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CNO Gilday: Inflation is eating away at Navy readiness

Chief of Naval Operations Adm. Michael Gilday warned Congress this week that high inflation is making it harder than ever for the Navy to maintain a ready fleet and ready Sailors.

In a House Appropriations subcommittee hearing, Gilday reminded lawmakers that the Navy budget has been “flat relative to inflation for over a decade,” which was already making it difficult for the Navy to carry out an expanding list of tasks. But today, with inflation hitting levels not seen in decades, the Navy is under even more pressure.

“[T]he price of Fleet readiness is going up. Manpower, operations, and maintenance costs – which make up almost 60 percent of our budget – continue to grow above the rate of inflation,” Gilday said in his written testimony.

“Making matters worse, inflation rose and remains at 6-8 percent, well above the historical average,” he added. “This will likely exacerbate all of our readiness costs.”

Inflation is especially problematic for the Navy and other service branches because Congress has yet to pass a spending plan for the current fiscal year, which began Oct. 1, 2021. That means the Navy is operating under a so-called continuing resolution, or CR, which essentially requires it to operate within the confines of the FY 2020 spending plan.

Gilday said trying to operate using the prior year’s funding plan in today’s much more expensive world necessarily means a degraded level of service.

“Under the current CR, the Navy has to operate, maintain, and modernize the Fleet at last year’s enacted funding level, which falls short of historical inflation and immensely short of current inflation,” he said.

Gilday said the Navy has learned to mitigate the impacts of delayed spending bills by delaying new projects, but also said these delays force Navy leaders to “expend precious time and manpower on managing cash flow, determining which programs to prioritize and which to let languish, and segmenting contract actions into multiple transactions that could otherwise be done once.”

Gilday warned that while the Navy suffers from inflation and delayed spending plans from Congress, the presence of China and Russia on the world’s oceans continues to expand.

“Both nations routinely subvert the rules-based international order, intimidate their neighbors, and attempt to enforce unlawful claims with the threat of force,” he said. “They are rapidly mobilizing their militaries, extending their ability to project power across the globe, and embracing the use of ‘gray zone’ activities to turn incremental gains into long-term strategic advantages. And China, in particular, is building all-domain capabilities that rival our own.”

“Back here, there is little evidence that we have grasped the reality that our security and way of life are being threatened, as we come before you four months into another CR to plead for steady, predictable funding,” he added.

The current CR will expire in mid-February, and Congress is hoping to approve a spending bill for the current year before then.

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