Since fiscal 2018, Congress has added $1.6 billion to the U.S. Navy’s shipbuilding and conversion accounts for warship line items, including the Columbia-class attack submarines, to ramp up production through shipyard upgrades and workforce additions.
That approach may be the one taken for munitions, if congressional appropriators do not allow multi-year procurements in fiscal 2024 for munitions or significantly cut such requests, such as those for the AGM-158B U.S. Air Force Joint Air-to-Surface Standoff Missile-Extended Range (JASSM-ER), AGM-158C Long Range Anti-Ship Missile (LRASM) and AIM-120 Advanced Medium Range Air-to-Air Missile (AMRAAM).
Lockheed Martin [LMT] makes JASSM-ER and LRASM, while Raytheon Technologies [RTX] builds the AMRAAM.
Section 3501 of U.S. Code Title 10 provides that an appropriations law, and an additional legislative act other than appropriations, must authorize MYPs of $500 million or more. Last year in the fiscal 2023 National Defense Authorization Act (NDAA), legislators, eying DoD’s stated need to counter China and the drawdown of DoD stocks to support Ukraine, took a preemptive step toward easing munition MYPs.
Section 1244c of the fiscal 2023 NDAA waived the requirement for certain munitions that DoD show legislators significant cost savings would result from an MYP before Congress authorizes the MYP. The section allowed MYPs beginning in fiscal 2023 for 5,100 AMRAAMs, 3,100 JASSMs, and 950 LRASMs. Section 1244c also allowed MYPs for 864,000 155mm rounds for the U.S. Army; 12,000 Army AGM-179 Joint Air-to-Ground missiles by Lockheed Martin; 700 High Mobility Artillery Rocket Systems (HIMARS) by Lockheed Martin; 1,700 MGM–140 Army Tactical Missile Systems (ATACMS) by Lockheed Martin; 2,600 Navy Harpoon missiles by Boeing [BA]; 1,250 Naval Strike Missiles by Kongsberg; 106,000 Army Guided Multiple Launch Rocket Systems (GMLRS) by Lockheed Martin; 3,850 PATRIOT Advanced Capability–3 (PAC–3) Missile Segment Enhancement (MSE) systems by Lockheed Martin; 5,600 FIM–92 Army Stinger missiles by Raytheon; and 28,300 Army FGM–148 Javelins by Raytheon.
Defense officials this year have said that they believe the munition MYPs are needed to ramp up production. The officials have mostly not focused on the cost savings associated with MYPs–cost savings that the Congressional Research Service has estimated customarily range from five to 15 percent.
House appropriators were fully aware of last year’s NDAA provisions to waive certain requirements for authorizing MYPs, but the committee’s leadership, including Rep. Ken Calvert (R-Calif.), the chair of the defense panel, maintains that projected, significant cost savings are a critical part of MYP authorization, a congressional staffer said.
The House Appropriations Committee authorized five of the seven MYP requests for fiscal 2024–Naval Strike Missile, GMLRS, PAC-3 MSE, LRASM, and JASSM-ER–but did not support the AMRAAM MYP authorization, as the AMRAAM program of record ends in fiscal 2027 and the committee contends that the AMRAAM unit cost has been inconsistent.
In addition to not acceding to the AMRAAM MYP authorization request, the House Appropriations Committee did not support MYP authorization for the Navy SM-6 missile by Raytheon because of Raytheon’s “serious performance issues on their last multiyear,” the staffer said. In fiscal 2019, the Navy received MYP authority to buy 625 SM-6s over five years. The multi-year ended in fiscal 2023, and Raytheon only delivered 138 of the 438 SM-6s under contract, the staffer said.
The House Appropriations Committee recommends $1.4 billion in fiscal 2024 “in advance procurement and industrial base funding to improve capacity for both private and public munitions providers,” per the bill report.
“However, since the department has failed to provide the Committee with cost savings expected to be generated by EOQ [economic order quantity] funding and in some instances has communicated an expectation of no cost savings from multiyear contracts, EOQ funding is not justified at this time,” the report said. “The committee expects that prior to the transmission of its fiscal year 2025 president’s budget request, the department will demonstrate how EOQ funding would generate cost savings across the respective multiyear contracts.”
Under EOQ, DoD buys batch orders of system components in the first two years of an MYP. In fiscal 2024, under the Pentagon’s Large Lot Procurement pilot program for MYPs, DoD asked for nearly $1.9 billion in EOQ.
Funding removed by House appropriators for the EOQs includes nearly $770 million for JASSM-ER, $335 million for LRASM, $252 million for PAC-3 MSE, $212 million for AMRAAM, and $39 million for the Naval Strike Missile.
The debt ceiling agreement puts an $886 billion fiscal 2024 cap on defense. The Senate, however, may propose an emergency supplemental funding bill with MYP munition adds.
A fiscal 2024 Continuing Resolution would not allow Pentagon MYPs to proceed unless already authorized in an NDAA and a defense appropriations act.