One hundred dollar notes are seen in this photo illustration at a bank in Seoul January 9, 2013. Japan's drive to weaken the yen poses a threat to big South Korean exporters such as Hyundai Motor, but Koreans may benefit as the new president aims to shift policy away from supporting big exporting conglomerates. The yen's tumbling by some 10 percent to the dollar in the December quarter at a time when the won has been on the rise sent the shares of big exporters falling and raised concerns among the policymakers in Seoul. Picture taken January 9, 2013. To match Analysis KOREA-CURRENCY/ REUTERS/Lee Jae-Won (SOUTH KOREA - Tags: BUSINESS) - RTR3CGGO

In what feels like the new and unfortunate normal, the government has once again started this fiscal year under a continuing resolution (CR). The CR serves as a stopgap measure that will maintain the previous year’s funding levels and delay the possibility of a potential government shutdown until mid-December, however, the CR is a serious disruption to military contracts and causes severe consequences to the U.S. Military’s overall readiness. As Senator John McCain (R-AZ) told his chamber of Congress this week, “Perhaps the greatest harm to our national security and our military is self-inflicted. It is the accumulation of years of uncertain, untimely, and inadequate defense funding.”[1] More specifically, the CR prevents the start of new contracts and creates serious problems and inefficiencies throughout the Department of Defense bureaucracy.

One significant way CRs impact our military readiness is by forcing delays in planned military training activities. A short three-month CR, like the one recently passed, causes critical training activities to be condensed or even scrapped in order to accommodate for budget constraints and accelerated timelines. As an example, the recently passed CR causes the Air Force to lose institutional training and flying hours, which are crucial for American pilots’ successes in combat situations.[2] All of the services could be required to condense or even cancel many upcoming field exercises. Within 90 days, the lost training would not be able to be recovered because units must enter already pre-scheduled exercises, thus further degrading their combat readiness and leaving U.S. servicemen and women without beneficial training.[3] Unfortunately, the result of this loss of training has been fatal, and has ultimately caused over four times as many uniformed men and women to be killed in training accidents than have died in active combat. Once again, it is sadly apparent that continuing resolutions not only harm our service members readiness to respond to potential threats, but also jeopardize their safety during peacetime.

In addition, CRs cause major delays for contracts and program start dates. For instance, the Navy will have to delay the induction of 11 ships in to the fleet, which will further backlog already delayed maintenance work at shipyards.[4] Meanwhile, the Army will have to defer working for the U.S. Government or with the U.S. Government a much less attrasupply transactions during this CR, creating more inefficiencies and costs in order to maintain timelines.[5] The execution of infrastructure projects will also be limited, affecting 79 major Air Force installations worldwide.[6] Furthermore, the CR also creates uncertainty in the hiring process of uniformed and civilian members into the Department of Defense. This unnecessary, repetitive, and self-inflicted process make active option to the best potential candidates.

Running the Government on a CR also significantly impacts government contracting efforts by increasing costs and delaying critical projects. Because CRs generally prevent new-starts on contracts and pauses production rate increases, many major programs are impacted across all sectors of the military. The Army alone has 18 of such projects that are affected by a three-month CR, including; the Paladin Integration Management Improvement, TOW2 missiles, M240L medium machine gun, the Advanced Tactical Parachute system, and several others. The Navy also has several contracts for Q1 fiscal year that are impacted, including the VA [Virginia] Class submarine AP, CMV-22, JLTV, KC-130J, Trident Missile subsystems, RAM, Griffin, ESSM, and Hellfire Missiles.[7] Additionally, the Air Force will see delays or price increases in projects like the F-35 sensor-shooter, B-21 long-range sensor-shooter, T-X advanced trainer, and KC-46 tanker.[8]

Though there is no way for contractors to completely mitigate the effects of a CR, there are several steps contractors should take to help protect themselves. First, contractors should be prepared for multiple scenarios, including worst case scenarios like a potentially extended CR beyond December, though that is unlikely.

It is also important that those companies and industries most affected by extended and frequent CRs play a proactive role in educating Congress on both the importance of their programs and most importantly, the adverse effects these disruptions have on American national security. The disruptions to contracts, maintenance activities, and supply transactions drive up costs for both the government and its contractors, making it abundantly clear that both parties have mutual interest in ending the current state of affairs in which we see frequent CRs.

In this area, The McKeon Group is well equipped to assist our clients work through turbulent times and ensure that key stakeholders are aware of the negative impacts of insecure budgets. Our team is committed to making sure that our clients are best positioned to understand and have a role in the congressional appropriations process.


  1. National Defense Authorization Act for Fiscal Year 2018–Motion to Proceed, 115th Cong. (2017) (testimony of Sen. John McCain). https://www.congress.gov/crec/2017/09/13/CREC-2017-09-13-pt1-PgS5245-5.pdf
  2. Mattis, James. (2017, September 8). Impacts of a Continuing Resolution Authority in Fiscal Year 2018. Retrieved from https://www.mccain.senate.gov/public/_cache/files/899b1f10-136a-4760-a058-b761137e9a23/mattis-letter-to-mccain-on-cr-9-8-17.pdf
  3. Mattis, James. (2017, September 8).
  4. Mattis, James. (2017, September 8).
  5. Mattis, James. (2017, September 8). Impacts of a Continuing Resolution Authority in Fiscal Year 2018. Retrieved from https://www.mccain.senate.gov/public/_cache/files/899b1f10-136a-4760-a058-b761137e9a23/mattis-letter-to-mccain-on-cr-9-8-17.pdf
  6. Mattis, James. (2017, September 8).
  7. O’Rourke, Ronald. (2017 September 22). Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress (CRS Report No. RL32665). Retrieved from Congressional Research Service website: https://fas.org/sgp/crs/weapons/RL32665.pdf
  8. Deptula, David. (2017, April 13). Congress, Military Are Running Out of Time. Retrieved from http://breakingdefense.com/2017/04/congress-military-are-running-out-of-time/