GPS & the Fiscal Cliff — Part II - Inside GNSS - Global Navigation Satellite Systems Engineering, Policy, and Design

GPS & the Fiscal Cliff — Part II

GPS contractors are scrambling to assess new Pentagon budget-cutting directives that have the potential to slow GPS modernization.

The belt-tightening is in response to a three-way fiscal vise created by the failure of Congress and the White House to agree on a budget for this year, on a new limit for the nation’s debt, and on a plan to implement future budget cuts.

GPS contractors are scrambling to assess new Pentagon budget-cutting directives that have the potential to slow GPS modernization.

The belt-tightening is in response to a three-way fiscal vise created by the failure of Congress and the White House to agree on a budget for this year, on a new limit for the nation’s debt, and on a plan to implement future budget cuts.

The most immediate problem is the need to raise the debt ceiling, a decision point that may be postponed for a few months. Today (January 18, 2013) House Republicans indicated that they would agree to lift the federal government’s statutory borrowing limit for three months, if Congress committed itself to passing a budget during that time period in order to pave the wave for talks on longer-terms spending cuts.

The nation reached its current debt limit on December 31 and has been using financial sleight-of-hand to keep the government open for the last few weeks. Creative accounting can’t work forever, though, and the federal government had been expected to run out of money — and potentially shutdown — as early as mid February.

Nevertheless, the two sides may be nowhere near finding common ground on the bigger issues. Last Monday (January 14, 2013), President Obama indicated in a press conference that he would not trade budget cuts for a debt deal.

“Republicans will not collect a ransom in exchange for not crashing our economy,” Obama said, adding that, “The full faith and credit of the United States is not a bargaining chip.”

Earlier that day Politico reported that an increasing number of Republicans were ready to take drastic steps to force just such cuts. GOP officials told the politically focused newspaper that more than half of their members were prepared to allow default unless the White House agreed to dramatic spending reductions. Many more members, including some party leaders, were ready to shut down the government to make their point.

Even if a debt deal is reached, officials may not be able to undo the damage already inflicted. The government has been operating for months under a continuing resolution or CR enacted to keep the government from shutting down. The CR, which is set to expire on March 27, was necessary because the appropriations bills for fiscal year 2013 were still unapproved when fiscal year 2012 ended on Sept 31.

CRs come with a number of restrictions. New projects cannot be started and, in this case, overall spending was set at 2012 levels. The federal government is now more than three months into the current fiscal year, and the Pentagon apparently has been spending at the higher levels anticipated for 2013 in the expectation that a deal would be reached sooner rather than later.

“Because most operating funding was planned to increase from Fiscal Year (FY) 2012 to FY 2013, but is instead being held at FY 2012 levels under the CR, funds will run short at current rates of expenditure if the CR continues through the end of the fiscal year in its current form,” said Deputy Secretary of Defense Aston Carter in a January 10 letter to the Chairman of the Joint Chiefs of Staff, the Secretaries of the various military departments and many other top Defense Department leaders.

If the CR is extended through the year in its current form, Carter wrote, “it would hinder our ability to maintain a ready force.” The need to protect funds for war-time operations makes the situation even more “challenging,” he said.

In the letter Carter authorized a number of spending cuts to be put in place until further notice. Although the specifics were still being worked out, the cuts could potentially affect the GPS program as civil staffing is reduced, travel is curtailed, and other measures put in place. Existing contracts and studies, for example, are to be scrubbed to find cost savings, and all R&D and production contracts and contract modifications that obligate more than $500 million must be cleared before the contracts are awarded.

Most industry sources said they had not experienced any impacts up to now — though a few reported recent cutbacks in assignments.  In fact, sources have told Inside GNSS consistently over the last six months that they have been directed not to take the possibility of budget cuts into their planning. Now managers from one coast to the other are rushing to assess potential changes to their programs.

And the biggest changes may be yet to come.

In his letter Carter ordered defense officials to provide by Feb 1 “Draft Implementation Plans” for long term cuts that would include “major changes in unit buys delays, etc.” and “significant changes in all joint programs.” These plans take into account the imposition of sequestration — the plan for indiscriminate, across the board cuts of roughly 9 percent is set to kick in on March 1.

The GPS III program may be particularly at risk. Under sequestration unobligated funds from prior years are likely to be swept up and redirected. Inside GNSS has been told that fiscal year 2012 money for long-lead items for GPS III space vehicles 5 and 6 may not yet be obligated. The Space and Missile Systems Center at Los Angeles Air Force Base, which oversees the GPS Directorate, did not respond to a query on the long-lead items by press time.

The only good news is that Carter put a priority on protecting those programs “most closely associated” with the Pentagon’s new defense strategy. That strategy focuses on a more agile force and places a greater emphasis on maintaining a presence in the Asia Pacific — a move that could insulate the GPS program somewhat.

“The expiration of the current continuing resolution does not impose any long term impacts to GPS,” Air Force spokesman Maj. Eric Badger told Inside GNSS. Should sequestration occur, he said, the GPS program office would “make all efforts to mitigate the impacts against the Enterprise programs.”

“The Air Force is committed,” Badger said, “to maintaining GPS as the gold standard for worldwide positioning, navigation, and timing (PNT) services.”

However, in the last several years, budget cuts have been made in the civil funding for GPS. Now Rep. Marsha Blackburn (R-Tennessee), vice-chair of the House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade, and a member of the committee’s Subcommittee on Communications and Technology, has proposed rescissions of 1 to 15 percent to civil programs for FY13 and FY14.

Badger acknowledged that, if the civil portion of the GPS budget is further reduced, “the Air Force would have to consider reducing the scope of efforts directed towards new civil capabilities (in accordance with National Security Presidential Directive 39: U.S. Space-Based Position, Navigation, and Timing Policy).”

Even so industry sources were nearly unanimous in their belief that sequestration would happen and it would be “a real train wreck.”

With the debt ceiling, sequestration, and the continuing resolution, said one source “the perfect storm is brewing. Hurricane Sandy is coming in March.”