After a last minute show of false budget modesty late Friday, President Trump signed into law the FY 2018 omnibus appropriations bill for $1.3T in discretionary spending. While there has been a fair amount of drama over the non-defense side of the ledger, there were no surprises for close followers of the defense budget.
The final bill contained $590B in baseline Pentagon spending and an additional $65.2B in Overseas Contingency Operations (OCO) spending for a total of $655.1B. Earlier in the year Congress had approved $4.9B in emergency spending for missile defense and disaster relief bringing the grand total for FY18 to $670B. This is $61B (+10%) more than the FY17 final appropriation and $23.6B (3.7%) more than the President had requested. (Note that the $700B "defense" figure often shown in the press includes $30B of DoE spending not normally included in Pentagon spending.)
The final figures have been well telegraphed. The final figure of $670B in Pentagon spending was already part of the adjustments to the Budget Control Act that was passed on February 9. That number coincides with the figures contained in the National Defense Authorization Act with associated program detail that was passed in December.
While there are few, small differences from what has been known to be coming for some time, it is worthwhile to appreciate where the additional money has gone and just how well the defense primes have fared since the President first proposed his FY18 budget last May.
Dollar-wise, aircraft procurement is the big winner of Congressional largesse: At $44B, aircraft procurement was increased $9.5B (27%) above the President's request. Congress added the following aircraft to the President's request:
LMT: 20 F-35s (+$2.9B), 16 MC/KC/HC/C-130Js (+$1.5B), 16 MH/UH-60 helos (+$508M), 3 CH53K (+$250M) = +$5.2B
BA: 10 F/A-18 (+$740M), 8 V-22 (+$676M split with TXT), 3 KC-46A (+$510M), 3 P-8A (+$501M), 17 AH-64E (+$577M), 8 CH-47 (+$387M), 2 C-40 (+$207M), 2 C-37 ($130M) = +$3.4B
TXT: 8 V-22s ($676M split with BA), 7 UH-1Y/AH-1Z (+$221M), RQ-7 (+$110M) = +$669M
Shipbuilding, a perennial Congressional favorite, will be funded at $23.8B, $3.4B (14%) more than the President requested and 12.7% more than enacted in FY 2017. 14 ships will be officially started in FY18 which includes an additional LCS for LMT and Austal (total of 3 for $1.5B) and some additional expeditionary ships. Except for the LCS, GD and HII divide the spoils which includes $225M to expand the submarine industrial base and perhaps, most significantly, funds changes in advanced procurement authorities that should smooth out production lines.
Percentage-wise, the Missile Defense Agency will see the largest budget growth. The MDA's FY18 budget will be $11.5B, $3.3B more than FY17 (+40%) and fully $1.6B more than the Administration requested. While MDA develops the nation's missile defense capability, the services procure the capacity. Congress added $165M (36%) to the procurement of LMT's THAAD interceptors. All told more than $1.5B will be spent on THAAD/AEGIS in FY18. RTN's SM-3 missile programs received $315M above the Pentagon request, a 39% bump in procurement plus increased testing for a newer version. With a ten year contract as the overall system integrator for the Missile Defense Agency, BA stands to see a large revenue bump, while NOC will also eventually benefit from the buy of 20 additional Ground Based Interceptors.
