we have to make tough choices. But between the ability to fight tonight and be ready for all the threats, versus preparing for the future and modernizing our forces — it is a tough decision, but we have to lay our chips somewhere, and that’s on the ability to perform our missions today.”

Raven said the Navy’s ability to make that prioritization, though, would require Congress to grant the services some “unprecedented flexibilities” in the form of massive reprogrammings, or moving money from one line item into another.

The Navy, for example, would have $26 billion in the wrong places, and would need Congress to approve $13 billion in formal reprogrammings — more than twice the money Congress approves for the entire Defense Department in a typical year, he said.

But the reprogramming frenzy would be vital to mitigate the risk the services would take in their modernization efforts and industry would face if contracts are delayed or nixed altogether.

The Army is facing a similar misalignment in funds, to the tune of $6 billion.

“These are production rate increases, new starts — both in programs for acquisition as well as military construction projects that we cannot start,” Army Under Secretary Gabe Camarillo said.

The Air Force’s misalignment in funds equates to over $13 billion and “impacts are particularly challenging in the Space Force, who has seen their budgets rising over the last couple of years,” Air Force Under Secretary Jones said.

‘Burning hotter’

Further complicating funding this fiscal year is the fact that Congress has yet to pass a sweeping supplemental request, which the Pentagon hoped would supply weapons to Ukraine and Israel in support of ongoing wars for both countries and would also fund the Southwest border mission. The lack of supplemental funding compounds the impact of a long-term CR, Camarillo said.

The Army is spending $500 million out of its base budget for operations costs in the European theater, another $100 million in the U.S. Central Command area of operations and another $500 million for the operations along the U.S. Southwest border.

“At one point in time, there was a thought that all of this could be funded through a supplemental, and it is now currently, today, in FY24, being funded 100% out of the Army’s base budget,” Camarillo said.

“We are just burning hotter than we normally would across all of our appropriations accounts,” he said. “[U.S. Army Europe and Africa] in Germany has explained that … they will run out of money this summer in the absence of extraordinary relief, aka a reprogramming.”

This will be a problem across the board, he added, to include running out of funds in the Army’s military personnel account.

Industry impacts

The services planned to ramp up munitions spending in FY24, to bolster their own stockpiles as a hedge against a future fight and to replenish allies’ and partners’ stocks.

A year-long CR puts that industry ramp-up in peril.

Camarillo said he was “particularly concerned” the CR would not allow the services to “send that strong signal to give industry the incentive to be able to facilitize, invest in a workforce and be able to do those extra shifts that we know that we need in order to restore our munitions.”

Camarillo said the Army intended to kick off a multiyear procurement effort for the Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) interceptors in FY24. Under a full-year CR, it would be $1.2 billion short to reach the production rates needed to achieve the economic order quantities and savings associated with the multiyear procurement deal.

Lockheed Martin has invested significantly in the PAC-3 MSE line to grow production from 550 missiles per year to 650. The Army requested in its FY24 budget $775 million to ramp up that production. The company intends to grow production beyond 650 in the following year, as demand increases due to the war in Ukraine and conflict in the Middle East.

Camarillo added the Army could not begin to field its Mid Range Capability missile to the first unit, which is important to its Pacific deterrence, due to new programs not being allowed to start under continuing resolutions. Nor could it increase production levels for the Guided Multiple Launch Rocket System, Javelin missile, and 155mm munitions.

“I will just say that we have always said our goal was to get on 155 artillery 100,000 per month rounds by the end of calendar year ‘25. We cannot get there unless we get both the appropriation and we get the supplemental,” Camarillo said.

“It’s very challenging, because we’re asking industry to lean as far forward as they possibly can and to make investments both in additional personnel, unique tooling and machining that’s required to ramp up production capacity,” Camarillo said.

And the Army planned to buy 225 Coyote counter-unmanned aerial system interceptors – a spending need that hits home, he said, due to the recent deaths of three soldiers in Jordan who were killed by a drone strike from Iran-backed militants — but those, too, could not be purchased in a year-long CR.

For the Navy, Raven said the sea service wanted to double its Standard Missile 6 spending — something particularly timely, as Navy ships are expending the older SM-2 missiles almost daily in the Red Sea, shooting down Houthi missiles and drones — but that cannot happen under the full-year CR.

After the Navy just last week awarded a maintenance contract to HII’s Newport News Shipbuilding to overhaul the attack submarine Boise – which has languished at the pier since 2015 and has been unable to undergo repairs at either a public or private repair yard – Raven said a full-year CR would render the Navy unable to actually fund and execute that contract this year due to a $600 million shortfall in the submarine maintenance funds.

It would also see a $800 million shortfall in amphibious ship spending that could put at risk America-class amphibious assault ship construction, a $2 billion shortfall in submarine construction spending that would threaten the Virginia-class attack sub program, and more.

For the Air Force, Kristyn Jones, who is performing the duties of the under secretary of the Air Force, said the service has five contractors onboard for its collaborative combat aircraft effort, but that wouldn’t be able to move forward.

The full-year CR would also hamper production increases on the Joint Strike Missile and the F-35A Joint Strike Fighter, both of which the Air Force says it needs for a high-end fight, as well as spending on the Joint Air-to-Surface Standoff Missile for facilitization to support future production increases.

“We hear over and over: the industry wants that solid demand signal so they know how to invest, they can support the facilitization — and by having this uncertainty, it really has negative impacts across the defense industrial base,” Jones said.

Megan Eckstein is the naval warfare reporter at Defense News. She has covered military news since 2009, with a focus on U.S. Navy and Marine Corps operations, acquisition programs and budgets. She has reported from four geographic fleets and is happiest when she’s filing stories from a ship. Megan is a University of Maryland alumna.

Jen Judson is an award-winning journalist covering land warfare for Defense News. She has also worked for Politico and Inside Defense. She holds a Master of Science degree in journalism from Boston University and a Bachelor of Arts degree from Kenyon College.

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