FY2017 Budget Reloaded

Jeff Child, Editor-in-Chief, COTS Journal

The $54 billion—the amount of proposed fiscal year 2018 increase in military spending by unveiled by the White House this month—is a number well known to all at this point. But perhaps of more immediate interest is the DoD’s request to amended the fiscal year 2017 budget. The DoD has announced a two part strategy for its upcoming budget plans. Released this month was an amendment to the fiscal year 2017 budget. Meanwhile, the budget request for fiscal 2018—which on “normal” years comes out in early February—is scheduled to be released on May 1.

The 2017 budget amendment is the current admiration’s chance to add its own priorities to previous administration’s FY 2017 budget submission. That budget request from last year was for $582.7 billion—a budget that Congress has not passed. How sequestration and the Budget Control Act of 2011 will come into play remains to be seen—though the BCA becomes a non-issue if the Congress ends up repealing that law.

The $30 billion 2017 budget amendment includes appropriations aimed at accelerating the defeat of the ISIS, al Qaeda, and their affiliated or associated groups, increasing warfighting readiness, and covering new must-pay bills. Here, I’ll focus on the items within 2017 budget amendment most relevant to COTS Journal readers: such as weapon system procurement and technology.

For the Army, some of the key procurement/technology items include $2.8 billion in equipment spending. This includes restoring and modernizing equipment in Aviation, Armor Formations, Unmanned Aerial Systems (UAS), and Air and Missile Defense systems across the operational force. $1.2 billion is allocated toward COCOM support / Counter ISIS. That includes funding for Intelligence, Surveillance and Reconnaissance (ISR) for multiple COCOM operations to counter ISIS, al Qaeda, and their affiliated or associated groups.

The Navy’s share of the 2017 budget amendment meanwhile includes a lot of aircraft procurement and technology investment. It calls for the purchase of 24 F/A-18E/F Super Hornet strike fighters and six P-8A Poseidon maritime patrol aircraft to replenish combat-worn strike fighters and increase the number of ready available aircraft within 30-35 months. Aviation spares funding buys spare parts for nine types of aircraft: F-35C Lightning II, F-35B Lightning II, CH-53K King Stallion, E-2D Advanced Hawkeye, C-40 Clipper, E-6 Mercury, H-1 series, MQ-8 Fire Scout, Special Project. There’s also an increase in information warfare funding will upgrade and maintain afloat and ashore networks to improve cyber security. It also provides planning and design for the new Command, Control, communications, Computers and Intelligence (C4I) system at the Naval Computer and Telecommunications Area Master Station Atlantic building in Norfolk, Virginia.

2017 budget amendment dollars allocated for the Marine Corps focus on a number of areas including Counter-Unmanned Aerial Systems capabilities, long range precision fires, and intelligence and communications. One goal is to balance ground and aviation, which involves fixing holes that resulted from the difficult decisions made during years of fiscal limitations and uncertainty. This means essential modernization for the aviation platforms and enhances the combat capability through electronic warfare and jammer techniques.

And finally, the Air Force portion of the 2017 budget amendment makes investments in capability and capacity designed to improve its 4th and 5th generation aircraft in areas such as F-16 Fighting Falcon sensor upgrades, MC-130J Commando II and HC-130 Combat King II retrofits, HH-60G Pave Hawk datalink interoperability, C-130H Hercules fleet propulsion upgrades and B-52 Stratofortress engine risk reduction. Added funds will also be used by the Air Force to procure five additional F-35A Lightning II’s and fund production shortfalls for C-130’s, space, and munitions. Funds will also strengthen the Air Force nuclear posture by funding nuclear command, control, and communications (NC3), Intercontinental Ballistic Missile (ICBM) sustainment, and bomber readiness.

There’s never been an exact correlation between increases in DoD funding and revenue growth in our military embedded computing industry. In fact in times of tight defense budgets our industry tends to actually thrive from technology upgrade program business. Moreover, changes don’t always trickle down to our market immediately—especially given long development cycles typical to the military. Ultimately however, more dollars allocated to procuring military platforms and modernization and upgrading of existing platforms translates to revenue opportunities for our space. With prime contractors reducing their engineering workforce numbers in recent years, it’s a particularly good time for our industry to contribute their expertise in embedded computing technology.