The Pentagon after releasing its fiscal year 2017 budget on Feb. 9 will find itself needing to come up with $22 billion to cover the difference between its request and the projection laid out for 2017 in the current fiscal year’s budget.
Early estimates put the fiscal 2017 request at around $524 billion, which is almost in line with the Budget Control Act (BCA) funding caps placed on the government by a deal that limited discretionary spending but saved the Defense Department from sequestration-level cuts.
“It’s not necessarily going to be smooth sailing in fiscal ’17 even though the budget is likely to come in right at the cap,” said Katherine Blakeley, a research fellow at the Center for Strategic and Budgetary Assessments, during a press conference Monday at the think tank’s Washington, D.C., office.
That will put the fiscal 2017 budget at about $524.2 billion, which is about $22 billion less than was called for in last year’s future-years defense plan projection. The FYDP for the current fiscal year called for $547 billion for fiscal 2017. The shortfall between the BCA caps and the projected base budget widens to $104 billion over the entire FYDP.
“Over the long term, the Pentagon is still hoping for more money, hoping for sequester relief in the out years,” Blakeley said. “But the plans are going to be a lot more difficult to execute if they don’t get it. This is a continuation of a routine where you push the spending to the out years…hope for some miracles, maybe get a couple minor miracles, but you are still stacking the deck up to the BCA caps and putting off a lot of your major spending.”
The Pentagon is in a situation where it must find $22 billion to cover the gap between what it wants and what it will get.
Most of the gap between the FYPD plans and the fiscal 2017 budget will come from research, development, technology and engineering programs and procurement accounts, Blakeley said. Even once-untouchable sacred-cow programs are vulnerable, as evidenced by Pentagon chief weapons buyer Frank Kendall’s admission last year that the F-35 Joint Strike Fighter would not be immune to future cuts.
The Air Force especially will likely slow procurement and integration of the F-35, which represents 42 percent of the spending on the service’s top nine acquisition programs. Other important programs like the Long Range Strike Bomber (LRSB) and the Boeing [BA] KC-46 aerial refueling tanker, JSTRS and investments in space and cyber capabilities will take precedence, she said.
“That is a huge amount,” she said. “It has continuing software issues and it already has had its funding and procurement profile flattened. So I’d be looking at the F-35A as the most likely bill payer for the Air Force because that’s where the money is.”
Where the Navy will make up its budget shortfall is more obvious, as the service has very publicly been ordered to reduce the number of Littoral Combat Ships (LCS), now called the future frigate. Rather than 52 LCSs, the Navy will get only 40, will winnow down to one variant in fiscal 2019 and begin to buy one ship per year through the life of the program instead of three. In all, the altered plan should save about $1 billion in fiscal 2017 and $4 billion over the FYDP.
The Navy will focus on buying an as-yet-unspecified number of F/A-18 Super Hornets, which will keep Boeing’s St. Louis factory open beyond the end of the year. The service also plans to buy 10 F-35Cs over the next five years, though exactly when is unknown.
The Virginia-class attack submarine will be kept on track and potentially more of the boats will have the specialized payload modules added.
“We are also going to see them trying as best they can to protect the Ohio replacement class early funding,” Blakeley said.
The Army has only three programs that crack the Defense Department’s top 20 acquisitions efforts. All three are helicopters–MH-60R/S, CH-47F, AH-64E–and all three are on the least expensive end of the spectrum.
“There just is not a lot of money available to cannibalize,” Blakeley said.
Most contentious in debating the Defense Department’s budget as a whole will be the use of overseas contingency operations (OCO) accounts, basically war funding protected from most cuts, to cover base budget shortfalls.
A with the current fiscal year, OCO funding is expected to come in at about $58.8 billion, which includes $49.7 billion for the 9,800 troops still in Afghanistan and funding for the anti-ISIS campaign in Iraq and Syria, European operations to deter Russia and buoy NATO allies and base funding items already shuffled there.
The use of OCO to catch items trimmed from the Pentagon’s base budget has been called “an essential safety valve,” a “budget gimmick” and a “slush fund,” Blakeley pointed out.
“Nobody seems to really like it, but we also can’t seem to really live without it,” she said. “Expect to see a vociferous debate about using OCO to make up some of the deficit between the plans and the budgetary caps this year.”
Between $20 billion and $30 billion already has been moved from the Defense Department’s base budget to OCO to protect it from the budget ax, including about 25 percent of the Navy’s operations and maintenance funds. Last year’s budget congressional budget deal moved about $8 billion into OCO from the department’s base budget, which “undermines resistance to doing it again,” she said.