The Navy is digging in its heels and rejecting billions in cuts from its 2018 budget as infighting has hit a boiling point at the Pentagon.

The Navy has refused to submit a budget that incorporates $17 billion in cuts over the next five years that Defense Secretary Ash Carter ordered. It's a standoff that has been brewing for months since Carter told the Navy to begin cutting major shipbuilding programs and invest in weapons systems and aircraft, according to half a dozen defense officials who spoke to Navy Times.
 
At issue is Navy Secretary Ray Mabus's insistence that budget cuts not be directed at the shipbuilding program, which he has long fought to shield from cuts as he attempts to rebuild the fleet to his goal of 308 ships.

Mabus argues that cutting ships is the "least reversible" thing to cut from the budget because of the long timeline for shipbuilding programs and the damage to the industrial base. The Navy had been developing budgets with the $17 billion in cuts that preserved shipbuilding, but the savings came overwhelmingly from operations and maintenance money needed to deploy ships and fix them when they get back — Navy leaders deemed those cuts intolerable.

What's unclear is what impact the outgoing administration's fiscal year 2018 budget would have on the incoming Trump administration, which will be expected to roll out a defense budget this spring. Carter's office insists its going to hand over the best budget it can while keeping the Navy and all the other services within the caps mandated by the 2011 Budget Control Act.

"At Secretary Carter's direction, the Department of Defense is hard at work developing a FY18 budget proposal that will help guide the next administration and ensure a seamless transition," said top Pentagon spokesman Peter Cook.

"All of the services were asked to develop specific budget plans that focus on improving readiness and developing capabilities that will allow the United States to defeat high-end adversaries while adhering to current budget limits. The Department is reviewing those plans to ensure they are balanced and maintain America's military edge."

But the Navy, led by Mabus, insists it would be foolish to send over a budget that cuts ships when Trump has said he wants to grow the Navy.

"Whatever budget the Navy submits will have the half-life of a mayfly at noon on January 20th," said a senior defense official supportive of the Navy's plan, referring to the date of Donald Trump's inauguration. "So to some degree Secretary Mabus has tried to make that point over the past several weeks."

The defense official said that Trump is "on the record" saying he wants 350 ships, so he is "unlikely to support a document that cuts ships. ... This is a nonsensical discussion that amounts to people on the third deck [OSD], substituting their judgement for the Navy's on what the Navy needs."

The budget battle is the latest in a string of brawls between Defense Secretary Ash Carter and Mabus which have spilled out into the public. Carter and Deputy Secretary of Defense Bob Work have pushed the Navy to cut its shipbuilding program in favor of investments in missiles and systems that will boost the current fleet's capabilities.

"The games between Carter's team and Mabus's team have gone on for months," said another defense official familiar with the infighting. "This is just a small example."

Carter's office is also preparing a letter to send to the Navy that will outline his priorities that will be sent to the Navy shortly, three sources confirmed. It would be the second such letter in the past 12 months.

In December 2015, Navy Times sister publication Defense News reported that Carter had directed the Navy to cut the overall buy of the littoral combat ship from 52 to 40 and to pick just one ship variant — the current program produces both a trimaran version manufactured in Alabama and a mono-hull version built in Wisconsin.

The deadline for submitting budgets to OSD is Thursday, the senior defense official said, adding that the Navy's will not incorporate the cuts. Ultimately that means that Carter's budget wonks will have to do the cutting themselves and the Navy may not like what they decide to cut, said Bryan Clark, a retired submarine officer and analyst with the Center for Strategic and Budgetary Assessments.

But the standoff between Mabus and Carter is emblematic of the Defense Departments struggle to come to terms with the budget constraints imposed by the 2011 cuts.

"The SECNAV's decision is emblematic of the challenge the Navy faced since the BCA was enacted in 2011,"  Clark said. "Operational demands continue to grow while the fleet remains the same size or shrinks. Ships and their crews don't have time to train and maintain their ships, and they are increasingly reliant on supplemental funding which cannot be planned for in advance.

"SECNAV is essentially drawing a line in the sand that the navy will need to reduce its OPTEMPO and put resources toward capacity, instead of just working the fleet harder to support overseas operations."