Avascent Analytics January 2014 Defense Budget Update

 In Weekly Wire

Avascent budget expert, Managing Director Doug Berenson, recently released a report summarizing the latest updates surrounding the DoD budget.

  • The report highlights that while topline spending for DoD is staying flat, how that money is allocated within the Department will differ from FY2013. The Bipartisan Budget Act (BBA) passed in December stabilized the budget at $495 billion per year in FY14 and FY15. The budget therefore experiences little growth from the post-sequester FY13 budget of $493 billion.
  • The recently passed FY14 Omnibus Appropriations Bill provides a boost to investment and infrastructure spending compared to the FY13 budget as sequestered; Milcon spending increases by 17%, and Procurement increases by 4%.
  • The O&M base budget does decline, but is partly offset by Overseas Contingency Operations funding, which was increased by 6% over the FY14 request.

Questions remain over how FY15 budget resources will be allotted. The FY15 budget is expected to release on or around March 4th, and will detail how the Quadrennial Defense Review (QDR) and Strategic Choices and Management Review (SCMR) intend to adjust forces and programs to a new strategy and lower resources.

  • Until then, the best guide will be Secretary Hagel. In a November 2013 speech, the Secretary emphasized the need to protect investments in “space, cyber, special operations forces, and ISR”, the need for institutional and personnel reform, and that “a tiered readiness system is perhaps inevitable.”
  • Avascent Analytics therefore expects relative stability in Cyber, EW, long-range aviation, SOF, and ISR; greater risk in most other investment areas; and further pressure on O&M costs, especially for forward-deployed units.

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