FY 2018 Army Budget Snapshot

Posted by Alexander Rossino on June 13, 2017

Deltek Forecasts Defense Agency IT Spending Will Remain Weak Through 2021

After several years of declines, funding for the U.S. Army is poised to rebound in fiscal 2018. If the President’s Department of Defense budget request is approved by Congress, the Army’s FY 2018 base discretionary budget will total $166 billion, a rise of 9.9%, or $15 billion more than the service received in fiscal 2017. 

Operations and Maintenance (O&M) Funding

Army’s base O&M funding in FY 2018 will be $49.4 billion, an increase of 6.9%, or $3.2 billion, over the FY 2017 enacted level. Increased funding goes to address Army readiness deficiencies, including training, depot support, facilities maintenance, and cyber operations.

Procurement Funding

Army’s Procurement funding will see a 2.2% decrease in FY 2018. The budget request still provides a substantial $17.4 billion in base funding for Procurement, but this is amounts to $400 million less than the $17.8 billion received in FY 2017. Army’s Other Procurement funding prioritizes Tactical Surveillance systems, which will receive $996 million, Joint Communications systems ($675 million), and Combat Communications systems ($440 million).

Research, Development, Test, & Evaluation (RDT&E) Funding

Army’s budget for RDT&E in FY 2018 will grow to $9.4 billion, an increase of 12%, or $1 billion, over the FY 2017 enacted level. Programs classified under System Development and Demonstration will receive $3 billion, under Operational Systems Development $1.8 billion, and under Management Support $1.2 billion.

Preliminary Information Technology Numbers

Army’s information technology funding also appears ready to rebound, although a final judgment on this needs to wait until the DoD releases its final IT budget numbers. The numbers that have been released so far as part of the Office of Management and Budget’s Exhibit 53 report account for only half, or $18.6 billion, of the DoD’s normal IT budget of around $35 billion annually. 

In the Army’s case, the preliminary numbers show a budget request of $3.65 billion, an increase of $126 million, or 3.6%, from the FY 2017 enacted level of $3.5 billion, and a 15.6% increase from the $3.1 billion requested in FY 2016.

Of the $3.65 billion preliminary total for FY 2018, Operations & Maintenance IT funding is $2.6 billion, an increase of $175 million, or 7.1%, from the FY 2017 enacted level of $2.45 billion, and a 17.4% increase from the $2.2 billion requested in FY 2016. Development, Modernization, and Enhancement (DME) IT funding is $1 billion in FY 2018, the same level as enacted in FY 2017, and $100 million, or 10%, more than the amount requested in FY 2016.

Bottom Line

Summing up, this brief look the Army’s FY 2018 budget request reveals that except for Procurement program funding, Army’s budget for steady state and some new (i.e., RDT&E) programs will be rising. This is good news for vendors already providing support to the Army in some capacity. Less procurement funding, however, suggests fewer new business opportunities in the coming year. For its part, meanwhile, the preliminary funding numbers for IT programs look like they will escape budget reductions as O&M spending grows and DME spending remains steady.

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