Despite the fact that many folks are focused on the upcoming release of the President’s Budget Request for Fiscal Year 2016, there is value in continuing to delve into the Defense-Wide portion of the recently passed Omnibus budget for 2015. Eight months remain in FY 2015, a span of time over which a great deal can change, and in which a lot of money will be spent. This said, I’ll try to whet appetites for the coming fiscal year, by offering a few expectations for the Defense-Wide portion of the FY 2016 budget.
A High-Level Look at FY 2015
Deltek’s high-level look at the FY 2015 Omnibus revealed that total funding for DoD is set at $553.9 billion ($490.2 billion in base budget, $63.7 billion for Overseas Contingency Operations (OCO)). Of the base budget, funding for Defense-Wide programs equals $52.4 billion. This total represents a slight drop from the funding received in FY 2014, but an increase from the funding levels requested in the President’s Budget for FY 2015. Digging into the funding by area in the base budget reveals relative stability in the three largest parts of the base budget – operations and maintenance, procurement, and Research, Development, Testing, and Evaluation.
Operations & Maintenance
Taking a step back now to O&M funding for FY 2015, one thing that caught my eye is a dramatic reduction in funding for acquisition workforce development from $213 million to $83 million. The DoD is in the throes of reforming its IT acquisition practices, including an attempt to carry out smaller procurements consistent with an agile acquisition approach. Having properly trained personnel is critical to the success of this endeavor. So, cutting funding for workforce development implies that either Congress believes the DoD’s acquisition workforce is sufficiently trained for the demands placed upon it, or that the pace of Defense technology procurement will be dropping to the point that the current acquisition workforce will be able to handle it. Does anyone in industry believe that either of these scenarios is realistic?
Most of the other items under O&M also suffered reductions. Here are a few of the most significant:
- Joint Chiefs of Staff - $440 million vs. $462 million requested
- Special Operations Command - $4.55 billion vs. $4.76 billion requested. Almost $25 million of this cut comes to the budgets of prominent SOC IT programs, including $9 million less for C4IAS, $9.1 million less for HQ C4 SITEC, $4 million less for the SOF deployable nodes program, and $2.5 million less for SOF tactical communications.
- Washington Headquarters Services - $592.5 million vs. $611 million requested
- All non-Military Intelligence Programs, non-cyber IT programs had their funding cut by $46 million
There are also a couple of additions:
- Defense Logistics Agency - $385.4 million vs. $381.5 million requested, including the addition of $12 million for DLA’s Procurement Technical Assistance program.
- $10 million for insider threat detection enhancements.
There aren’t many changes in procurement funding at the Defense Agencies as practically all are fully funded. The one item worth noting is a $23.4 million investment in major IT equipment at the National Security Agency. The NSA had originally requested $3.4 million and was given an additional $20 million.
Research, Development, Test, and Evaluation
Moving now to RDT&E, there are a number of funding changes to list. First, let’s examine the notable reductions:
- Information and Communications Technology - $324.4 million vs. $334.4 million requested
- Electronics Technology - $169.2 million vs. $179.2 million requested
- SOF Technology Development - $36.7 million vs. $39.7 million requested
- C3 Systems - $239.3 million vs. $243.3 million requested
- Sensor Technology - $302.8 million vs. $312.8 million requested
Balancing these are a number of notable funding increases:
- Defense Research Sciences - $332 million vs. $312 million requested
- Combatting Terrorism Technology Support - $94.7 million vs. $69.7 million requested
- Defense Rapid Innovation Program - $225 million for a brand new program
- Network Centric Warfare Technology - $380.4 million vs. $367 requested
- Defense Technology Analysis - $22.1 million vs. $12.1 requested
Lastly, funding for the Defense Health Agency contains a couple items of note.
- First, funding for Base Operations and Communications received $1.83 billion vs. $1.7 billion requested. This funding includes $50 million apiece for Facilities Sustainment, Restoration, and Modernization of Air Force, Army, and Navy medical facilities. The DHA is undergoing a major IT infrastructure consolidation effort and much of this funding will go to continuing that work.
- Second, the Integrated Electronic Health Program received $9.2 million, the amount requested in the President’s Budget, to continue the procurement process.
What to Expect for FY 2016
Given the stability in these portions of the budget over the last two years, what should industry expect for FY 2016? Basically, more of the same. When the Budget Control Act was passed in 2011 it set spending caps that bottomed out in FYs 2014 and 2015, respectively. FY 2016 was projected to be the year when budget caps began creeping up once again. By all indications, this expectation remains intact. Both the White House and the Joint Chiefs of Staff have expressed expectations that the DoD’s base budget request will be as much as $60 billion higher in FY 2016 than it was in FY 2015. Even if this total is an overestimate, chances seem good that Congress will approve a base Defense budget higher than the $490.2 billion approved for FY 2015. In this case, the Defense-Wide portion of the DoD’s base budget can be expected to come in at levels consistent with recent years – so, around $52 billion total for O&M, Procurement, and RDT&E.