DOD budget keeps growing, despite the odds

March 1, 2006
The 2007 proposed budget for the U.S. Department of Defense (DOD) is likely to go into the history books as one to confound the experts, and enrage the fiscal conservatives.
John Keller
Editor in Chief
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The 2007 proposed budget for the U.S. Department of Defense (DOD) is likely to go into the history books as one to confound the experts, and enrage the fiscal conservatives.

Top-ranking experts in government and industry have been warning of substantial impending cuts in defense spending for the past 18 months, yet when Pentagon leaders released their 2007 spending proposals Feb. 6 the numbers just kept on growing.

DOD proposes to spend $439.3 billion next year on weapons systems, ammunition, personnel, new construction, systems upgrades, health care, and a broad spectrum of other initiatives. This number is up by 4.6 percent from the Pentagon’s 2006 proposed budget, and up 6.5 percent from the $410.8 billion that Congress actually appropriated for the military this year, which does not include supplemental appropriations that Congress uses to fund the global war on terrorism.

The big question is where is the money going to come from? Either the money is there, or it isn’t. Experts have been warning that the rising costs of federal entitlements-particularly Medicare-inevitably will force a reduction in defense spending. It will be interesting as events unfold to see if this prediction is true.

Another question is what will Congress do with the 2007 DOD budget request? In 2006 Congress trimmed the Pentagon’s request of $419.3 billion by 6.5 percent down to $410.8 billion. Congressional mid-term elections are coming up in another eight months, public support for the war in Iraq is sagging, and Congress might be emboldened to make even deeper cuts. It’s impossible to say at this moment in time.

Regardless, however, I can’t escape the conclusion that, for the time being, it’s a great time to be involved in the military technology business, for the Pentagon’s 2007 budget proposal is brimming with potential opportunities.

Proposed spending for procurement and research in communications, electronics, telecommunications, and intelligence is up (see “Defense spending set to increase for electronics and electro-optics programs in 2007” on page 1 of this issue). Other big-ticket programs with substantial amounts of electronics and opto-electronics also offer increased spending-or at least substantial sums in this budget.

“We feel we have an extremely healthy budget,” said DOD Comptroller Tina Jonas Feb. 6 at the Pentagon’s budget briefing for the media. A quick look at the numbers, and it’s difficult to argue her point.

Military aircraft programs for procurement, research, and system upgrades contain some of the brightest opportunities for electronics and electro-optics. The program to develop the F-35 Joint Strike Fighter (JSF) offers potential spending of nearly $5.3 billion in 2007, as this program is on the verge of switching from an all-research program into procurement and deployment.

In fiscal 2007, DOD officials expect to provide funding to procure the first five operational JSF aircraft. These aircraft will be conventional takeoff and landing versions for the U.S. Air Force. Funding also is in this budget for advanced procurement of eight conventional- and eight additional short-takeoff-and-landing aircraft for the U.S. Marine Corps.

Another surprisingly bright spot in the 2007 budget is the U.S. Army’s Future Combat System (FCS), which is the centerpiece of the Army’s future modular force. FCS was widely considered to be a prime candidate for budget cuts, but instead Army officials are proposing to increase the program’s funding to nearly $3.75 billion next year-up from $3.12 billion in 2006.

FCS will have manned and unmanned systems, and will include networked communications, sensors, battle command, embedded training, and surveillance capabilities. Plans for 2007 would fund the continued system, development, and demonstration for the FCS networked system of systems, including prototypes and software development.

Other big plus-ups in the 2007 budget include space-based radar, which calls for $266.4 million, up sharply from $98.3 million last year; $452.1 million for the Wideband Gapfiller Satellite, up from $164.3 million; $867.1 million for Transformational Satellite Communications, up from $429.2 million; and $955 million for the Evolved Expendable Launch Vehicle, up from $798.9 million the year before.

The Pentagon’s spending proposal is not without its reductions, however. Notable cuts include the Air Force’s F-22 Raptor jet fighter, which would reduce spending to $2.78 billion, down from $4.2 billion the year before; the Navy’s LPD-17 San Antonio-class amphibious transport dock ship, down to $297.5 million from $1.33 billion; and the Army STRYKER family of armored vehicles, down to $809.2 million from $1.08 billion the year before.

According to Defense Secretary Donald Rumsfeld, the 2007 budget reflects the DOD’s new strategy that concentrates on an era of asymmetric, irregular threats, rather than large land- and sea-based threats during the Cold War.

Perhaps the most notable example of this strategic shift is the 2007 budget’s increase in the number of active-duty special operations forces battalions by 33 percent, as well as the expansion of psychological operations and civil affairs personnel by 33 percent, Pentagon officials say.

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