Navy 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 trickling out their budget details over the following weeks. The FY 2024 budget places the Department of the Navy near the top of DoD budget pecking order.

Navy FY 2024 Discretionary Budget Request

The proposed FY 2024 budget provides $255.8B in total discretionary base budget authority to the Department of the Navy. This includes $53.2B for the U.S. Marine Corps (USMC). The $255.8B in discretionary base funding is a $12.8B (+5.3%) increase over the FY 2023 estimate of $243.0B and $35.7B (+16%) above the FY 2022 final budget of $220.1B. The three-year budget trend at the Navy continues to pace upward, fueled by readiness priorities and global defense concerns, although planned growth for FY 2024 is slower than the increases Navy received for the current fiscal year. (See chart below.)

Operations and Maintenance (O&M)

The Navy’s Operations and Maintenance (O&M) funding provides the essential resources that Navy components need to maintain readiness and perform ongoing missions. Overall, the Navy requested $84.6B for O&M, 4% more than the enacted FY 2023 level. Among the four major categories of Navy O&M, only the Marine Corps Reserves is scheduled for a budget decrease in FY 2024, declining $18M from $347M to $329M.

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

Navy

• Ship Depot Maintenance, $11.1B (+8%)
• Mission and Other Flight Operations, $7.9B (-5%)
• Mission and Other Ship Operations, $7.0B (-3%)

Navy Reserve

• Mission and Other Flight Operations, $731M (+2%)
• Combat Support Forces, $187M (+40%)
• Aircraft Depot Maintenance, $168M (+4%)

Marine Corps

• Base Operating Support, $3.1B (+14%)
• Field Logistics, $1.9B (+13%)
• Operational Forces, $1.8B (-3%)

Marine Corps Reserve

• Operating Forces, $128M (-12%)
• Base Operating Support, $121M (+1%)
• Sustainment, Restoration and Modernization, $47M (-8%)

In addition to the above funding categories, the Navy O&M budget includes $335M for Environmental Restoration, Navy; $9M for Lease of Department of Defense Real Property; and $251K for Disposal of Department of Defense Real Property.

Procurement

Shifting focus to the funding requested for new acquisitions, the Navy has requested a total of $87.4B for FY 2024, $7.2B (+9%) above the FY 2023 funded level, which itself is $10.4B (15%) above what Navy spent in FY 2022. This points to a $17.7B (25%) top-line increase from FY 2022 to FY 2024.

The Navy breaks down their Procurement request by the type of items or services being acquired. Among the categories above, only Aircraft procurement is slated for a decrease in FY 2024. Each of the other categories show growth from FY 2023 and most show yearly growth since FY 2022.

Shipbuilding and Conversion, followed by Aircraft, dominate Navy procurement. However, the next largest category – Other – shows the largest proportional increase for FY 2024 among the three top categories, approaching 20% growth. The Other category 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 Navy-wide Other procurement category.

• Reactor Plant Equipment, $2.7B (+67%)
• Supply Support Equipment, $660M (+8%)
• Spares and Repair Parts, $646MB (+11%)
• Other Shipboard Equipment, $629MB (+-16%)
• Spares and Repair Parts, Virginia Class (VACL), $470M (new)

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

Finally, the Navy’s requested RDT&E funding for FY 2024 is a modest 3% increase over the current fiscal year. However, this sustains and builds upon a $4B (+18%) increase in FY 2023 from the $22B Navy spent in FY 2022.

These are the top five Navy RDT&E programs by budget request for FY 2024. Navy’s need for Advanced Component Development and Prototypes account for more than 35% of their RDT&E funding request.

• Link Plumeria, $2.1B (+102%)
• Classified Programs, $2.0B (-16%)
• Pilot Fish, $916 (+37%)
• Conventional Prompt Strike (CPS), $901M (-27%)
• Chalk Coral, $688M (-9%)

Conclusion

Overall, the Navy is seeking the highest percentage growth in FY 2024 base budget compared to the Air Force, Army and Defense Agencies in aggregate. The proposal is now in the hands of congressional appropriators to determine its final disposition. While most of the funding will go toward sustaining existing military readiness capacity, there are pockets of technology growth opportunities within the Procurement and RDT&E areas as well as IT sustainment work within O&M.