DOD POLICY, APPROPRIATIONS BILLS HELD UP OVER DEBT CEILING IMPASSE
Action on the FY’24 National Defense Authorization Act (NDAA) came to a halt this week due to uncertainty over funding levels for key projects that could be impacted by an agreement to trim certain spending in order to obtain a deal to increase the federal debt limit. The same issue is slowing work on FY’24 appropriations bills for defense and other agencies. Several Senate appropriators said this week that they will not be able to take further substantive action on their bills until they know whether, or by how much, certain accounts may be reduced as Republicans seek spending concessions as a condition for approving an increase in the debt ceiling. Although there have been discussions this week on a debt ceiling deal, most observers state that there has been little to no movement on either side. There may be no meaningful progress until the “x date”, the date by which the government will begin to default on its debt, is reached. All of this creates confusion for federal agencies and contractors. While contractors can continue to do business now, they must take care to ensure that projects will actually have funding. Uncommitted COVID money is frequently discussed as a source of potential cuts in order to achieve a debt deal. Other accounts could also be included, depending on what it takes to cobble together enough votes for action. Future planning for both industry and government is difficult. The presidential budget blueprint will be revised by Congress, but exactly how remains unknown. Contractors may be able to rely better on the continuation of critical projects already underway. The path ahead for other projects may not be known for another month or more.