The US Navy's Naval Air Systems Command (NAVAIR) cannot award Bell-Boeing a second multi-year production contact for the V-22 Osprey tilt-rotor until a 2013 defence appropriations bill is signed into law.
"An agreement between the program and industry was reached for MYPII [multi-year procurement II] in 2012," NAVAIR says. "The awarding of the MYPII contract is contingent upon approval of the National Defense Authorization Act [NDAA] and the Department of Defense Appropriations Act, 2013. The NDAA was signed by the President January 2. We expect the multi-year deal to be complete when the President signs the Department of Defense Appropriations Act."
NAVAIR says an initial contract was put into place in December, 2011, to purchase long lead items to build production Lot 17 aircraft. That contract was amended on 28 December, 2012, to complete the purchase of materials and labor for those machines. The MYPII contract calls for the production of 99 aircraft.
"We anticipate that this contract will be further amended to become the 'whole' MYPII and will cover all of the material and labor for V-22 Lots 17-21, for the years 2013-2017," NAVAIR says. "We expect this to occur in the first quarter of 2013."
Despite NAVAIR's optimism, there is little indication that the US Congress will pass an appropriations bill anytime soon. The US government is currently operating under a so-called continuing resolution until 27 March, which provides the same level of funding as the fiscal year 2012 budget. It is very unusual for a continuing resolution to run this long into a fiscal year, says Todd Harrison, a budget analyst at the Center for Strategic and Budgetary Assessments.
But if Congress and the Obama Administration cannot reach a budget deal by 1 March, the Congressional sequestration maneuver would go into effect. Sequestration was originally expected to go into effect on 2 January, but was averted by a last minute temporary deal that was reached before the New Year. The maneuver would automatically cut the US defence budget by 10% on top of the effects of the continuing resolution.
Without a fiscal year 2013 budget, many defence programmes are running into problems with contract awards. "It makes it very difficult," Harrison says.
Unless a programme maintains the same level of funding as the year before, ramping up funding is very problematic under a continuing resolution. New start programmes are all but dead in the water.
The present uncertainty also severely impacts planning for the President's fiscal year 2014 budget proposal, which was expected to be released during the early part of February. Harrison says that there have been indications which suggest that could be delayed into March or even April.