US Department of Defense’s Reprogramming Action: Analysis
Understanding US PBR reprogramming
Each fiscal year, the US Department of Defense (DoD) 'programs' funds via its Planning, Programming, Budgeting and Execution (PPBE) system and sends the result to Congress via the President. It takes the form of a President's Budget Request (PBR). The US Congress acts on the PBR and 'marks' up the budget, and after concurrence among the committees, sends the Authorization and Appropriations Bills to the President for signature. Once signed by the President, the Bills become Public Law and the military services execute the DoD budget.
However, based on unforeseen military requirements due to the constantly changing geo-political situation and urgent military requests, priorities often change. Along with the various innovation efforts by the current administration, these new priorities need to be addressed. At the same time, some of the assumptions made going into the budget formulation prove to be less accurate as events unfold during the course of the year. As a result, reprogrammings (of previously programmed funds) occur throughout the year as needs dictate.
July 2018's reprogramming request
The Under Secretary of Defense (Comptroller) David Norquist signed out a large DoD Reprogramming Request to Congress on 11 July 2018 affecting a total of USD4.3 billion previously programmed funds over four fiscal years.
This is an unusually large reprogramming request - affecting USD4.3 billion of previously programmed funds. Part I (of ten sections) addressed USD2.957 billion of change requests in FY18 Base Budget, whereas Part II addressed USD135 million of changes in the FY18 Overseas Contingency Operations (OCO) budget.
While some reprogrammings are perfunctory, others can have large impacts on DoD contractors as the changes may necessitate shifted portfolio priorities and, therefore, project staffing. Jane's believes that is likely to occur with this request.
Most noteworthy FY18 reprogramming requests
- Addition of USD221 million for Hypersonic projects in RDT&E appropriations in Defense-Wide and Air Force, one of which is the New Start for Land-Launched Hypersonic capability
- Addition of USD85 million for Artificial Intelligence, including stand-up of the Joint AI Center (JAIC)
- Addition of USD15.2 million for Ground Based Midcourse Ballistic Missile Defense for Lot 1 Ground-based Interceptors and Fort Greely, AK Missile Field 1
- Some eight different projects in the Cyber arena totaling USD164 million
- Addition of USD285 million for the Army's Stryker Upgrade program procuring 91 Stryker Double-V Hull Engineering Change Proposal (ECP)
- Addition of USD83 million for the Air Force's UH-1N Replacement Program for FY18 award
- Addition of USD424 million for various projects related to Training of service members in all Services
- Addition of USD99 million for the Navy's prototype advanced Railgun mount
- Addition of USD363 million for the Army's PAC-3 Missile Segment Enhancement (MSE) missile
- Addition of USD52 million to procure 1,000 Joint Direct Attack Munition (JDAM) tail kit mods
- The three largest reprogramming additions in FY18 by JMF Markets Forecast were: 1) Missile market at USD745 million, followed by 2) Mil Ground Vehicle market at USD441 million, then 3) Precision Guided Weapon market at USD280 million
- Most of the areas that gave up funds ("funds available") were in the military services Personnel areas, Administration & Service-wide activities and Defense Working Capital Funds
The reprogramming request of 11 July 2018 also introduces 11 DoD 'New Start' programmes in the FY18 budget:
BI = Background Investigation
It is assumed that most of these reprogramming requests will be approved by the Congressional committees in the near future in order for the services to continue to execute their budgets in an effective manner.
President Trump's defense strategy
Jane's expects the reprogramming actions in this document to serve as a precursor to the February 2019 FY20 PBR, which President Trump has mentioned as being his first 'full up' PBR under his administration.
This reprogramming blends in nicely with the 3-pronged approach to restore readiness and to rebuild the US depleted military which President Trump is leading with able execution by Secretary of Defense James Mattis. According to the President and SECDEF, the approach is to "Get Ready - Get Balanced - Get Bigger and More Lethal." Step 1 "Get Ready" occurred with the FY18 PBR submit of May 2017 to address immediate readiness issues. Step 2 "Get Balanced" is part of the February 2018 FY19 PBR submit to Congress, presently being reviewed. The FY19 PBR is a 'transitional budget' partially informed by five DoD studies.
The actions requested in this reprogramming shape and accelerate this transition. The third step "Get Bigger and More Lethal" will occur with the FY20 PBR submit in February 2019 - this PBR will become President Trump's "full up" informed defense budget worked fully by his administration. The three steps are a logical progression of the recent National Security Strategy issued by President Trump in December 2017 and its companion National Defense Strategy issued by SECDEF Mattis in January 2018.
About Jane's US DoD analysis
Jane's provides numerous US DoD budget displays during the fiscal year budget cycle. For this reprogramming request, Jane's has developed and provided a complete and comprehensive top-level and detailed picture of the 324 individual change actions affecting contractor portfolios (both plus and minus). The purpose of this Jane's Reprogramming analysis is to provide Jane's customers with a spreadsheet tool to research, manipulate and extract specific reprogramming data ($) and quantity data from the US DoD source document listed in the title and apply that information to their company programs and portfolio as appropriate
Posted 26 Jul 2018 by Guy Eastman, Senior Analyst II, Research & Analysis, Aerospace and Defense
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