Defense innovation has weakened as gridlock in the emerging technology of congressional bars

WASHINGTON – With more than six weeks left in the government’s fiscal year, Congress faces an uphill battle to pass a defense bill and avoid a continuing resolution.

CRs will maintain funding at previous year levels with certain exceptions. A divided Congress has relied on the act in recent years to avoid a government shutdown as lawmakers negotiate a deal for the next fiscal year, and the likelihood that a CR will be needed for fiscal year 2023 is increasing, law firm Alston & Bird said in a note to clients on July 26.

Even if a CR remains lit, the implications could hurt the Pentagon’s efforts to keep pace with competing nations in emerging technologies. Because funding is limited to prior-year levels, CRs delay the start of new programs and contracts, many of which fall within defense technology.

“It would stop our modernization efforts and give China a chance to continue to innovate while we’re on that hiatus,” said Kea Matori, director of legislative policy at the National Defense Industrial Association trade group. “It’s basically a self-inflicted wound, but unfortunately, it’s a common occurrence.”

“Government is not always the easiest customer and when you add CR, it’s not a business model that works in the commercial sector,” she says.

As the Pentagon strives to incorporate artificial intelligence, machine learning and other cutting-edge innovations into warfare, defense officials and lawmakers have sought to create programs and offices to manage modernization.

According to the CR, the office was not in the debt payment account last year and was denied funding to begin hiring and contracting. They add uncertainty to the contract timeline, and without a consistent approach, many new technology initiatives can be delayed or abandoned.

According to Elaine McCooker, a senior fellow at the American Enterprise Institute, the impact will be felt equally across industry.

Large companies have learned to cope with the disruptions caused by CRS and to adjust to current government funding. But many new technologies come from smaller companies that don’t have the same level of resources or expertise in navigating the fragmented timeline, she said.

“They don’t have the same breadth and depth to absorb those kinds of changes,” McCusker said in an interview.

What happens to government contractors in CR?

For companies dependent on federal dollars, the cost of the delay will be borne by the small business owner, said ML Mackey, CEO and co-founder of Beacon Interactive Systems, a maker of US military information management software.

Companies are still responsible for payroll and other costs when the CR is issued and the contract is put on hold, McKee said. In many cases, companies must find ways to compensate for cash flow shortages.

McKee said small business owners should regularly use personal finance to pay off loans and credit cards.

Even if a deal is finally completed when Congress enacts a relief bill, a business owner bears the brunt of the delay.

For small tech companies looking to enter the defense sector, the prospect of shouldering that financial burden can dissuade owners from working with the government.

In June, the House Treasury reported 12 pieces of funding legislation, including the defense bill, which it said it would try to pass in the House by the end of July. The federal fiscal year ends on September 30.

In recent years, Pentagon officials have faulted lawmakers for regularly using CRs as a funding measure, citing their heavy costs and impact.

In a hearing in January, Marine Commandant Gen. David Berger testified to the House Appropriations Subcommittee that CRS would have a negative impact on the Pentagon because no amount of future resources could make up for lost time.

“We are ahead of China, not by their speed, but by not following our own budget processes,” he said.