The Pentagon on Tuesday unveiled the $582.7 billion budget request for fiscal year 2017, a sum that conforms to the Bipartisan Budget Agreement and includes $523.9 billion in base spending and $58.8 billion in the Overseas Contingency Operations (OCO) account that pays for wartime expenses.
Although the budget deal reached by the Obama administration and Congress last year provided some relief, Defense Department officials charged with creating the budget said they had been planning for a base budget that was $22 billion more than the number set by the agreement.
That admission could fuel defense hawks’ claims that the budget submission does not adequately reflect the needs of the Defense Department, especially as the military accelerates operations meant to destroy ISIL and fortify NATO countries against a resurgent Russia.
House Armed Services Committee Chairman Mac Thornberry (R-Texas) has been clear that he interpreted the budget agreement as the floor, not a ceiling, for the defense budget, and that the OCO request should be increased to reflect changing operational needs. Any additional boosts to overseas operations that were not matched by additional funds to the OCO account would likely cannibalize base expenses, he said in a Feb. 8 letter to House Budget Committee chairman Tom Price (R-Ga.).
During a briefing on the Pentagon Tuesday afternoon, Deputy Defense Secretary Robert Work took those criticisms head on, saying that the $58.8 billion OCO request actually exceeded the military’s need for contingency funds.
“The request for $58.8 billion, let me emphasize was built from the bottom up” and reflects all of the funded needing for operations in Afghanistan, Iraq and Syria, he said. “This OCO budget provides us everything we need, we believe right now, to execute our global operations. And it left about $5 billion to cover base needs.”
The extra $5 billion in OCO helped bridge the gap between the expected 2017 base budget and the amount allotted in the Bipartisan Budget Act, said Defense Department Comptroller Mike McCord. The Pentagon also was able to squeak out about $5 billion more in savings from lower-than-estimated fuel prices and inflation.
But to make up the other $11.7 billion, the department made cuts to major weapons programs, slashing nine AH-64 Apache helicopters, 24 UH-60 Black Hawk helicopters, five F-35A Joint Strike Fighters, two Navy V-22 Ospreys, three Air Force C-130J aircraft, four service life extensions for the Navy’s Landing Craft Air Cushion and 77 Joint Light Tactical Vehicles for the Marine Corps from its plans, he said.
“Joint Strike Fighter, this is one [program] where we would have loved to have more airplanes. This is actually fewer than were funded last year and fewer than we had planned,” he said. “But taking $17 billion out in six weeks is a challenge.”
The slower-than-expected F-35 procurement is not expected to cause a significant increase in unit cost, but “it’s unclear that we will be able to get this program back to the ramps that we had hoped for previously,” he added.
After the briefing, Senate Armed Services Committee Chairman John McCain (R-Ariz.) seized on the $17 billion figure.
“It is already clear that this request is inadequate to address the national security threats we face and the growing demands they impose on our men and women in uniform,” he said in a statement. “By strictly adhering to the minimum spending level allowed by last year’s Bipartisan Budget Act, the President’s request would leave the Department of Defense with at least $17 billion less than what it said it needed and planned for this year.”
On Tuesday, Thornberry reiterated that he would likely press for additional funding.
“As with all administration budget requests, Congress will consider the individual proposals, but make its own independent judgment on what is needed to defend the country,” he said in a statement.
Cuts to Acquisition Overall, But Some Key Investments
The military’s investment in acquisition decreased by $4.1 billion—from $188 billion in the 2016 enacted budget to $183.9 billion the 2017 request, according to budget documents. The department plans to spend $112.1 billion for procurement and $71.8 billion on research, development, test and evaluation (RDT&E).
In procurement, aircraft and related systems took the biggest hit, falling from $50.6 billion in 2016 to $45.3 billion in 2017. Missile defense programs, mission support, and shipbuilding and maritime systems endured cuts of about half a billion dollars apiece, while funding for ground systems and space programs remained roughly the same. The missiles and munitions portfolio, however, was expanded by about $1.2 billion this year.
The RDT&E budget was increased by $2.8 billion compared to the enacted 2016 budget.
Science and technology funding took a slight hit, decreasing from $13 billion enacted in the 2016 budget to a request of $12.5 billion across the services and defense agencies. The biggest chunk of the S&T account amounting about $902 million will go to the Strategic Capabilities Office that Defense Secretary Ashton Carter plugged in his budget preview speech last week. The SCO develops game-changing applications for existing technologies, such as using developing guidance systems for munitions using smartphone cameras or transforming a legacy aircraft into an “arsenal plane” tricked out with as many bombs and missiles as it can hold (Defense Daily, Feb. 2).
The S&T account also contained billions of dollars in funding to enable the department to develop and quickly access emerging technologies, further new manufacturing processes and expand the companies with which it does business.
It includes $35 million to further the Pentagon’s yet to be identified Third Offset Strategy that will identify the technologies the department needs to retain its edge. The department requested $45 million for the Defense Innovation Unit-Experimental effort to link the department with cutting edge businesses in Silicon Valley and elsewhere, and $40 million to stand up an In-Q-Tel pilot program that would connect it with startup companies tasked with delivering a product on an accelerated timeline. The budget also provides $137 million to support of six Manufacturing Initiative Institutes for processes such as 3D printing and to stand up of two yet-to-be-disclosed institutes.
The budget contains $6.7 billion for defensive and offensive cyber capabilities, operations and strategy.
Other increases in the budget were driven by current threats like the Islamic State terrorist group and Russian aggression in Europe. The department plans to boost its funding for the fight against ISIL by about 50 percent in 2017, resulting in a $7.5 billion request.
It’s also wants $3.4 billion for the European Reassurance Initiative, a figure that is more than quadruple last year’s $789 million request. Those funds will pay for additional prepositioned equipment in Europe including another Army armored brigade, training and exercises with partner nations and the presence of three Army brigade combat teams in Eastern Europe.
“We’re going to move to a so-called heel-to-toe basis where we’re over there constantly on the ground exercising,” McCord. “That’s a doubling of the operating budget part of ERI from what we had last year. On top of that, we’re going to add the prepositioning aspect.”
Although the Army will be doing more in Eastern Europe, the budget continues the reduction of Army end strength. The 2017 budget would fund an active-duty Army of 460,000 soldiers, 198,000 soldiers in the Army reserves and an Army National Guard of 335,000 troops. The 2016 budget request funded 475,000 active duty soldiers, 342,000 Guardsmen and 198,000 Army reserve troops, comparatively.
Active duty Navy forces are also decreasing slightly from 327,300 to 322,900 sailors. Meanwhile, Marine Corps and Air Force end strength will hold steady at 182,000 active-duty Marines and 317 active-duty airmen.
Future Bow Wave
The Bipartisan Budget Deal has provided the Defense Department much needed stability and relief from mandatory spending caps imposed by the Budget Control Act of 2011, but the next administration will have to manage a “bow wave” in which the department intends to greatly increase its investments even as BCA caps persist. Work warned that Congress and the next president will face fiscal risk in the coming years.
“We really like the budget deal. We applaud Congress for being able to provide us with two years of stability, but in 2018 we are planning on going up again significantly above the sequestration level caps,” Work said. “If you take all the money between [fiscal years] 18 and 21, that’s a $100 billion that we are counting on that we don’t know for certain that we don’t know we’re going to get.”
Starting in 2021, the department will embark on a major effort to recapitalize its nuclear triad, including buying new bombers, ballistic missile submarines and ICBMs. That will cost about $18 billion per year until 2035, Work said.
“If that comes out of our conventional forces, that will be very, very, very problematic for us.”