Navy FY 2017 Discretionary and IT Budget Request Snapshot

Total Discretionary Funding

The FY 2017 federal budget provides the Navy with $155.4B in base discretionary funding, a decrease of $3.95B (-2.5%) from the FY 2016 enacted level, making Navy the DoD component that is essentially taking the base budget hit for FY 2017. (Army sees a $$262M cut, while the Air Force and Defense Agencies see increases of $5.4B and $1.1B respectively.) The Navy budget also includes $9.4B in Overseas Contingency Operations (OCO) funding, a $27.2M increase (+0.3%) from FY 2016.

Discretionary funding highlights include:

• $44.0B in in base funding for Procurement, down $3.8B (-8%) from FY 2016 enacted level of $47.8B.
• $46.9B in base funding for Operations and Maintenance (O&M), an increase of $764M (+1.7%) from the FY 2016 enacted level of $46.1B.
• $17.3B in base funding for Research, Development, Test, & Evaluation (RDT&E), down $835M (-4.6%) from the FY 2016 enacted level of $18.1B.

Navy Total IT and New Development Budgets

The Navy and Marine Corps is requesting a combined $6.5B for IT in FY 2017 IT, a 0.4% decrease of -$25.6M from the FY 2016 enacted level, but still 7.1% above the FY 2015 level of $6.1B. The $25.6M reduction from FY 2016 to FY 2017 is a much smaller cut than the overall base budget. (See table below.)

Further, Navy’s IT Development, Modernization, and Enhancement (DME) funding in FY 2017 decreases $112M, or -12.2%, from FY 2016, and is a decrease of $103M, or 11.3%, from FY 2015. Over the last several budget cycles, the proportion of total Navy IT dollars that have been allocated to DME funds has consistently fallen, which makes Navy stand out among the four defense components which show more variance year to year.

Noteworthy IT Programs

Looking further into the Navy’s IT budget investments and initiatives provides some vision into their current priorities and future direction. Here are a few initiatives that stand out among others due to relative size, budget growth, and/or proportion of new development spending.

IT funding highlights include:

• Next Generation Enterprise Network (NGEN) – Provides secure net-centric data and services to Navy/Marine personnel. At $1.3B this continues to be the single largest Navy IT investments for FY 2017. While it receives a 4.9% decrease from FY 2016 (when it received a 26% bump) the FY 2017 level is still 20% higher than the FY 2015 level. The funding continues to be nearly all O&M, with 0.1% of funding for DME.
• Consolidated Afloat Network Enterprise Services – CANES is an enterprise afloat system to provide management services, enterprise services such as e-mail services, directory services, information repository service, web services, etc. The second largest Navy IT program at $314.8M, it sees a budget reduction of $66M (-14%) from FY 2016. However, CANES has the highest amount of developmental funding at $234.4M, or 75% of the total FY 2017 budget.
  
• CFFC Base-Level Computing Capabilities – CFFC Base-Level Computing Capabilities contains funding for civilian and military labor supporting primarily the Navy Information Dominance Forces and Fleet Cyber Command. As the third largest IT line item for FY 2017, the investment is one of the few top 10 IT budget lines receiving an increase this year, +$8M (+5%) from FY 2016.
• Common Aviation Command and Control System Increment 1 – CAC2S provides a complete modernization replacement for the command and control (C2) equipment of the Marine Air Command and Control System (MACCS) which is nearing the end of its service life. Receiving $83.8M for FY 2017, this initiative sees a $32M (+63%) increase from FY 2016, giving it the second largest dollar increase in overall budget across the Navy. $11.9M (14%) of this funding is for new development.
• Global Combat Support System-Marine Corps Logistics Chain Management Increment 1       GCSS-MC is an enterprise, integrated, web-based computer system designed to enable MAGTF CSS functions and support MAGTF and Combatant Commander/Joint Task Force combat support information requirements. The investment receives a $7M (+10%) increase from FY 2016 to reach $78.7M and the $9M (12%) in new DME funding makes it one of the highest net DME winners at Navy this cycle.
• Network On The Move – NOTM will leverage equipment solutions common to the Mobile Modular Command and Control (M2C2) fielded solution and the COBRA3 prototype enhanced with FMV receive capabilities. Receiving $46.6M (+$44M) in total funding and $9M in new DME funding for FY 2017 places this investment among the largest IT budget winners for both total budget and DME dollar growth at Navy for FY 2017.

After experiencing what appears to be budget relief in FY 2016 for both its total base discretionary and IT budgets, the Navy’s discretionary and IT budgets for FY 2017 have flattened and/or receded, reflecting changing DoD priorities and dynamics. The ongoing shift in Navy IT funds to predominantly O&M spending continues to reflect efforts to economize and scrutinize new IT investments among competing priorities and defense-wide IT strategy. Companies looking to introduce new technologies or win new business may be challenged to show how these fit within an O&M-dominated mentality.