It might be a known bug. But it is quite easy to cheat and create impossible challenges : Create a legal deployment for a mission, then change the ship design to something more expensive. An extreme example would be to change cheap fighters to heavy cruisers.
That’s what I made here (changed fighters with frigates). That’s the defendin Siruis mission. Normally the budget is 20 000 credit max. The ennemy fleet costs 29 000 ! (Here it is the same on both sides) :
An easy way to solve that issue would be to disable the “challenge!” button in the same way as the “fight” if the fleet is illegal.
An other funny concequence, is that it is possible to have squadrow of frigates with the “stick together” order.