Seismic Shift in Defense Spending

Rumors have been floating for months – and now everyone knows they are true.

The Army is shifting $25B within its Science & Technology (Research) and Acquisition (Development and Procurement) accounts to fund its highest priority areas. This shift will coincide with the 2020 Budget and affect FY 2020 and the subsequent four years.

Given the Army’s 2019 budget for these two accounts was roughly $30B, it’s a significant realignment in resources.

These highest priority areas are called the Big Six – Long-Range Precision Fires, Next Generation Combat Vehicle, Future Vertical Lift, Network, Air & Missile Defense, and Soldier Lethality. Each area has one, and some have two, organizations focused on driving each area’s modernization strategy. Called Cross Functional Teams (CFT), and led by a general officer, the CFTs bring together personnel from across the Army’s various constituencies to accelerate modernization activities.

However, just because the Big Six are the Army’s priority areas, not all programs within these areas are deemed priorities that will receive funding. The CFTs are charged with championing program requirements and recommending funding and program strategies to their parent organization, the newly formed Army Futures Command (AFC). The AFC, which wields significant influence in program acquisition approach, in turn recommends funding to the Army Secretariat – who ultimately approves and releases funding through the Army Budget Office. According to the National Defense Industrial Association, just over 30 programs will receive the lion’s share of funding to accelerate their completion and fielding.

So, what about the other hundreds of programs?

Essentially, if your program isn’t at the top of the CFT’s recommendation list, your program is considered a bill-payer candidate for the priorities. And if your program isn’t being championed by a CFT, then your program is not only a bill-payer candidate, it may be cancelled entirely.

Army leadership held so-called Night Courts over the past fall to review each program against priorities and made what amounts to fund vs de-fund decisions. These decisions were made at the most senior levels by a small cadre of leaders.

As the President’s Budget is set for release next month, contractors will begin to see the dramatic impact of this shift in black & white. Nearly two hundred programs will see major funding reductions or total elimination.

There is not much that contractors can do about this – the Army has the obligation, right, and ability to set its priorities. But – that doesn’t mean contractors have to remain silent. Contractors also have the right to appeal to their elected officials and challenge the Army’s decisions – especially when there is an existing contract in place for systems deemed necessary before this realignment.

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