Navigating the DoD Acquisition Budget During Uncertain Times

 

Massive federal deficits, exacerbated by the COVID-19 crisis, have raised serious questions about the future of U.S. defense spending.  Even before the pandemic hit the U.S., the Pentagon’s $705.4 billion budget request was already projecting zero real annual growth over the next five years – far shy of the 3-5% real growth desired by military leaders.  The government now faces a stalled economy and a 2020 shortfall that could surpass $4 trillion.

The debate is already underway about whether to slash the defense budget to offset government shortfalls or to shield the Pentagon’s coffers in the face of a rapidly changing global security environment.  For years, Forecast International has warned that the impending end of sequestration budget caps would not result in a new spending surge for the Department of Defense.  That outlook is certainly panning out.  Flat budgets are essentially a best-case scenario at this point, but the Pentagon could actually see a reduction in buying power over the coming years.  However, the full extent of the damage may be delayed as Washington attempts to shield the defense industrial base in the near-term.

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Sample data pull showing Air Force program changes in the FY21 budget request

The Pentagon has already taken the approach of trying to divest legacy systems in order to free up funding for new advanced weapons geared toward great power competition – such as hypersonics, artificial intelligence, and robotic vehicles – but Congressional resistance to retiring gear will make it impossible for the DoD to fully adopt this strategy.   The end result will be a messy trade-off where some of these high-end projects are scaled back or cancelled due to budget pressure.

The Army’s key programs are long-range precision fires, Next Generation Combat Vehicles, Future Vertical Lift, network improvements, air and missile defense, and soldier lethality.  The service has particularly struggled in recent years with rotorcraft development and fielding a Bradley replacement, and the current environment puts even more pressure on planners to get things right this time around.

The Navy continues its push for a 355-ship fleet, but the latest budget funded only eight battle force ships.  The Navy wants funding to add a tenth Virginia class submarine to its latest multiyear buy, and the service continues to worry about how the staggering cost of the Columbia class submarine program will impact future shipbuilding budgets.  For the Air Force, budget pressure could affect procurement rates for aircraft like the F-35, T-7A trainer, or the B-21 bomber, and the service continues to iron out issues with the critical KC-46A tanker.

horizontal bar chart showing defense spending on various markets
Use filters to curate custom funding projections by market segment

Forecast International’s U.S. Defense Budget Forecast helps navigate this complex landscape by putting critical budget data at your fingertips.  The U.S. Defense Budget Forecast is an online database that provides fast and easy access to data on the 2,000+ line items in the Pentagon’s procurement and RDT&E accounts. The database provides an array of comparative analytical tools capable of identifying winning and losing programs in every budget request, allowing clients to identify burgeoning opportunities and see program changes that will impact their own strategic planning efforts.

FI U.S. Defense Budget database user portal.

Users also gain access to the congressional budget tracker, which follows each acquisition program through the entire congressional markup process. It is particularly important in uncertain times like these to keep a watchful eye on Congress, as its decision-making throughout the markup process sheds light on the framework of the final defense appropriations bill each year. In addition to the in-depth data features, the product also offers written analysis of budget requests, congressional markups, and broader defense spending trends.

In the weeks and months ahead, accurate and reliable budget data and market forecasts will be more critical than ever to achieving success. At this moment of global uncertainty Forecast International is committed to ensuring you have the market intelligence you need to navigate the challenging road forward.

About Forecast International

For over 45 years, Forecast International intelligence reports have been the aerospace and defense industry standard for accurate research, analysis, and projections. Our experienced analysts compile, evaluate, and present accurate data for decision makers. FI's market research reports offer concise analysis of individual programs and identify market opportunities. Each report includes a program overview, detailed statistics, recent developments and a competitive analysis, culminating in production forecasts spanning 10 or 15 years. Let our market intelligence reports be a key part of reducing uncertainties and mastering your specific market and its growth potential. Find out more at www.forecastinternational.com

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