What military contractors can learn from the Pentagon’s 2016 budget

From the outside, the Pentagon’s budget looks relatively similar that the plan the Defense Department laid out one year ago. But upon closer inspection, President Barack Obama’s budget request gives a glimpse into how the military will look decades from now.

A number of new research-and-development projects could lead to major, multibillion weapon programs down the road. As such, defense firms are paying close attention to these projects.

“This budget does show some priorities,” said Roman Schweizer, an analyst with Guggenheim Securities.

DOD is looking to the latter part of this decade as a time to get back to basics and invest for the future.

Keep reading this article at: http://www.defenseone.com/technology/2015/02/what-military-contractors-can-learn-pentagons-2016-budget/104505

DoD’s FY16 budget could lead to increased contracting activity

The Department of Defense (DoD) will be asking for a budget of $585 billion for fiscal year 2016, according to a draft Pentagon comptroller document obtained by Politico.  This amount represents $38 billion more than the budget which DoD has been operating under as a result of sequestration.

In order for DoD’s budget amount to be approved, Congress will need to agree to suspend or discontinue sequestration.  DoD’s five-year budget plans call for ramping up base defense spending to $570 billion in 2020.

According to the draft budget documents, DoD will request $209.8 billion in funding for operations and maintenance, an increase of $14.5 billion from this fiscal year.  The proposal would also increase procurement spending by $14.1 billion to $107.7 billion, and research and development funding by $6.3 billion to $69.8 billion.

Among the projects included in the Pentagon’s draft FY16 budget are:

  • Three new Littoral Combat Ships (LCS),
  • LCS capabilities improvements,
  • Two Virginia-class attack submarines,
  • Refueling of the USS George Washington aircraft carrier,
  • The Ohio-class replacement nuclear submarine program,
  • The KC-46A tanker program,
  • A new long-range bomber,
  • The MQ-9 Reaper procurement, and
  • 57 F-35 fighter jets.

 

Pentagon seeks $60 billion increase for FY16 budget

As the White House and Pentagon pass drafts of the fiscal 2016 defense budget back and forth before submitting it to Congress early next year, the base budget request possibly could exceed Congressionally-mandated spending caps by as much as $60 billion, according to a former defense official with knowledge of the discussions.

Administration and defense officials have said for months that the 2011 Budget Control Act (BCA), which limits how much the Pentagon can spend, wouldn’t fully constrain the 2016 request. But a source with knowledge of a meeting between President Barack Obama and the Joint Chiefs of Staff said the chiefs have pushed for an increase of $60 billion over the $535 billion cap for defense, with another $10 billion for Department of Energy programs.

While the number might appear high, Pentagon and administration plans to push past the cap are no surprise.

Keep reading this article at: http://www.defensenews.com/article/20141116/DEFREG02/311160020

Explaining the federal budget paralysis

Budget uncertainty is the new norm in the federal sector. With the sequester and government shutdown in recent memory, it has reached the point where the possibility of the next fiscal year starting with a Continuing Resolution of a few months is a relief. Two key questions: Why is this happening in Congress and will the uncertainty ever end?

The most common explanation is to blame a political party or person. This is incomplete. Federal sector managers, executives, and contractors can benefit from looking deeper into Congress and its processes. A better understanding of the dynamics can even improve planning by setting realistic expectations for Congress.

The reality is the federal discretionary budget, which funds the federal government, has become the central battleground for the hyper-partisan warfare in Congress today.

Keep reading this article at: http://www.federaltimes.com/article/20140724/BLG05/307240016/Explaining-budget-paralysis

Pentagon deputy: Defense contracting choices will only get tougher

Sequestration is forcing the Defense Department to “literally build two budgets” and, if the automatic cuts are continued, will damage the quality of U.S. weapons systems and deter innovation, a top Pentagon acquisition official said last Wednesday (Apr. 23, 2014).

Elana Broitman, deputy assistant Defense secretary for manufacturing and industrial base policy, said, “The sequester cuts are tied to no long-term plan, and, though it’s a truism in the marketplace, we are concerned about [having] enough competition with fewer entities around to fund innovation.”

Broitman spoke at a panel discussion at Arlington, Va.,’s Artisphere organized by Bloomberg Government, whose newly released annual study of the 200 top federal contractors noted that Defense Department contract spending is down by 15 percent. “We used to trim things we don’t need,” Broitman said, “now we’re choosing between two good things.” She also cited risks if the U.S. government does not invest in the industrial base and research and development, saying. , “We can no longer guarantee for adversaries and allies that our products are the best.”

A former aide to Sen. Kirsten Gillibrand, D-N.Y., Broitman also expressed regret that Congress has rejected the Obama administration’s request for another round of the Base Closing and Realignment Commission. “There’s only so many costs we can swallow if we want our troops well trained,” she said. “We can’t afford every installation where they may be housed.”

Keep reading this article at: http://www.govexec.com/contracting/2014/04/pentagon-deputy-defense-contracting-choices-will-only-get-tougher/83155/

F-35’s operating cost to decline, says DoD acquisition chief

The Pentagon will decrease its $1.1 trillion estimate for the cost of supporting Lockheed Martin Corp. (LMT)’s F-35 fighter jet over a 55-year lifespan, the top U.S. weapons buyer said.

“It will drop to a number that’s not trivial but is not as much” a reduction “as I would like,” Frank Kendall, the Defense Department’s undersecretary for acquisition, said April 3, 2014 at a Bloomberg Government breakfast in Washington.

While debate over the aircraft, the costliest U.S. weapons system, has focused mostly on the price to develop and build the fighter, Pentagon agencies also have disputed its long-term operating costs, from spare parts to repairs.

Kendall declined to elaborate on the reduced 55-year estimate by the department’s independent cost-assessment office. The figure will be released later this month in its next unclassified Selected Acquisition Report. Until then, the official projection is the $1.1 trillion formulated by that office three years ago.

By contrast, the Pentagon’s F-35 program office estimates that the fleet will cost $857 billion to operate and support over its lifetime.

On the separate cost of developing and producing a planned fleet of 2,443 F-35s, the U.S. Government Accountability Office said in February that its projection is $390.4 billion, as adjusted for inflation over the years the plane is produced. The Pentagon’s latest estimate by the same measure is $391.2 billion, about a 1.1 percent reduction from an earlier calculation.

Keep reading this article at: http://www.bloomberg.com/news/2014-04-03/lockheed-f-35-s-operating-cost-estimate-to-decline.html 

Here’s a visual guide to the Defense Department’s FY15 budget proposal

Deciphering the Pentagon’s 2015 spending proposal has been difficult, but Defense News has some charts the could serve as a decoder ring.

Out friends at VisualDoD helped us compile data from the Defense Department’s spending plan to create these detailed graphics, which tell a story on their own.

First, the chart below provides a nice overview of overall DoD spending since 2006. As you can see, defense spending has flat-lined in recent years.

DoD Top Line Spending

Now lets get a little more into the weeds.

Keep reading this article at: http://intercepts.defensenews.com/2014/03/a-visual-look-inside-dods-2015-budget-proposal

Here are the predicted winners and losers in the FY15 budget

While its passage in Congress is far from guaranteed, the Pentagon’s budget request for fiscal 2015 has some clear winners and losers on the weapons-acquisition front.

The Defense Department on March 4 will request its spending plan for the fiscal year beginning Oct. 1. The base budget, excluding war funding, will total $496 billion, Defense Secretary Chuck Hagel said during a press conference Monday afternoon (Feb. 24, 2014) at the Pentagon.

Hagel spent a portion of the hour-long briefing discussing the department’s modernization plans.

To read about the winners and losers in the FY15 budget, keep reading this article at: http://www.dodbuzz.com/2014/02/24/winners-and-losers-in-the-2015-budget

 

OMB says budget deal means no further sequester cuts in FY14

Federal agencies will not face any additional sequester-related spending cuts for fiscal 2014 following passage of December’s bipartisan budget deal, the Office of Management and Budget confirmed in a report this month.

Under the deal, Congress agreed to partially roll back discretionary spending reductions previously mandated in 2011, leaving total defense spending—not counting funding for the Afghanistan war—at $520.5 billion and total spending on other programs at $491.8 billion this year. Lawmakers also reworked the caps for next year to keep overall discretionary spending at about the same benchmark; for 2015, the caps on security and non-security spending are $521.3 billion and $492.4 billion respectively, according to the OMB report.

Keep reading this article at: http://www.federaltimes.com/article/20140217/MGMT05/302170012/1001 

Pentagon said to be planning to boost missile defense spending by over $4 billion

The U.S. Defense Department plans to ask Congress for $4.5 billion in extra missile defense funding over the next five years as part of the fiscal 2015 budget request, say congressional sources and an expert.

Nearly $1 billion of that sum will pay for a new homeland defense radar to be placed in Alaska, with an additional $560 million to fund work on a new interceptor after several failed flight tests, said Riki Ellison, founder of the nonprofit Missile Defense Advocacy Alliance, and two of the congressional sources, who were not authorized to speak publicly.

The Pentagon’s request for added funding comes despite continued pressure on military spending and cuts in other arms programs, a sign of Washington’s growing concern about missile development efforts by North Korea and Iran, the sources said.

Keep reading this article at: http://www.reuters.com/article/2014/02/07/us-usa-military-missile-idUSBREA1605T20140207