Air Force and Space Force FY 2024 Budget Outlook

In mid-March the Office of Management and Budget (OMB) released its fiscal year (FY) 2024 budget request, with the Department of Defense (DoD) and military services continuing to release details of their budget proposals over the subsequent weeks. The FY 2024 budget places the Department of the Air Force (DAF) at the top of DoD budget ladder.

Air Force FY 2024 Discretionary Budget Request

The proposed FY 2024 budget provides $259.2B in total discretionary base budget authority to the Department of the Air Force. This includes $30.0B for the U.S. Space Force (USSF). The $259.2B in FY 2024 discretionary base funding is a $12.4B (+5.0%) increase over the FY 2023 estimate of $246.8B and $39.2B (+18%) above the FY 2022 final budget of $220.0B. One element to consider in evaluating the DAF FY24 budget is the $44.2B in “Non-Blue” funding that is included in the Air Force’s budget but is actually pass-through funding spent in other areas and organizations. That amount is also increasing from $43.9B in FY 2023.

The three-year budget trend at the DAF continues its upward pace, fueled by readiness priorities and global defense concerns, although planned 5%growth for FY 2024 is slower than the 12% increase the DAF received for the current 2023 fiscal year. (See chart below.)

Operations and Maintenance (O&M)

The Air Force’s Operations and Maintenance (O&M) funding provides the essential resources that DAF components need to maintain readiness and perform ongoing missions. Overall, the DAF requested $79.5B for O&M, 4% more than the enacted FY 2023 level. Among the four major categories of Air Force O&M, only the Air National Guard proposes a budget decrease in FY 2024, declining $128M from $7.4BM to $7.3B.

Below are the top three programs by dollars for each element of the Air Force’s O&M budget request.

Air Force

• Base Support, $11.6B (+8%)
• Contractor Logistics Support and System Support, $9.5B (+9%)
• Flying Hour Program, $6.7B (+2%)

Air Force Reserve (AFR)

• Primary Combat Forces, $2.0B (+12%)
• Depot Purchase Equipment Maintenance, $648M (+31%)
• Base Support, $544M (+4%)

Air National Guard (ANG)

• Aircraft Operations, $2.5B (-3%)
• Contractor Logistics Support and System Support, $1.3B (-2%)
• Depot Purchase Equipment Maintenance, $1.2B (+3%)

Space Force

• Contractor Logistics and System Support, $1.4B (+2%)
• Space Operations, $867M (+26%)
• Facilities Sustainment, Restoration & Modernization, $679M (+131%)

In addition to the above funding categories, the Air Force O&M budget includes $350M for Environmental Restoration; $7.9M for Lease of Department of Defense Real Property; and $253K for Disposal of Department of Defense Real Property.

Procurement

Moving to focus on the funding requested for new acquisitions, the Air Force has requested a department-wide total of $64.7B for FY 2024, $3.6B (+6%) above the FY 2023 funded level. This comes after a $8.5B (16%) increase in FY 2023 compared to FY 2022. The Space Force accounts for $4.7B of the department-wide $64.7B in Procurement funding.

The Air Force breaks down their Procurement request by the type of items or services being acquired. Among the categories above, the Aircraft, Ammunition and National Guard and Reserve Equipment categories are slated for decreases in FY 2024. Each of the remaining categories show growth from FY 2023 and nearly all the categories show growth compared to FY 2022.

The Other and Aircraft categories clearly dominate DAF procurement, while the next largest category– Missiles – shows the largest proportional increase for FY 2024, more than doubling. The Other category, with 4% growth for FY 2024, consistently includes various technologies, including communications, ISR, electronics, and information technology, among others. Here are the largest five programs by requested FY 2024 funding from the Air Force Other Procurement and Space Force Procurement categories. (The DAF does not break out Space Force procurement at a more granular level.)

Air Force, Other Procurement

• Classified Programs, $25.5B (+2%)
• Special Update Program, $1.0B (+5%)
• Combat Training Ranges, $346M (+149%)
• Engineering and EOD Equipment, $281M (+47%)
• Tactical C-E Equipment, $227M (+38%)

Space Force, Procurement

• National Security Space Launch, $2.1B (+109%)
• Special Space Activities, $841M (-3%)
• Space Development Agency Launch, $529M (-29%)
• Space Mods, $167M (+144%)
• GPS III Space Segment, $122M (+18%)

Research, Development, Test, and Evaluation (RDT&E)

Finally, the Air Force’s total combined RDT&E funding request for FY 2024 is a 6% increase over the current fiscal year, with the Air Force and Space Force seeing 3% and 16% bumps, respectively. These increases build upon the 9% and 44% respective increases the AF and SF received in FY 2023 from the FY 2022 levels.

These are the top five Air Force and Space Force RDT&E programs by budget request for FY 2024. Air Force and Space Force need for Operational System Development activities account for 51% and 39% of their respective RDT&E funding requests.

Air Force

• Classified Programs, $16.8B (-6%)
• Ground Based Strategic Deterrent EMD, $3.7B (+4%)
• Long Range Strike - Bomber, $2.9B (-5%)
• Next Generation Air Dominance, $2.3B (+40%)
• F-35 C2D2, $1.3B (+24%)

Space Force

• Classified Programs, $5.8B (+6%)
• Space Technology Development and Prototyping, $2.0B (+105%)
• Resilient Missile Warning Missile Tracking - Low Earth Orbit (LEO), $1.3B (+61%)
• Next-Gen OPIR -- Polar, $1.0B (+19%)
• Next-Gen OPIR -- GEO, $720M (-58%)

Conclusion

Overall, the Department of the Air Force is seeking the second highest percentage growth rate in FY 2024 base budget among the DoD components, second only to the Navy and well above the effectively flat budgets of the Army and Defense Agencies. The proposal is now working its way through the congressional appropriations process, which will take months to complete. Like the other military services, most DAF funding sustains existing military readiness capacity and capabilities. However, there are areas of technology capability development within the Procurement and RDT&E areas as well as IT sustainment work within O&M that may present growth opportunities for contractor innovation and support.