Budget highlights; $23B for Intel; Export deals get OK, and more...

What ever happened to the “masterpiece” budget promised by then-Deputy Defense Secretary Patrick Shanahan in 2017? That was an eternity ago, particularly in an era where the news cycle mimics a gnat’s attention span.

Three full days since the Pentagon sent its fiscal 2021 budget request to Congress, it’s become abundantly clear that the military cannot achieve the larger force numbers championed by the Trump administration. In some areas, the military will be shrinking, buying fewer armored vehicles, shedding hundreds of aircraft, and even retiring less than 20-year-old ships.

Here’s a top-level breakdown of the administration’s $740.5 billion fiscal 2021 defense budget proposal, which Pentagon officials say “ supports the irreversible implementation” of the 2018 National Defense Strategy, the one that predicts great-power competition with Russia and China:

  • Pentagon Base Budget: $636.4 billion.
  • Overseas Contingency Operations (for actual war-related operations): $53 billion.
  • Overseas Contingency Operations (that should be in the base budget): $16 billion.
  • Energy Department & other agencies (largely nuclear-weapons related): $35.1 billion.

“Due to limited topline growth and rising military personnel costs, the services, particularly the Air Force and the Navy, have had to make several investment decisions to offset these increases that will certainly face opposition in Congress,” Avascent’s Matt Vallone wrote in a note Thursday morning. 

“By cutting current capabilities for additional funding in development programs, the DoD is effectively gambling on being able to transition these programs quickly and effectively from development into acquisition, something that has proven troublesome in the past,” Vallone wrote. “The ability of the department to effectively execute the [National Defense Strategy] will largely depend on its ability to navigate these two potential obstacles successfully.”

The Navy insists it’s still trying to grow its fleet to President Trump’s 355 ship goal even though its top leaders are practically screaming it’s impossible. The fiscal 2021 budget proposal would grow the fleet to just 305 ships by 2025, even though Pentagon leaders have talked about having 355 by 2030.

“[T]here are a number of different options that we could take as we look to the future on how we might achieve a higher number, but given the flat top line in our projections 305 is what we're going to end up,” Rear Adm. Randy Crites, Navy deputy assistant secretary for budget, said Monday. 

Why?

“We dug a hole that was a deeper hole than we thought in terms of our readiness,” Crites said. “Ship maintenance, it's taken us a while to try to dig out of that. And it's really what we can afford to do.” 

The Air Force is much in the same boat with its 386 squadron goal, which its top uniformed budget official conceded is essentially a pipe dream.

“The reality is that's an unconstrained answer,” Maj. Gen. John Pletcher, Air Force deputy assistant secretary for budget, said of the 386-squadron goal when asked about it on Monday.

“We've got to build a budget...inside the top line that the department has available,” Pletcher continued. “386 is still a valid requirement, it's still where we want to go. This budget advances some of the capabilities we need and hopefully in the end we can continue to grow the capacity we need towards that Air Force we need, as well.”

The Army vowed to kill or delay dozens of projects to fund high-priority projects in fiscal 2021. 

“It was through this critical and laser-focused analysis of the equipping portfolio, using the lens of the deep dives that resulted in eliminating 41 programs and reducing or delaying 39 programs, not essential to supporting the [National Defense Strategy] or the current fight, which freed up funding for modernization,” Maj. Gen. Paul Chamberlain, Army budget director, said on Monday.

Those cuts totaled $2.4 billion in fiscal 2021 or a $1.4 billion “reform savings credit,” according to Army budget documents. The Army on Thursday provided lists of the “Top 10” programs killed or cut. The cuts totaled $315 million and the reductions totaled $816 million.

So far, the Army has not released the full list of the additional 60 programs impacted by the cuts. Chamberlain, at a briefing with reporters on Tuesday said Congress would get the full list.

(We’ve asked the Army for the full list; we’ll let you know if we receive it.)

“Nothing is being done under the carpet,” Chamberlain said. “Congress has access to the list. It’s certainly not done without transparency to Congress.”

Just the taxpayers.

Welcome

You’ve reached the Defense One Global Business Brief by Marcus Weisgerber. With every passing budget day, I grow more cynical. Just gonna leave it at that. Send along your tips and feedback to mweisgerber@defenseone.com or @MarcusReports. Check out the Global Business Brief archive here, and tell your friends to subscribe!


From Defense One

DOD's 2021 Budget Would Trim Arsenal, Shift Funds To Arms Development // Marcus Weisgerber

Some experts say the budget proposal assumes a worrying amount of near-term risk.

100 US Soldiers to Transfer into Space Force in 2021 // Marcus Weisgerber

The Army is the first branch outside the Air Force to announce initial plans regarding the new branch of service.

What Do You Call the Troops of the US Space Force? // Marcus Weisgerber

The Pentagon wants your input — and space cadets and spacemen are not under consideration.


Some Budget Highlights

The $106.6 billion requested for research, development, test and evaluation is the “largest RDT&E request ever,” according to Elaine McCusker, the Pentagon’s acting comptroller and CFO.

Here’s the plan for the next five years of defense spending, better known in budget circles as the future years defense program:

  • FY21: $705 billion (Down 1.1 percent from $713 billion in fiscal 2020)
  • FY22: $722 billion (Up 2.4 percent)
  • FY23: $737 billion (Up 2.1 percent)
  • FY24: $753 billion (Up 2.2 percent)
  • FY25: $768 billion (Up 2 percent)

A few programmatic highlights: The Army is once again slowing buys of the Oshkosh Joint Light Tactical Vehicle and is now planning to compete future buys of the Humvee replacement. Here’s what the Army’s budget document say is planned:

“Current contract options may be exercised through 30 November 2023 assuming contractual quantity headspace is still available. Current funding indicates headspace quantity of 16,901 may be achieved in FY 2021, with competitive follow on contract award anticipated in FY 2022. A split procurement will occur between the existing Oshkosh contract and the new competitively awarded contract based on the approved acquisition strategy. The Program Office continues to gather insight from industry partners to better understand their position to ensure strong competition for the follow on contract.”

What does industry think about the budget request? “We’re very happy to see that … essentially all of our programs were very well funded in the fiscal year ‘21 budget moving out,” Raytheon CEO Tom Kennedy said Thursday at a Cowen conference in New York. The CEO, whose company is slated to merge with United Technologies in a few months, expects the Pentagon to start shifting the money being spent on research and development into procurement as technologies mature over the next five years. “They’re going to want to take these new capabilities into production,” Kennedy said. “We think the budget is going to be solid here for definitely several more years through the FYDP moving out,” he said. “But there will be a turn in the RDT&E into procurement dollars which is good for us procurement is higher margins for our business moving forward.”

Pentagon Requests $23.1B For Intel

That money would go toward military intelligence programs. It was included as part of its fiscal 2021 budget request sent to Capitol Hill on Monday. Since it’s classified, the details of how that money would be spent is not publicly released. So how does it stack up historically? Well, we know the Pentagon requested $22.95 billion for military intelligence programs in fiscal 2020. We won’t find out how much of that request Congress appropriated until the fiscal year ends on Sept. 30. Typically the Pentagon announced the appropriated figure for the prior fiscal year in October. Congress approved $21.5 billion for military intel program in fiscal 2019.

Pratt & Whitney Protests Using GE Engines on New F-15s

The Connecticut company filed the protest with the Government Accountability Office on Feb. 7 (H/T to Flight’s Steve Trimble for noticing this). So why does this matter? The Air Force announced in January that it would use GE’s F110 engine on its new F-15EX fighters that will replace its old F-15C Eagles. GE’s F110 powers F-15s flown by South Korea, Singapore and Saudi Arabia. However U.S. Air Force F-15s are powered by Pratt & Whitney engines.

L3Harris Wins USAF AI Contract

The “multimillion-dollar” deal is for “a software platform that will make it easier for analysts to use artificial intelligence to identify objects in large data sets.” Flashback to when the Pentagon launched Project Maven, it’s initial trials using AI to identify objects in drone video. Back then in 2017, Pentagon officials talked about needing to train the algorithms so they could learn. This new contract announced this week is for training algorithms. “[I]n order to train these algorithms, real images are often unavailable because they are either rare or do not exist,” L3Harris said in a Feb. 12 statement. “The L3Harris tool creates sample images used to train search algorithms to identify hard-to-find objects in the data, which will help make it easier for the military and intelligence community to adopt artificial intelligence.”

US OKs Major Weapons Deals to India, Australia

State Department says India Can Buy Missile Defenses. The potential $1.9 billion deal includes Sentinel radars, AMRAAM and Stinger missiles, launchers and lots of other equipment. A large part of the Integrated Air Defense Weapon System sale is the NASAMS air and missile defense system. It’s the same defense system that defends Washington, DC. Raytheon and Norway’s Kongsberg are the main contractors.

US: Australia can buy stealthy anti-ship missile. The U.S. State Department OKed the nearly $1 billion deal for up to 200 Lockheed Martin-made Long-Range Anti-Ship Missiles on Feb. 7. If the sale goes through, Australia would become the first ally to buy the U.S. cruise missile. “Australia is one of our most important allies in the Western Pacific, the Pentagon’s Defense Security Cooperation Agency said in a statement. “The strategic location of this political and economic power contributes significantly to ensuring peace and economic stability in the region.” That’s another way of saying that Australian having the missile would serve as a deterrent against China naval aggression in the Pacific.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.