LegiStorm

Summary:

This report provides a basic discussion of interim continuing resolutions (CRs) and highlights some specific issues pertaining to operations of the Department of Defense (DOD) under a CR. It also provides a brief look at selected FY2017 defense programs that could be affected by a CR. On September 29, 2016, the President signed H.R. 5325, the Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, and Zika Response and Preparedness Act, into law. Division C of H.R. 5325 is termed a "continuing resolution" (CR) which provided temporary funding in FY2017 for programs and activities typically covered by regular appropriations bills—including those of the DOD. Funding under the terms of the CR was effective October 1, 2016, through December 9, 2016. H.R. 5325 provided budget authority for FY2017 for most projects and activities at the rate at which they were funded during FY2016 minus 0.496%. On December 10, 2016, H.R. 2028, the Further Continuing and Security Assistance Appropriations Act, 2017, was enacted to extend CR funding until April 28, 2017 at a funding rate of 0.1901% below the FY2016 appropriated level. H.R. 2028 also included a supplemental appropriation for Overseas Contingency Operations (Division B: Security Assistance and Appropriations Act, 2017), providing an additional $11.6 billion for related DOD and Department of State activities. As with regular appropriations bills, Congress can draft a CR to provide funding in many different ways. Under current practice, a CR is an appropriations law that provides either interim or full-year funding by referencing a set of established funding levels for the projects and activities that it funds (or covers). Such funding may be provided for a period of days, weeks, or months, and may be extended through further continuing appropriations until regular appropriations are enacted, or until the fiscal year ends. In recent fiscal years, the referenced funding level on which interim or full-year continuing appropriations has been based was the amount of budget authority that was available under specified appropriations acts from the previous fiscal year. CRs may also include provisions that enumerate exceptions to the duration, amount, or purposes for which those funds may be used for certain appropriations accounts or activities. Such provisions are commonly referred to as anomalies. The purpose of anomalies is to preserve Congress's constitutional prerogative to provide appropriations in the manner it sees fit, even in instances when only interim funding is provided. For affected agencies, CRs can create challenges that would not exist under a full-year appropriation. For example, an interim CR may prohibit an agency from initiating or resuming any project or activity for which funds were not available in the previous fiscal year (i.e., prohibit new starts). In addition, Congress may include provisions in interim CRs that place limits on the expenditure of appropriations for programs that spend a relatively high proportion of their funds in the early months of a fiscal year. Also, if a CR provides funds at the rate of the prior year's appropriation, an agency may be provided additional (even unneeded) funds in one account, such as research and development, while leaving another account, such as procurement, underfunded or lacking. This is sometimes referred to as a problem with the color of money. By its very nature, an interim CR can prevent agencies from taking advantage of efficiencies through bulk buys and multi-year contracts. It can foster inefficiencies by requiring short-term contracts that must be reissued once additional funding is provided, requiring additional paperwork and overhead in contracting actions. DOD has started the fiscal year under a CR for 12 of the last 16 years (FY2002-FY2017) and every year since FY2010. The amount of time DOD has operated under CR authorities during the year has increased in the last 6 years and equates to a total of more than 26 months since 2010. This has caused DOD to adapt its programming activities to a truncated budget year. For FY2017, the Defense Department requested $523.9 billion in discretionary funding, as compared to the FY2016 enacted level of $521.7 billion. While the variance is comparatively small (0.4%), the variance in FY2016 enacted and FY2017 requested amounts by appropriation account may be considered significant under the CR. For example, DOD is seeking an $8.4 billion increase in Operation and Maintenance (O&M) funding from FY2016 to FY2017. O&M appropriations fund critical readiness functions such as individual, unit, and collective training, flying hours, ship steaming days, depot maintenance, and civilian personnel pay. Under the CR, O&M levels are held at the reduced FY2016 rate. Additionally, the DOD Comptroller expects that many DOD programs and activities would be affected by enactment of an interim CR through prohibitions on new starts, limitations on production quantity increases, and color of money issues, if such issues are not specifically addressed through anomalies (provisions that enumerate exceptions to the duration, amount, or purposes for which those funds may be used for certain appropriations accounts or activities).