The U.S. Navy’s fiscal 2025 budget request includes money for one Virginia-class attack submarine instead of the planned two, but still represents “a prioritization and very significant investment in undersea warfare capabilities,” the service’s undersecretary said Friday, arguing this is not contradictory.

The Navy has been buying its attack subs at a rate of two per year since FY11, but industry has not kept up in recent years, delivering closer to an average of 1.2 boats annually. The service spent $2.3 billion from FY18 to FY23 to change that, hoping to not only get industry up to an on-time delivery rate of two per year, but then to a rate between 2.3 and 2.5 to support the AUKUS submarine partnership with Australia and the United Kingdom.

The Navy, business leaders and lawmakers have all highlighted stable funding as a key to helping industry bolster its output. And yet, in a fiscal year with a top line capped by law and in which the Navy had to delay several major shipbuilding and modernization efforts, the sea service chose to save some $4 billion in the FY25 spending plan by nixing the second Virginia sub.

“We did reduce the funding to one Virginia-class submarine in FY25. But we maintain the funding for nine out of the planned 10 Virginia class” during the five-year Future Years Defense Program, or FYDP, Under Secretary Erik Raven told reporters.

The one FY25 boat will be the first of a new Block VI design. Navy budget books refer to seeking a nine-sub multiyear procurement contract for Block VI.

“In addition, we make significant investments in the submarine-industrial base. During last year’s budget rollout, I talked about $2.4 billion in submarine-industrial base investments that were planned over the FYDP. In this year’s budget, we plan an additional $8.8 billion on top of what was already programmed across the FYDP,” he added.

Raven said the FY25 budget also maintains its planned advance procurement for future submarines, which is “incredibly important in terms of supporting the supplier base to set themselves up for the needed production rate for Virginia class.”

And in the longer term, he explained, the Navy in last year’s long-range shipbuilding plan showed an intention to buy one boat a year in each of FY30 and FY31.

Now, the Navy believes it can buy two boats in each of those years, which will be reflected when the long-range shipbuilding plan comes out later this spring, he added.

“So taken as a whole, this budget presents a significant investment in the undersea capability area, and we feel like these are absolutely the needed moves to make sure that we’re set up for the long term, for success in both Virginia and the Columbia program,” he said, the latter being the ballistic missile submarine that the Navy still calls its top spending priority.

Rear Adm. Ben Reynolds, the deputy assistant secretary of the Navy for the budget, said Friday the total submarine-industrial base funding would be $3.9 billion in FY25 alone. That doesn’t include the cost of buying actual submarines, but rather the funds being poured into the supply chain to help vendors hire and train workers, retool existing facilities and build new ones, invest in additive manufacturing, and more.

That one-year sum is $1.5 billion more than the Navy planned to spend across the entire five-year FYDP last year, showing how thorny a challenge this has been and how important it remains to future American and AUKUS alliance needs.

However, the Navy also asked for $3.3 billion more in the supplemental funding package that stalled in Congress. The package was meant to fund support to Ukraine and Israel, operations at the U.S.-Mexico border, and other emerging defense needs — including submarine-industrial base support, couched as pivotal to deterring China from attacking Taiwan.

Neither the FY24 defense spending bill nor the supplemental spending bill have passed Congress, so it’s unclear when or if any of that money will make it to the supply chain.

Reynolds said this massive spending for a targeted segment of the industrial base “gets us up to that place where we can get to one-plus-two [Columbia and Virginia production rates] towards the end of the FYDP.” That fund would total at least $16.8 billion by FY29 if everything, including the FY24 budget and supplemental, were to pass.

At least one member of Congress is pushing back. Rep. Joe Courtney, a Connecticut Democrat whose district includes the General Dynamics’ Electric Boat submarine construction yard, said Monday the reduced buy in FY25 “demands the highest scrutiny by the Congress” because it “contradicts the Department’s own National Defense [Industrial] Strategy issued January 11, 2024, which identified ‘procurement stability’ as critical to achieve resilient supply chains.”

Still, Raven, in a Monday afternoon briefing, maintained the Navy’s choice is best for industry.

“We removed one Virginia-class out of concern for the industrial base ability to produce yet one more, while in a capped environment making headroom for these historic investments in the submarine-industrial base,” he said.

Air Force Secretary Frank Kendall told reporters March 8 that the smaller budget request – which is, like the rest of the Defense Department, constrained by funding limits set in the 2023 Fiscal Responsibility Act — means the service won’t be able move as fast as he’d like to build more resilient systems that can counter space threats from China and Russia.

“China has fielded a combination of anti-satellite capabilities and space-based targeting capabilities — so they’re threatening our space assets and they’re threatening our joint force,” he said during an embargoed media briefing. “We’ve got to respond to that. . . . I’d like to move faster on that than we currently are.”

The Space Force’s budget has nearly doubled since it was created in December 2019. Its fiscal year 2021 request for $15.4 billion jumped to $30 billion by FY-24. That growth was due largely to the consolidation of space systems and personnel under the service’s purview.

Service officials, including former Vice Chief of Space Operations Gen. David Thompson, have said the Space Force’s funding must continue to increase as it takes on new responsibilities and missions.

“The budget needs to grow because there are still more missions that are migrating to space,” Thompson told C4ISRNET in December. “The challenge is, in this environment, defense budgets are likely not to grow significantly in the near future the way they have in the recent past. "

Kendall said the service is making progress toward improving the resilience of its systems. He pointed to the shift toward building smaller satellites in large quantities across key mission areas like missile warning and communications.

However, he wants to be able to invest more in other mission areas — like positioning, navigation and timing — and improve the service’s portfolio of offensive space programs, which are largely classified.

“We need to find a way to have PNT be more resilient, and I think there are some additional communications things that we need to do,” he said.

Funding modernization

The largest portion of the Space Force’s spending request, $18.7 billion, would fund the development of satellites, ground systems and other supporting technology and modernization of existing capabilities. That’s about $300 million less than FY24, due in part to the Space Force’s classified portfolio.

According to Kendall, a portion of the service’s FY25 budget is part of a separate account known as “pass-through” funding, which typically goes to outside organizations like the intelligence community. Kendall would not confirm whether or how much Space Force funding had shifted from its base budget to this account, but said that part of the service’s smaller request is owed to some of its funding being tagged as pass-through money.

Elsewhere in its research and developing account, the Space Force requests $4.7 billion to develop satellites in multiple orbits that can spot and warn of traditional and advanced missile threats.

Within that portfolio, the service proposes $2.1 billion for the Next-Generation Overhead Persistent Infrared program. The effort is the successor to today’s Space-Based Infrared System, which detects and tracks ballistic missiles. It includes two satellites built by Lockheed Martin that will reside in geostationary orbit, about 22,000 miles above Earth, and two Northrop Grumman-built polar satellites destined for a highly elliptical orbit.

The Space Force also wants $2.6 billion for its Resilient Missile Warning and Tracking program, which aims to field satellites in low Earth orbit, about 1,200 miles above the planet, and medium Earth orbit, at an altitude of between 1,200 and 22,000 miles.

Funding for the MEO portion of the program would support initial satellite development and ground support. The LEO funding, which sits around $1.7 billion, would go toward the Space Development Agency’s efforts to launch 28 satellites in FY25.

Another $1.7 billion would support other SDA activities, including expansion of the agency’s fleet of communications, or data transport, satellites.

The Space Force’s request includes $1 billion for the Evolved Strategic Satellite Communications program, which is developing secure, survivable communications capabilities for strategic missions. The satellites are designed to withstand nuclear attack, and the service wants to award a contract and begin production in 2025.

The request also calls for $237 million to start a new program, Protected Tactical SATCOM Global. Initial budget documents did not describe the effort in detail.

The Space Force’s $4.3 billion procurement account — which is about $400 million smaller than it was in fiscal 2024 — would fund 11 launches, down from 15 planned missions in FY24. Four of those launches will carry SDA satellites and the remaining 7 will be for Space Force missions.

Another $527 million, if approved, will buy two GPS IIIF satellites, a modernized version of navigation spacecraft designed to provide better accuracy and anti-jam capabilities. The service expects to start launching the satellites in 2027.

The service is asking for $175.4 billion in its base budget and another $10.5 billion to pay for overseas operations.

The FY25 budget levels also presume the passage of supplemental funding by Congress to cover the costs of providing military aid to Ukraine and to support increased operations in the Middle East. The most recent supplemental package passed the Senate but is stuck in limbo waiting for a House vote.

The Army is canceling several modernization programs and truncating some procurement across the future years defense program, but it is not making those cuts in order to stay in line with congressionally mandated budget gaps, Army Under Secretary Gabe Camarillo said in a March 8 briefing with reporters at the Pentagon. The service made “some very difficult tradeoffs, particularly as we’re trying to maintain pace on modernization,” he said.

“We’re trying to fully fund our military personnel account,” he said, “but at the same time, we wanted to make a significant investment in barracks and housing, so areas, for example, that we had to potentially look at are other areas of [operations & maintenance] spend[ing] that are not tied to readiness.”

And the service will continue to prioritize readiness and modernization geared toward operating in the Indo-Pacific theater as part of a larger strategy to deter China’s aggression in the region. Its share of the Pacific Deterrence Initiative in FY25 would be $1.5 billion. The Army would fund $461 million in FY25 for its Operation Pathways exercises, for example, and is asking for $602 million in research and development and $2.8 billion in procurement to field integrated air and missile defense capability in part to support the defense of Guam.

Additionally, “the Pacific focus leads to more investments in longer range, precision munitions,” Army acquisition chief Doug Bush said in the same briefing.

Protecting people

“Overall, the [FY]25 budget funds the needs of our soldiers, $70.7 billion in military personnel funding to account for all increases in basic pay, housing and subsistence,” Camarillo said. The Army is investing $900 million more in FY25 in its personnel account over FY24.

Continuing to acknowledge its recruiting challenges, the service is planning on an active-duty end-strength of 442,300 soldiers. In FY24, the Army requested funding for an active-duty force of 452,000 troops.

Army National Guard end-strength will remain the same as it was in the service’s FY24 budget request – a total of 325,000 – and the Army Reserves will grow to 175,800, an increase of 1,000 reservists over FY24 budget request levels.

The service is investing in recruiting to include the expansion of the Future Soldier Prep Course, improved recruiter selection and training and other efforts to redesign its recruiting workforce. And the Army plans to spend $1.1 billion for marketing and advertising in FY25.

Military housing improvements were a top priority in the FY25 budget, Camarillo noted, including $935 million for new barracks construction at nine sites, up by 41% from the FY24 request. “Barracks and sustainment is funded to 100% for the first time ever, at least in recent memory,” Camarillo said.

The Army is requesting $71.4 billion for operations and maintenance, down by just under 1% from its FY24 request. The budget accounts for the Army’s force structure changes and supports “projected global requirements.”

Modernization modifications

In addition to the Army’s recent decision to cancel its Future Armed Reconnaissance Aircraft to invest in the current utility and cargo helicopter fleets and new unmanned aircraft systems, the service’s FY25 budget will reflect the cancellation of another major priority program established five years ago when the Army overhauled its modernization enterprise and set out to build over 30 weapons systems and other capabilities.

The Army has decided not to move forward with the Extended Range Cannon Artillery program, which used a service-developed, 58-caliber gun tube mounted on the chassis of a BAE Systems-made Paladin Integrated Management howitzer.

“We concluded the prototyping activity last fall, unfortunately, not successful enough to go straight into production,” Army acquisition chief, Doug Bush, said in the same March 8 media briefing. “So what we’re hoping to do is, after an exhaustive tactical fires study that was done to revalidate elements of the requirements by the Army led by Army Futures Command, we hope to, this summer, go into an evaluation of existing systems from industry to get the sense of the maturity of those systems … that would lead to ..a downselect of one of those systems for potentially follow-on production.”

The Army is asking for $55 million to execute its new plan to fill ERCA requirements in FY25.

Overall, the service’s total research, development, test and evaluation funding is $14.1 billion, dropping by $1.7 billion from the FY24 request, or a 10.8% decrease.

The Army plans to spend $24.4 billion in procurement in FY25, $1 billion more than requested in FY24, or a 4.5% increase.

“The shift in RDT&E from FY24 to 25 shows a progression of many of our key capabilities and systems going from R&D into production to include some of the aviation rebalancing as well as the production of new aviation platforms,” Camarillo said.

The Army plans to shift $4.5 billion taken from the FARA development program canceled in the middle of a competitive prototyping effort, along with money taken from the discontinued UH-60 Victor-model Black Hawk program and the retirement of Shadow and Raven UAS, to current fleet upgrades and procurement and future UAS, launched effects and loitering munitions programs.

The service’s other major Future Vertical Lift program — the Future Long Range Assault Aircraft — is fully funded in the budget according to the current cost estimate, Bush said. “We are going through a Milestone B [research and development phase] this year, where we will finalize our cost estimate for the program’s [Engineering and Manufacturing Development] phase.”

The Army also continues to fund its troubled Long-Range Hypersonic Weapon program, hoping for a successful test planned for this summer. It wants $538 million in FY25 for research and development and another $744 million in procurement. The service was supposed to field the first unit with all-up rounds at the end of last year, but following a series of failed and canceled flight tests, the program is lagging behind.

With the drone war heating up in Ukraine and the Middle East, the Army is requesting roughly $40 million in research and development for various directed energy programs that will help the service tackle countering small UAS and drone swarms to include work to provide both a laser weapon and high powered microwave system for the Indirect Fire Protection Capability Increment 2 program, Camarillo said. And the service is requesting $88.5 million to continue developing its Directed Energy Maneuver-Short Range Air Defense System.

Procurement plus up

The Army is requesting $24.4 billion, a $1 billion dollar boost over FY24, to begin buying some of the new weapons systems the service is planning to field as the result of a major modernization push to ensure the service is ready to fight in a multidomain environment against high-end threats by 2030.

There are no major munitions or missile procurement boosts as a means to replenish stockpiles sent to Ukraine or expended in the Middle East as the service continues to push for the approval of supplemental funding to cover those costs, according to Camarillo.

Yet some quantities will go up in FY25 as new missiles begin to be fielded to first units. For instance, the Army wants to buy 230 Precision Strike Missiles for $492 million in FY25, which were fielded to the first unit in late 2023.

And the service would ramp up the number of Mid-Range Capability missiles, its new ship-killing capability, planned for production. The Army is requesting $183 million in FY25 to continue MRC development as well as $233 million to procure 32 Tomahawk missiles and MK14 cannisters, along with operational support. MRC is one program that was supposed to be fielded to the first unit in FY24 but a continuing resolution is preventing the Army from reaching that milestone.

Continued investment in major munitions like the Patriot Advanced Capability-3 Missile Segment Enhancement missile, Javelin, Guided Multiple Launch Rocket system, and 155mm artillery are planned in FY25.

The PAC-3 MSE’s first multiyear contract was supposed to start in FY24 but without supplemental funding, cannot be finalized. FY25 would be the second year of the contract the Army needs to replenish and stockpile the missile which is being used both in Ukraine and the Middle East. The Army wants 230 missiles in FY25 for $963 million.

The Army would also like to spend $1.2 billion on GMLRS, procuring 6,408 missiles in a multiyear buy, which is “the highest base budget number for GMLRS probably ever,” Bush said.

A purchase of 10 more High Mobility Artillery Rocket Systems for $79.4 million is also on tap, as well as 126 next-generation Stinger missiles for $75.2 million.

The majority of the 155mm munitions production would come from supplemental funding but the Army is requesting to build 50,000 for $171.7 million using base budget dollars in FY25.

The Army is prioritizing air-and-missile defense in its budget in FY25, supporting 15 Patriot battalions for $172 million and the service is requesting $516.6 million to procure four new Lower Tier Air and Missile Defense Sensors to replace older Patriot radars.

The Indirect Fire Protection Capability system would also get a budget boost in FY25. The service is asking for $658 million to procure systems needed for the program’s initial operational test and evaluation. The Army asked for $313 million in FY24.

With the surging need for counter-unmanned aircraft systems, the Army is requesting to spend $82.5 million to buy Mobile Low, slow, small, unmanned aircraft Integrated Defeat System (MLIDS) and $26.4 million for Fixed Site LIDS. The service would also spend $116.3 million on Coyote interceptors in FY25 and another $33.6 million on unspecified C-UAS effectors.

As the result of the FARA advanced helicopter cancellation, the Army plans to use funding freed up by the decision to begin production of the CH-47F Block II Chinook for active force along with what it’s already building for Special Operations units, investing $465.2 million in FY25.

The Army is also planning on buying more UH-60M Black Hawks, asking for $709 million in FY25. And the service wants to rapidly procure new Future Tactical UAS as it retires aging Shadow and Raven UAS from the aviation fleet, asking for $149 million to buy aircraft and another $128 million to continue development. The Army wants to award a contract for FTUAS in the fourth quarter of FY25.

“We concluded the prototyping activity last fall,” Doug Bush told reporters at a March 8 briefing on the fiscal 2025 budget request. “Unfortunately, [it was] not successful enough to go straight into production.”

The new plan — following an “exhaustive” tactical fires study meant to revalidate elements of the extended-range cannon requirement led by Army Futures Command — is to evaluate existing options from industry this summer “to get a sense of the maturity of those systems.”

Of the 24 new Army systems slated to make it into the hands of soldiers by the end of 2023, only the Extended Range Cannon Artillery program missed that goal. The ERCA system uses a service-developed, 58-caliber gun tube mounted on the chassis of a BAE Systems-made Paladin Integrated Management howitzer.

The Army was building 20 prototypes of the ERCA system: two for destructive testing and the remaining 18 for a battalion.

The operational evaluation of ERCA revealed “engineering challenges,” Bush said a year ago. Observations in early testing of prototypes showed excessive wear on the gun tube after firing a relatively low number of rounds.

The US Army arsenal from 1813 that’s building weapons for Ukraine

Army Futures Command leader Gen. James Rainey told Defense News last summer the service was working on a new conventional fires strategy expected by the end of the calendar year. The strategy would determine both capability and capacity of what exists and what the Army may need, Rainey said.

The strategy considered new technology to enhance conventional fires on the battlefield, such as advances in propellant that make it possible for midrange cannons to shoot as far as longer-range systems.

Depending on the artillery strategy’s conclusions, there are a variety of options the service could consider in order to fulfill the Army’s requirement for an extended-range cannon, Bush said.

The Army was able to conduct a variety of successful tests with ERCA prototypes, including hitting a target on the nose 70 kilometers (43 miles) away at Yuma Proving Ground, Arizona, in December 2020 using an Excalibur extended-range guided artillery shell.

The problems with the cannon were mostly related to the length of the gun tube and its ability to withstand a large number of projectiles without excessive wear to the gun tube.

The Army is racing to extend artillery ranges on the battlefield to take away advantages of high-end adversaries like Russia and China. The ERCA weapon was intended to be able to fire at and destroy targets from a position out of the range of enemy systems.

That requirement remains, Bush stressed last week.

The hope now is to find systems that currently exist and are capable. The Army would then choose one for production if it proves promising, Bush said.

“There [are] things people say, and then we need to actually do testing to make sure it’s true,” he explained.

“It’s a shift from developing something new to working with what is available both domestically and internationally to get the range,” he added, “because the fires study validated the range and volume are still needed, so we want to find a different way to get there.”

The Army is asking for $55 million in its FY25 budget to pursue the new effort to find an extended-range cannon capability.

The service also plans to continue developing new munitions it was already working on as part of the ERCA program, Bush noted.

Air Force Lt. Gen. Heath Collins, the agency’s director, said March 7 at the McAleese & Associates conference that the agency was told by the Pentagon it would not conduct its usual briefing as part of Monday’s formal rollout. He referred questions to the Defense Department.

Collins noted he’s working with his staff on finding another forum to detail its budget request, adding that the agency would “still make sure” to “get the appropriate information out.”

Several reporters and analysts recalled MDA budget briefings took place as long ago as the early 2000s.

When asked about the decision, Pentagon spokesman Chris Sherwood declined to confirm it.

“We will not preview content or briefers before the president’s budget release,” he said. “The undersecretary of defense (comptroller)/chief financial officer will decide which departments and agencies brief their respective budgets during the DoD budget rollout press conference.”

This year marks the first budget cycle in which Collins is leading MDA. President Joe Biden tapped Collins to be MDA director in May 2023; he succeeded Vice Adm. Jon Hill, who had served as the agency’s leader since 2019.

Collins did not officially take command of the agency until Congress confirmed him in December, after Sen. Tommy Tuberville, R-Ala., released a lengthy blanket hold on military officer confirmations.

Last year, MDA sought a budget of $10.9 billion, prioritizing regional and homeland missile defense with a major focus on building an air and missile defense architecture in Guam.

The agency is in the midst of major modernization efforts to keep up with the pace of emerging, complex threats. This includes developing a Next Generation Interceptor to replace Ground-Based Interceptors that make up the roughly 20-year-old Ground-Based Midcourse Defense System. That system protects the homeland from potential intercontinental ballistic missile attacks from countries like North Korea and Iran.

The agency is also working on a Glide Phase Interceptor to defeat hypersonic missile threats farther from intended targets.

Noah Robertson contributed to this story.

“No U.S. boots will be on the ground,” Biden said. “A temporary pier will enable a massive increase in the amount of humanitarian assistance getting into Gaza every day. And Israel must also do its part. Israel must allow more aid into Gaza and ensure that humanitarian workers aren’t caught in the cross fire.

“To the leadership of Israel I say this: Humanitarian assistance cannot be a secondary consideration or a bargaining chip.”

Senior administration officials told reporters earlier Thursday the mission would route humanitarian aid through Cyprus to the temporary port in Gaza. The White House is also pushing Israel and Egypt to allow more aid through the land crossings at Rafah and Kerem Shalom.

The announcement, which drew bipartisan applause from lawmakers gathered, came amid calls from Biden for Congress to pass his long-stalled foreign aid bill to arm Israel, Ukraine and Taiwan.

The Senate passed the $95 billion foreign aid plan by a 70-29 vote in February. It includes $14 billion in Israel military aid, $48 billion in security assistance for Ukraine and $4 billion to arm Taiwan.

Israel receives an annual $3.8 billion in U.S. military aid, but the White House has said the Defense Department lacks the replenishment funds needed to continue arming Ukraine from U.S. stockpiles.

There’s also $2.4 billion in the bill for U.S. Central Command to respond to the uptick in attacks on American forces since the Israel-Hamas war began in October 2023; as well as $542 million for U.S. Indo-Pacific Command in response to its fiscal 2024 unfunded priorities list.

House Speaker Mike Johnson, R-La., has so far refused to put the bill on the floor amid growing resistance to additional Ukraine aid from Republican lawmakers as well as opposition from former President Donald Trump, the frontrunner in the GOP presidential primary race.

“Now assistance to Ukraine is being blocked by those who want to walk away from our world leadership,” said Biden, invoking former Republican President Ronald Reagan. “Now my predecessor tells Putin ‘do whatever the hell you want.”

The reference to Trump’s remarks at a campaign rally last month in which the former president voiced frustration with some NATO allies underspending on defense drew “boos” from Republicans in the crowd.

“Send me the bipartisan National Security Bill. History is watching,” Biden said, staring down Republican members of Congress who have opposed the measure. “If the United States walks away now, it will put Ukraine at risk, Europe at risk, the free world at risk, emboldening others who wish to do us harm.”

Biden also promised a strong response to other national security threats, including strikes to degrade Houthi capabilities in the Red Sea. “As commander in chief, I will not hesitate to direct further measures to protect our people and military personnel.”

Despite limited details about the plan for a humanitarian port, the idea drew immediate praise from Senate Armed Services Committee Chairman Jack Reed, D-R.I., and fellow panel member Angus King, I-Maine, who last week urged the administration to deploy a Navy hospital ship to the region.

“The civilian suffering in Gaza must be alleviated, and a maritime aid route will enable large quantities of food, shelter, and medical supplies to be delivered to those who need it most,” the pair said in a statement. “This temporary port, along with the ongoing airdrop campaign, will help ease the humanitarian crisis in Gaza.”

Technology developed through the terminated program will also be applied to a wider variety of platforms, he said.

The service is “planning to set up additional research and development resources for the UH-60M Black Hawks to continue to improve that vital platform,” Doug Bush, the Army’s acquisition chief, told lawmakers during a House Armed Services Committee’s Tactical Air and Land Subcommittee hearing on March 6.

The end of the FARA program last month marked an abrupt change of direction in aviation modernization and became one of the service’s most significant program cancellations of the last decade. The Army had already spent at least $2 billion on the program and had requested another $5 billion for the next five years.

At the same time, the service scrapped its Shadow and Raven unmanned aircraft systems developed for the counterinsurgency fight nearly two decades ago and a program – the UH-60V – that upgraded Lima-model Black Hawks with a digital cockpit for the National Guard. The Guard will now get Mike-model UH-60s.

The Army also plans to invest in a new multiyear procurement buy of its UH-60M Black Hawks and purchase CH-47F Block II Chinook cargo helicopters it did not plan to procure for the active component. And it will invest roughly $2.5 billion across the next five years beginning in fiscal 2025 in new unmanned capabilities, according to Bush.

While FARA has come to an end, the Army said it needs the funding budgeted in FY24 to close out the program and wrap up some critical technology development efforts that can be transferred to other programs.

The FY25 budget request will show that the Army has requested funding for UH-60 research and development across its future years development program “that was not there before,” Bush said.

“When we go to that next multiyear, we hope that’s a better Black Hawk aircraft,” he said. “The one we have is great, but we hope that that R&D, cutting across the whole FYDP, that will allow us to have a better aircraft.”

Making Black Hawk better

One of the largest areas of technology development in the FARA program was focused on a modular open systems architecture.

That development will cascade to other aviation platforms from its Future Long Range Assault Aircraft to the current fleet of helicopters and even to other future platforms like the XM30 Mechanized Infantry Combat Vehicle in the design phase now, Gen. James Rainey, Army Futures Command commander, said during the same hearing.

The number one priority for Black Hawk upgrades will be incorporating the open system architecture, Maj. Gen. Mac McCurry, the Army’s Aviation Center of Excellence commander, testified at the hearing. “The ability for us to turn and be more nimble as we react to changes on the battlefield and put a new piece of kit on a Black Hawk, that open architecture helps us do that very well.”

The Army also “learned numerous things … modeling and simulation that we developed as part of this, the whole Launched Effects ecosystem was one of the main things we’ve benefited over the course of this study,” Rainey added.

Launched Effects will be deployed from both aircraft and ground platforms and will not only be able to perform armed scout-type missions for Army aviation but will be host to a wide variety of sensors and payloads to perform reconnaissance, take out enemy weapons, provide targeting or even extend network connectivity.

More technology that will be transferable includes work on Degraded Visual Environment capabilities, which the Army has been working on for many years, as well as sensor processing and heads-up mounted display advancements, according to McCurry.

Additionally, the service did a lot of work on sensor miniaturization and lightening payloads and sensors that can now be easily transferred to unmanned systems, he added.

And work on additive manufacturing to get away from forgings and castings will increase the Army’s maintenance-free operating periods, McCurry said.

A path for improved engine

The Army plans to spend some of its time closing out the FARA program testing out its Improved Turbine Engine Program engines in the FARA prototypes built in a competition between Lockheed Martin and Bell Textron. Both aircraft had been built and recently received ITEP engines to begin the process toward initial flights by the end of the year, prior to the program’s cancellation.

“We’ve got engines in test stands today. We’ve got engines in the aircraft today that we’re going to run in the FARA aircraft and we will learn from that,” Brig. Gen. David Phillips, the Army’s program executive officer for aviation, said during the hearing.

The ITEP engine program experienced technology development and supply chain hurdles, drastically delaying its introduction to the aircraft it will power including the FARA program. ITEP was originally designed to replace the engines in UH-60M and AH-64E Apache attack helicopters, giving the aircraft 3,000 shaft horsepower and increased fuel efficiency.

The Army is delaying procurement of the ITEP engine, a move it announced along with the FARA cancellation, but it is sustaining its research and development efforts, Bush reassured at the hearing.

“We’re going to revisit that in [the program objective memorandum FY]26, to understand based on how things are going with integration on Apache and Black Hawk, when those procurement dollars need to come back into the program,” he said. “The Army remains committed to that program and getting that capability to the fleet.”

He wanted the conservative think tank’s help mustering public and congressional support for a $1.4 trillion defense budget, nearly 50% higher than fiscal 2023 spending levels.

The Mississippi Republican said this figure, equal to 5% of U.S. gross domestic product, is necessary given multiplying threats across the world.

“The U.S. should lead in the Indo-Pacific,” he said. “The U.S. should lead in Europe. The U.S. should lead in the Middle East. This is our official strategy. The U.S. should seek to win, not just manage, against China and Russia. The U.S. should deter Iran and North Korea and terrorist groups.”

The senator’s appeal was quickly followed by a panel with three speakers, all with ties to former President Donald Trump, who questioned the size of the current defense budget, much less a 50% increase, and argued the U.S. can’t do it all.

“Our military is not what it should be, despite spending almost $1 trillion,” said Elbridge Colby, a former deputy assistant secretary of defense who helped develop Trump’s National Defense Strategy.

The contrast between Wicker’s push and the skepticism of many Republicans promises to create new complications as the U.S. defense budget surges toward $1 trillion.

Last year’s debt ceiling agreement caps the FY24 defense top line at $886 billion, though the Pentagon and all other agencies face a 1% cut if Congress does not pass a full FY24 budget by April 30. Even so, FY24 defense spending could balloon as high as $953 billion if Congress also approves President Joe Biden’s foreign aid request for Ukraine, Israel and Taiwan.

As the Pentagon seeks to address these new wars along with consistently rising costs like salaries and health care for troops and civilians, the $1 trillion figure may draw new scrutiny to the defense budget, including questions about where to cut and where it’s falling short.

It’s a figure that seems far too large to some Republicans aligned with Trump’s America First policy and progressive Democrats. It’s also an amount that falls more than $400 billion short of what some defense hawks say the Defense Department needs to meet its many commitments.

Mark Cancian, a senior adviser at the Center for Strategic and International Studies think tank, told Defense News the $1 trillion figure, while symbolic, will pose “a major decision for the next administration.”

“If it’s a Trump administration, everything’s up in the air. But even if it’s a Biden administration, I would argue — many people would argue — that their strategy is underfunded,” Cancian said. “They have this very robust strategy, and they just aren’t putting the money against that.”

Even if Congress chose to keep the defense budget flat, it would soon approach $1 trillion in the next few years to keep up with inflation.

And cuts would be challenging; the Republicans and progressive Democrats advocating to cut $100 billion or more from the defense budget would confront a host of thorny complications that range from personnel to readiness to acquisition policy.

“A $1 trillion figure is attention-grabbing, and it will cause people to start asking some hard questions about what the nation’s return on investment is for its $1 trillion in spending,” said Travis Sharp, a senior fellow at the Center for Strategic and Budgetary Assessments. “The way the $1 trillion budget gets presented, and the types of things it’s measured against, will become pretty important in terms of the political and popular support for that level of spending.”

‘We already spend $1 trillion’

The U.S. today spends more on its military and weapon systems than the next 10 countries combined, including China and Russia, according to data compiled by the Stockholm International Peace Research Institute in 2023.

Cancian — who worked in the White House’s Office of Management and Budget during the Obama administration — estimates defense spending would have to increase by roughly $25 billion annually to keep pace with inflation. This means the U.S. is on track to reach a $1 trillion defense budget within the next few years, regardless of supplemental spending.

And that’s just discretionary defense spending, which excludes mandatory bills such as veterans’ benefits.

“By almost any other metric, we already spend $1 trillion a year on defense,” said Geoff Wilson, who leads the Center for Defense Information at the Project on Government Oversight, an independent watchdog. “We’re one of the only countries that views this as a separate line item.”

At the same time, the Defense Department has trouble tracking its $3.8 trillion in assets, failing its sixth consecutive audit last year. The Marine Corps became the first, and so far only, armed service to pass an audit in February.

“Given all these costly failures and this abhorrent track record of fiscal accountability in the military-industrial complex, how much more defense are taxpayers actually going to get?” Wilson asked. “I don’t think just throwing another $200 billion at the problem is going to fix everything else. The industrial base has been unable to absorb the defense budget it already has.”

Over the last decade, defense priorities have largely received bipartisan support. During the Trump administration, the defense budget continued to grow.

But former Trump administration officials and many Republicans have started to chafe.

For the first two years of the Biden administration, Republicans worked with centrist Democrats to significantly boost the White House’s defense budget requests. The defense budget stood at $740 billion when Biden took office in FY21 and rose to $858 billion in FY23, excluding an extra $35 billion in Ukraine military assistance that year.

“That’s a lot of money that we spend — over 3% of GDP — on defense,” Colby, the former Pentagon official, said at the Heritage event. “A lot of it is for reasons that are understandable … personnel costs, the higher cost of our defense-industrial base, the industrialization in general. At the same time, you’ve got to look at the fact that there are very real political constraints.”

Colby has called for a focus on the Indo-Pacific region to deter China from attacking Taiwan, and pushed for NATO allies to spend 2% of their respective GDP on defense. For his part, Trump has threatened to withdraw from NATO over numerous members’ failures to meet the 2% benchmark set by the alliance.

Republican hawks derided Biden’s $886 billion defense budget request last year as failing to keep pace with inflation, only to lock it in as part of the debt ceiling agreement. Five months into the fiscal year, Congress has yet to pass a full FY24 budget.

The debt ceiling blueprint provides the Defense Department with more discretionary funding than all other federal agencies combined. When Republicans last leveraged a debt ceiling raise in exchange for discretionary spending caps under the Obama administration, Democrats insisted on equal amounts of both defense and nondefense spending.

Sharp, the budget analyst, said because the 2023 debt ceiling agreement “starts out with uneven caps, the parity principle doesn’t really apply as much, which suggests that defense is coming under less fiscal pressure than it could.”

Under the Obama administration, the Pentagon and Congress routinely circumvented defense budget caps through a fund known as overseas contingency operations, billed as a spending account focused on the wars in Afghanistan and Iraq.

Biden eliminated this account in his FY22 budget. But following Russia’s full-scale invasion of Ukraine in February 2022, he has used Ukraine aid packages to similarly increase defense spending beyond the base budget, with much of the money going to Pentagon contractors backfilling U.S. equipment sent to Kyiv.

Now, a group of Republicans wants to put the brakes on the foreign aid packages that have constituted significant defense spending increases outside the base budget.

“We just want the country to have a conversation about the strategy of spending,” Robert Greenway, the new head of Heritage’s Center for National Defense, said in September on a podcast. “We’re probably knocking on the door of a couple hundred billion dollars on Ukraine.”

‘A budget that is too low’

Amid bloody wars in Europe and the Middle East as well as the specter of a potential Indo-Pacific conflict, the Biden administration has rushed arms to Ukraine and Israel, and it seeks to do the same for Taiwan.

Biden’s latest Ukraine military aid request is his largest yet and includes security assistance for Israel and Taiwan. The foreign aid bill the Senate passed 70-29 in February for all three security partners and other Defense Department priorities would total $67 billion in extra Pentagon spending for FY24. If the House passes that bill as well as a full defense budget, it would put FY24 defense spending at $953 billion.

However, House Speaker Mike Johnson, R-La., has refused to put the bill on the floor for a vote amid opposition from Trump.

Growing congressional concerns, fueled in part by Trump’s presidential campaign, mean the Pentagon may be unable to rely on additional funds to boost its base budget the same way it did during the Iraq and Afghanistan wars.

But even after the large defense spending increases in recent years, some analysts argue the Pentagon’s strategy remains underfunded.

“The current strategy, which is pretty consistent with what the Trump administration had and with what the Obama administration had, calls for engagement in Europe; a response to Ukraine; a continued presence in the Middle East, although reduced at least; and China as the pacing threat — but also nuclear modernization; a strong, all-volunteer force; a vibrant defense-industrial base,” Cancian said.

“You stick all that together — that’s very expensive.”

An extra $26 billion in Ukraine military aid for FY22 brought total defense spending that year to $804 billion. Then in FY23, an extra $35 billion in Ukraine military aid brought total defense spending to $893 billion.

“The future of America’s national security faces two huge challenges: an outdated defense strategy and a budget that is too low to support it,” Elaine McCusker, a senior fellow at the conservative think tank American Enterprise Institute, wrote in February. “These factors include an industrial base that is inadequate to meet our needs and stalled emergency spending that includes a long overdue revitalization of our defense production capacity for crucial platforms such as submarines and ships.”

But with Trump increasingly likely to win the GOP presidential nomination, some Republican defense hawks have become wary of lining up behind Ukraine aid ever since Congress passed its last package for Kyiv in December 2022.

Sen. Lindsey Graham, R-S.C., voted against the Senate bill in February, endorsing Trump’s proposal to issue the foreign assistance as loans. Graham’s position marks an about-face from nine months ago, when he made his vote on the debt ceiling deal contingent on passage of a defense spending package for Ukraine to circumvent Biden’s $886 billion military budget top line.

The Heritage Foundation, which has spearheaded the Project 2025 policy document for a future Republican president, has also lobbied against additional Ukraine aid.

Trump’s former acting Defense Secretary Christopher Miller authored the document’s section on the Defense Department, which lambasted the Pentagon for “wasteful spending, wildly shifting security policies [and] exceedingly poor discipline in program execution.”

The Project 2025 transition document doesn’t recommend a specific defense budget top line, but Miller wrote in his memoir last year the U.S. should cut military spending by 40% to 50% to “end American adventurism and retool our military to face the challenges of the next century.”

Meanwhile, several progressive Democrats in the House have come out against the bill’s extra $14 billion for the Israeli military amid the humanitarian catastrophe in the Gaza Strip.

“If the proposed increase were coming as part of the base budget, it wouldn’t attract potentially some of the controversy that supplementals have because base budget spending isn’t always so tightly connected to a security situation occurring in a specific part of the world that people can have strong opinions about,” Sharp said.

‘The status quo is very rigid’

During his first three years in office, Trump proposed large defense increases, in line with his National Defense Strategy, which called for 3% to 5% real budget growth above inflation. But in 2020, his final year in office, Trump proposed a flat defense budget.

For the past several years, progressive Democrats, led by Reps. Barbara Lee of California and Mark Pocan of Wisconsin, have introduced a bill to cut $100 billion in defense spending, though it has failed on the floor.

“The reason that’s delusional is not that you can’t save money with efficiencies or changes in overhead,” Cancian said. “The problem is that all of them are politically difficult, and you have to expend political capital to get those efficiencies. And that’s where the White House typically stops.”

Sharp said it would be possible to eliminate budget inefficiencies and find savings in a theoretical exercise that rebuilds the Defense Department from scratch, but cutting $100 billion in a single year would be a tall order.

“It’s a purely academic exercise mostly because transforming situations in those ways is — I don’t want to say impossible, but it’s extraordinarily difficult,” he added. “The status quo is very rigid.”

The Heritage Foundation and the American Enterprise Institute convened a conference last year to identify savings and efficiencies in the defense budget. The conference’s report proposed potential savings over the long term, but cautioned there’s “no easy button” to press.

“Defense inefficiency is often marbled within the budget across programs, accounts, services and agencies,” it stated.

The report recommended some actions that have previously run afoul of parochial headwinds in Congress, such as base realignment and closure. It noted five previous rounds of base closures saved the Defense Department $12 billion annually. Congress rejected the base closure attempt the Trump administration proposed in 2017.

The largest portion of the Pentagon budget goes toward operations and maintenance, which covers equipment repair and training costs, among other items like some health care costs.

McCusker, who served as acting Pentagon comptroller in the Trump administration, estimated roughly $109 billion within Biden’s FY23 defense budget proposal did not go directly toward core military functions.

“Along with increasing costs of health care, benefits and compensation, the true cost of military capability is disguised and squeezed out by these and other priorities,” she told Defense News. “For example, the [operations and maintenance] appropriation is loaded with spending on health, community, family, climate, education and security assistance programs.”

The next largest category is personnel, including troop payment and retirement benefits for the all-volunteer force. Congress authorized a 5.2% troop pay raise in December when it passed the annual defense policy bill, the largest salary boost in 22 years.

The third is procurement, and defense contractors frequently come under fire for systems hit by delays and cost overruns.

“All you have to do is look at the last 20 years of major weapons developments: the F-35 [fighter jet]; the LCS, or littoral combat ship; the Zumwalt-class destroyer; the Ford [aircraft carrier],” said Wilson, the Project on Government Oversight analyst. “They’ve all been over budget and behind schedule. And this is not only a real cost; it’s a cost on readiness.”

For instance, the submarine-industrial base has been unable to keep up with the Navy’s goal of producing two Virginia-class submarines and one Columbia-class submarine per year. The delays stem in large part from labor shortages and pandemic-related supplier issues.

Wicker inserted another $3.3 billion in the Senate’s foreign aid supplemental to address these challenges.

Sens. Bernie Sanders, I-Vt., and Chuck Grassley, R-Iowa, introduced a bill with eight other Democrats and Republicans last year that would require any part of the Defense Department to return 1% of its budget to the Treasury for deficit reduction if it failed to pass an audit.

Grassley previously chided the Pentagon for spending $10,000 per toilet seat for a fleet of aircraft, saying that “the Department of Defense has been plagued by wasteful spending for decades.”

The Defense Department’s troubled bookkeeping practices can make tracking and eliminating waste a difficult endeavor.

Service contracts for things like administrative and technical support account for roughly half of all Pentagon contracting. But a 2023 Government Accountability Office report found the Defense Department did not fully collect and review data for service contracts that ranged from $184 billion to $226 billion annually from FY17 through FY22. Although the Navy collects and reviews this data, the report said the Army and Air Force do not consistently do the same.

While it’s unclear how much money the Pentagon could find by eliminating waste, pressure to get its fiscal house in order will likely increase as the defense budget nears $1 trillion. In the meantime, any significant defense budget cut may require the U.S. to reexamine its role in the world.

“There are a lot of things that you could do to save money, but you have to have a different strategy,” Cancian said. “You can save $100 billion, but you cannot have the current strategy. And for the Europeans, for Israel, for our allies in the Middle East, this would be a radical change.”

These hinge on four related variables:

Who wins the White House? Former President Donald Trump regards increased defense spending as one of his signature achievements. If reelected, he might look to reprise that record. He and President Joe Biden also could take very different approaches to Ukraine financial assistance via supplemental budgets.

Who controls Congress? If one party controls all three branches of government, it will have an easier time enacting its fiscal plans. Given the number of Democratic seats at stake this November, Senate control is likely to shift to Republicans in 2025-2026. The race for control of the House is a toss-up. A divided Congress is a recipe for continued dysfunction over the budget process.

Will there be fiscal constraints? The Fiscal Responsibility Act set caps on all discretionary spending in FY24 and FY25. The law could sequester the FY24 budget to 99% of FY23 enacted levels unless Congress acts by April 30. This would leave the DOD about 4.2% below the FY24 budget request. For FY25 and beyond, Congress could limit federal spending to cope with historic budget deficits and national debt.

What about supplemental budgets? In October, the White House requested $105.1 billion in supplemental funds — which are not constrained by the Fiscal Responsibility Act — to support Ukraine, Israel, U.S. submarine programs and other efforts. House Republicans are divided over Ukraine funding. Whether Congress uses supplementals to aid Ukraine and to skirt caps are critical variables.

There are some outliers who advocate spending outside these scenarios. For example, Sen. Roger Wicker, R-Miss., has called for defense spending equal to 5% of gross domestic product. On the other hand, Reps. Barbara Lee, D-Calif., and Mark Pocan, D-Wis., in February 2023 called for the FY24 defense budget to be $100 billion below the FY22 budget. But neither of these extremes has enough support.

Doug Berenson is a partner in the aerospace and defense practice at the consultancy Oliver Wyman.

The war in Ukraine, the threat of war with China in the Taiwan Strait, and continuing attacks on the American presence in the Middle East all raise questions about whether the United States can meet its defense obligations in one of the most complex geopolitical environments our nation has ever faced.

At the same time, global technological change continues to surge in areas like artificial intelligence, unmanned vehicles, hypersonics, cyber and space. How quickly the Pentagon adjusts to these changes and allocates its $800 billion budget is crucial to addressing national security challenges.

To this end, Congress created the Commission on Planning, Programming, Budgeting, and Execution Reform in the fiscal 2022 National Defense Authorization Act. Congress directed the 14-member bipartisan commission to recommend reforms to the way the Department of Defense sets priorities and allocates resources, using what’s known as the PPBE system.

After two years of research and after hearing from more than 1,100 expert witnesses ranging from congressional members and staff to senior defense officials and industry experts, our final report is now available to the public.

The report lays out five major areas for reform designed to improve the alignment of budgets to strategy, foster innovation and adaptability, strengthen relationships between the DOD and Congress, modernize business systems and data analytics, and strengthen the capability of the resourcing workforce — with 28 actionable recommendations that will better enable our military to achieve its missions today and in the future. A few examples illustrate the scope and nature of our recommended changes:

• Replace the PPBE process with a new Defense Resourcing System

Established in the 1960s, the PBBE process is no longer able to keep up with the pace of innovation and the complexity of growing national defense threats. Therefore, our commissioners reached consensus on a recommendation to create a new and streamlined approach called the Defense Resourcing System, dubbed DRS.

DRS consolidates the existing four-stage process into three interlocking stages: strategy, resource allocation and execution — to better align allocation of the DOD’s resources with strategic goals and to bring about more efficient resource allocation. The DRS provides key strategic and resource-informed direction to drive resource allocation in a more rigorous and analytically informed way. It also provides the agility needed to keep pace with advances in technology, as well as the changing threat environment — and increases transparency and accountability to Congress.

• Transform the budget structure

This recommendation involves changing how appropriations and budgets are presented to Congress and the public and how Congress authorizes and appropriates funding.

The transformed structure focuses less on spending categories (such as procurement and operating costs) and more on major capability areas (examples might include ground maneuver units and tactical aviation).

The new structure creates a smooth, top-down flow from service/component and major capability activity area, to individual systems and programs throughout their life cycle. The transformed budget structure will improve linkages between strategy and budgets and provide a clearer picture to Congress and the public of how DOD money is spent and why.

• Update thresholds for smaller reprogrammings

These smaller reprogrammings (known as below-threshold reprogrammings) are important because they allow the DOD to move money more quickly to meet changing requirements.

However, while the DOD budget has grown significantly over the last two decades, the thresholds for use of these smaller reprogramming actions are, in some cases, lower today than they were back then. The commission recommends revising these thresholds to account for the growth in each of the appropriations.

• Encourage improved in-person communication with Congress

Ensuring Congress has the necessary information to perform its oversight role constitutes a key enabler to successful execution of the DOD mission, as well as implementation of these recommendations.

The Commission recommends a more regularly recurring series of conversations between Pentagon officials and Congress on a range of topics to include challenges and successes with programs or authorities, current financial and programmatic execution, and changes that affect the president’s budget request.

Other recommendations in our final report include standardizing and modernizing DOD business and financial systems, providing the necessary agility to respond to changing threats at speed, improving training and focusing on recruiting and retention of the resourcing workforce.

Taken together, our 28 recommendations will create a better balance between the agility and oversight in meeting our nation’s defense challenges. These changes are significant, and implementation will require time and a strong partnership between the department and Congress.

As we note in our report, “Today, the United States is confronted with the potential for armed conflict in every domain, in every corner of the world and at any given time.”

Now more than ever, our Department of Defense needs a new Defense Resourcing System that provides the processes, authority, and tools to enable our men and women in uniform to meet the threats of today and far into the future.

Robert Hale, chair of the PPBE Reform Commission, was comptroller and chief financial officer at the Department of Defense from 2009 to 2014. Ellen Lord, vice chair, was undersecretary of defense for acquisition and sustainment from 2017 to 2021.

The $78 billion tax bill, sponsored by House Ways and Means Chairman Jason Smith, R-Mo., includes a provision to fully restore a research and development credit Congress first enacted in 2017 as part of former President Donald Trump’s sweeping tax cuts. The House passed the bipartisan bill in January in an overwhelming 357-70 vote.

The 2017 R&D tax cuts allowed companies to immediately deduct their research and development expenses. But in 2022, the provision partially expired, meaning companies now must spread that deduction out for a minimum of five years or longer in an amortization period.

Smith’s bill would fully restore the immediate R&D tax deductions without the amortization period while allowing defense contractors and other businesses to retroactively claim the credit for 2022 as well.

Aerospace Industries Association chief executive Eric Fanning said in a statement the “critical bill provides a short-term fix to a harmful policy that has forced American businesses to cut back on R&D spending.”

The defense industry is pushing the Senate to pass it before the 2023 tax filing season ends.

“Congressional members deserve enormous credit for addressing a significant issue negatively impacting companies of all sizes and across all sectors of the U.S. defense-industrial base,” the National Defense Industrial Association said in a statement. The statement said the five-year amortization period “substantially reduced the cash flow many small businesses had available to maintain a highly qualified and specialized workforce and to accelerate their research and development investments.”

The top five biggest defense contractors — all of whom are National Defense Industrial Association members — have also lobbied Congress heavily to restore the tax credit, according to lobbying disclosure forms reviewed by Defense News.

Lockheed Martin, General Dynamics and Northrop Grumman brought up the R&D tax credit every quarter while lobbying Congress last year, according to the disclosure forms. Boeing and RTX, formerly known as Raytheon Technologies, also raised tax issues every quarter.

Lockheed Martin and Northrop Grumman both spent at least $10 million total last year lobbying Congress. General Dynamics spent at least $12 million lobbying in total last year, while RTX spent at least $11 million and Boeing at least $14 million.

All of those companies, except Lockheed Martin, are also members of the Aerospace Industries Association.

Last year, Sen. Elizabeth Warren, D-Mass., and Rep. Chris DeLuzio, D-Pa., pressed defense contractors on their lobbying to restore the R&D tax credit, deriding it as “nothing but corporate handouts.” But the R&D tax credit nonetheless enjoys widespread bipartisan support.

Even so, the bill remains stalled in the Senate over unrelated issues, and the Financial Services Committee has yet to advance it amid opposition from ranking member Sen. Mike Crapo, R-Idaho.

Crapo lambasted efforts from the House “to pressure Senate Republicans to rubber stamp” the compromise legislation “as counterproductive” in a statement last week.

“This was the risk of announcing a deal without my support and with no near-term path forward in the Senate,” said Crapo. He said he disagrees with the bill’s child tax credit policy even as he supports its measures to maintain “pro-growth” policies from the Trump tax cuts.

“That is precisely why I am still working with my Senate colleagues to reach consensus on a path forward,” Crapo added.

In the meantime, Senate Democrats are looking at possibilities to advance the bill outside the Financial Services Committee. Those options range from holding a stand-alone vote on the Senate floor to attaching it to must-pass legislation due this month. Possible legislative vehicles include the long-overdue spending bills or the Federal Aviation Administration Reauthorization Act.

Five months into the fiscal year, which began Oct. 1, lawmakers have yet to pass a full FY24 budget. The uncertainty has raised concerns in the Pentagon that Congress may put the department on a one-year continuing resolution with a 1% sequester.

Without an FY24 defense budget, the Pentagon remains unable to implement new modernization programs and cannot take new steps to expand the defense-industrial base amid wars in Europe and the Middle East.

“The lack of full-year funding has put key government programs in purgatory, wasted taxpayer money on outdated budgets and hindered forward progress that will make the country more secure, push us to the next levels of technological advancement and support American competitiveness in key industries like aerospace,” Aerospace Industries Association chief executive Eric Fanning said in a statement.

The House voted 320-99 to pass its fourth temporary spending measure, and the Senate followed suit shortly thereafter in a 77-13 vote. Under the latest stopgap spending bill, funds appropriated for Veterans Affairs and military construction will expire on March 8, two weeks before Defense Department funding runs out.

Congress is expected to vote on the FY24 Veterans Affairs and military construction spending bill next week. But lawmakers have yet to finalize the FY24 Pentagon spending bill.

The right-wing House Freedom Caucus has insisted on several policy riders in the appropriations bill that Democrats have ruled out as poison pills, including bans on the Pentagon’s abortion travel leave policy and medical care for transgender troops.

Last year’s debt ceiling deal caps FY24 defense spending at $886 billion. If Congress does not pass a full FY24 federal budget by April 30, the debt ceiling agreement puts government funding on a one-year continuing resolution that would cut spending at the Pentagon and all other federal agencies by 1%.

Pentagon sounds the alarm

The undersecretaries of the Navy, Army and Air Force told reporters Wednesday a one-year stopgap funding measure at FY23 levels would result in billions of dollars in “misaligned” funds at the Defense Department.

To cope with a one-year stopgap measure, they said the Defense Department would first have to prioritize current operations in places like Europe and the Middle East, followed by personnel, then acquisition and modernization.

Navy Under Secretary Erik Raven noted this would result in the military submitting “unprecedented” reprogramming requests to Congress. The Navy, for instance, would need Congress to approve a $13 billion reprogramming request to address $26 billion in misaligned funds.

It would also result in a $2 billion shortfall for the Virginia-class attack submarine program and another $800 million shortfall for amphibious ship spending. Congress has provided a $2.2 billion carveout for the Navy to continue work on the Columbia-class ballistic submarine program, most at risk of falling behind schedule.

Other services would not be able to begin new initiatives either, including a highly prioritized munitions ramp-up following the influx of arms the U.S. has sent to Ukraine and Israel with more due for Taiwan.

“These are production rate increases, new starts — both in programs for acquisition as well as military construction projects — that we cannot start,” said Army Under Secretary Gabe Camarillo.

Congress has still not funded the multiyear munitions procurement plans it authorized for FY23 and FY24, and Camarillo noted those funds are needed “to give industry the incentive to be able to facilitize, invest in a workforce and be able to do those extra shifts that we know that we need in order to restore our munitions.”

The $95 billion foreign aid bill for Ukraine, Israel and Taiwan also includes considerable funding to ramp up the munitions-industrial base. But House Speaker Mike Johnson, R-La., has so far refused to put it on the floor for a vote after the Senate passed it 70-29 earlier this month.

For its part, the Air Force warned earlier this month a 1% sequester would reduce its buying power by $13 billion and put $2.8 billion in space modernization projects on hold.

Turkey has sought to lock down the sale, which includes 40 new F-16s made by Lockheed Martin as well as modernization kits for 79 fighter jets in its current fleet, for several years. The State Department finally approved the sale when Turkey ratified Sweden’s NATO membership after stalling for more than a year.

Sen Rand Paul, R-Ky., on Thursday forced the vote on the resolution to block the sale, citing “significant human rights issues, arbitrary killings, suspicious deaths of person in custody, torture, arbitrary arrests and continued detention of tens of thousands of persons.”

“I also remain deeply concerned about the negative strategic implications of this proposed sale, given Turkey’s reckless military actions in recent years,” Paul said on the Senate floor ahead of the vote.

Paul noted that a U.S. F-16 shot down a Turkish drone in October in northeast Syria, where American troops back Kurdish-majority forces Ankara considers a terrorist organization. He also pointed to Turkey’s deployment of F-16s to Azerbaijan in 2020 during its war with Armenia over the disputed Nagorno-Karabakh region.

Senate Foreign Relations Chairman Ben Cardin, D-Md., defended the sale on the floor after greenlighting it last month.

“I consulted closely with the highest levels of the Biden administration about this transaction over several months,” said Cardin. “I believe they share my concerns, and I believe we are making progress.”

Cardin argued Russia’s invasion of Ukraine presented a strategic imperative for Sweden’s NATO accession as well as the need to modernize Turkey’s capabilities within the alliance. He said the sale would upgrade Turkey’s “aging F-16 fleet to a more capable model, a model that is compatible with the United States.”

“Turkey is key to the defense of the southern flank of NATO,” said Cardin. “It is host to a major U.S. military presence, and Turkey’s F-16 fleet contributes to NATO, including in the Black Sea, which is critical to our national security.”

The State Department also approved an $8.6 billion sale of F-35 stealth fighter jets to Greece last month at the same time it greenlit Turkey’s F-16 purchase.

The U.S. expelled Turkey from the F-35 co-production program in 2019 over Ankara’s purchase of the S-400 missile defense system due to fears Moscow could use its advanced radar system to spy on the stealth fighter jets.

A full-year continuing resolution that would keep fiscal 2023 spending levels through the rest of 2024 means the U.S. Army, for instance, would run out of operations and maintenance funding in the European theater as it trains Ukrainian soldiers to defend against Russia’s ongoing invasion of the country, which has entered its third year.

The financial strain is compounded by the lack of certainty over whether Congress will pass a supplemental funding package that would reimburse the Army for expenses incurred so far in bankrolling support to Ukraine.

The Army already spent $500 million in the European theater in operations and maintenance, and “we were counting on a supplemental to be able to sort of replenish us for that,” Army Secretary Christine Wormuth said at a Feb. 27 Defense Writers Group event. “What that means is probably by late spring, summer, we would have to make some difficult choices about other [NATO] exercises, for example, that our forces participate in.”

Additionally, the Army has been funding support to Israel to include deployments of units to the Middle East in the event they are needed, she added.

Army Under Secretary Gabe Camarillo told reporters Feb. 28 at the Pentagon that the service spent $100 million in U.S. Central Command’s area of operations as well as another $500 million to support the U.S. Southwest border security mission.

“I do worry. Our budget has been flat for the last couple years. We don’t have a lot of cash under the sofa cushions, and if we don’t get a budget and we don’t get a supplemental, we’re going to probably have to cancel some things,” Wormuth said.

The Army is prioritizing current operations, Camarillo said, which means it is “going to have to look to other areas of O&M spending where they “can potentially take some risk,” including “exercises and the degree to which we participate in some around the globe. We might have to scale some of that back in the absence of an appropriation this year.”

For the Air Force, Kristyn Jones, who is performing the duties of the service’s undersecretary, told reporters alongside Camarillo that in order to pay its personnel, training exercises would take the hit.

“Anything that’s already on a [Foreign Military Sales] case won’t have a dramatic impact, but all of the replenishment that we’re expecting in the supplemental is currently impacted. And even things like F-35 [fighter jet] training that we’re planning … with our allies and partners, that’s impacted by not having this appropriation as well.”

The Air Force is focused on trying to ensure flight hours are maintained, but it’s also important, Jones noted, that pilots receive training.

Despite the military’s experience in warfare, “we’re in a different strategic environment and we need to do the exercises, often joint and allied, to prepare for that environment. And the lack of our ability to do that doesn’t allow us to, again, to test the new techniques, the new military tactics that we’d like to have primarily for an Indo-Pacific fight,” Jones said. “That’s really where we need to stretch our muscles a little bit more.”

Learning from sequestration

With a possible extended or full-year continuing resolution, the service undersecretaries said the last time the military felt such a painful budget crunch was during the 2013 sequestration, where the services were required by law to make percentage cuts evenly across spending lines.

One of the fallouts of the 2013 sequestration was a rise in aviation mishaps because vital training flight hours were cut. Military Times and Defense News took a deep dive into aviation mishaps from FY11 through FY18 and uncovered the trend.

“Safety is always going to come first,” said Navy Under Secretary Erik Raven, “but we did look at the lessons of 2013 and sequestration, where we spread risk around the enterprise, and I think the concerns about maintaining ready and trained forces are part of the lessons that we’re using to inform if we get into this worst-case scenario where we don’t have our ’24 budget enacted and we are under a CR.”

“We’re not going to repeat that same peanut butter spread,” he added.

But trade-offs will be inevitable, he acknowledged, and “we’ll have to look across the board to see how to maintain the focus on current operations.”

Paparo’s confirmation was advanced by a voice vote without any objections late Wednesday evening, alongside 25 other senior military promotions. The chamber also confirmed Aprille Joy Ericsson as assistant secretary of defense within the Department of Defense’s research office in a voice vote.

Paparo will replace Adm. John Aquilino, who has served in the INDOPACOM role since April 2021. Paparo currently serves as commander of U.S. Pacific Fleet, and was nominated for the new role last August.

How Adm. Paparo will lead the US military in the Indo-Pacific

During his confirmation hearing before the Senate Armed Services Committee on Feb. 1, Paparo listed China, Russia and North Korea as the most pressing threats to U.S. military interests in the Pacific.

“If confirmed, I will ensure that we maintain the overmatch that preserves stability today, tomorrow, next week and for the decades to come,” he said.

Paparo is the son of an enlisted Marine and the grandson of an enlisted sailor who fought in World War II, according to his command biography. The Pennsylvania native has served in a variety of leadership roles during his 37-year military career.

A TOPGUN graduate, Paparo has logged more than 6,000 hours flying the F-14 Tomcat, the F-15 Eagle and the F/A-18 Super Hornet and has 1,100 carrier landings under his belt. As a fighter pilot, he took out a surface-to-air missile site in Kandahar during the invasion of Afghanistan in October 2001.

He was one of hundreds of military leaders whose promotions and confirmations were held up for months last year after Sen. Tommy Tuberville, R-Ala., staged a protest over the Defense Department’s abortion access policies.

Tuberville dropped those holds in December, but Paparo’s confirmation took several more weeks because of lingering background work by the Senate committee.

INDOPACOM oversees more than 380,000 American servicemembers stationed overseas and is responsible for all U.S. military activities in 36 nations.

One stopgap option would transfer additional weapons from U.S. stocks without funding to replenish that equipment. Another option uses the Excess Defense Articles program to send U.S. equipment to third-party countries that then send older weapons to Kyiv.

The European Union is also stepping up its assistance. It passed $54 billion in economic support for Ukraine after Hungary dropped its opposition.

But none of these stopgap measures to staunch the bleeding come close to the influx of arms for Kyiv that Congress could unlock if it passes the $95 billion foreign aid bill for Ukraine, Israel and Taiwan.

“The consequence of not doing so is likely Ukraine’s defeat,” Sen. Chris Murphy, D-Conn., told Defense News last week after returning from a congressional delegation to Europe. “There is not a plan B there. There’s certainly more that Europe could do, but there are certain weapons systems that only the United States can provide and maintain. And there is a hard limit to the amount of resources Europe can put in if the United States chooses to leave the coalition.”

Ukrainian officials also attributed Russia’s recent conquest of Avdiivka to the lack of available weaponry when Senate Majority Leader Chuck Schumer, D-N.Y., led a congressional delegation to the war-torn country last week.

House Speaker Mike Johnson, R-La., has refused to hold a vote on the foreign aid bill, which includes $48.3 billion in additional military assistance for Ukraine. The Senate passed the bill 70-29 earlier this month over objections from former President Donald Trump, the likely Republican presidential nominee.

Congress passed a cumulative $113 billion in military and economic aid for Ukraine after Russia’s full-scale invasion in February 2022, but has not provided additional funding since December 2022.

Biden hosted congressional leaders at the White House on Tuesday, where he joined Democrats and outgoing Senate Minority Leader Mitch McConnell, R-Ky., in pushing Johnson to pass the bill.

In the meantime, the Pentagon is weighing whether it should use roughly $4 billion left of drawdown authority to continue arming Ukraine from U.S. weapons stockpiles, even though it does not have the money to replenish those inventories without the foreign aid bill, CNN reported Wednesday.

The Pentagon did not directly address deliberations about transferring additional weapons without replenishment funding.

“The [Defense Department] continues to urge Congress to pass a supplemental to support Ukraine in its time of need and to replenish our stocks,” Pentagon spokesman Lt. Col. Garron Garn told Defense News in a statement.

The Pentagon used its last $1 billion in Ukraine replenishment funding to backfill U.S. stockpiles in December, with the White House noting that would be the last remaining assistance, absent congressional action.

“At issue here again is the question of impacting our own readiness, as a nation, and the responsibilities that we have,” Pentagon press secretary Gen. Patrick Ryder said last month. “While we do have that $4.2 billion in authority, we don’t have the funds available to replenish those stocks, should we expend that. And with no timeline in sight, we have to make those hard decisions.”

The remaining $4.2 billion in Ukraine transfer authority stems from an accounting error the Pentagon made last year. The error prompted Pentagon Inspector General Robert Storch to announce an audit of the valuation of weapons sent to Ukraine.

Excess Defense Articles

Another, more limited option involves third-party countries transferring Soviet-era equipment to Ukraine in exchange for more U.S. weapons through the Pentagon’s Excess Defense Articles program. The program also allows the U.S. to send equipment that helps countries transition away from Russian arms.

“The United States is providing security assistance to partners such as Ecuador and Zambia to help them transition off Russian equipment, but there’s more we can and must do,” the assistant secretary of state for political-military affairs, Jessica Lewis, said in December.

Ecuadorian President Daniel Noboa said in January that the U.S. would send $200 million in refurbished weapons to help fight cartels in exchange for “scrap” equipment. But Noboa backtracked last week after Russia imposed a ban on Ecuadorian banana and clove imports.

“To our surprise, the United States has publicly stated that this equipment will be used in the armed conflict in Ukraine, and we do not want to be part of it,” Noboa said.

The Greek newspaper Kathimerini reported in January that the U.S. is providing Greece with equipment through the Excess Defense Articles program, including two C-130H aircraft, three Protector-class ships and 60 Bradley armored fighting vehicles.

“Greece has provided substantial military assistance to Ukraine, including Soviet-era BMP infantry fighting vehicles, artillery and small arms,” the U.S. State Department told Defense News. “We thank the government of Greece for its generosity and encourage additional donations, in the future.”

The Defense Security Cooperation Agency, which oversees the Excess Defense Articles program, has not updated the public list of transfers since 2020, despite a congressional requirement that it do so. As such, it’s unclear what other countries are receiving U.S. weapons through the program.

The agency told Defense News it expects to update the list within “several weeks” but did not explain why updates stopped in 2020.

Noah Robertson contributed to this report.

The U.S. military may run out of personnel funds before the end of the year, be forced to scale back operations and see ongoing modernization efforts harmed if Congress fails to pass a defense spending bill by the end of next week, service leaders warned Tuesday.

The undersecretaries of the Army, Navy and Air Force said they’d have billions of dollars in “misaligned” funds — money that exists but not in the right budget lines to support their current spending needs — if they’re stuck with a full-year continuing resolution that keeps fiscal 2023 spending levels through the rest of 2024.

They agree that they’d have to prioritize current operations first, then people and then acquisition and modernization in a CR.

“You see sailors and Marines across the globe today, performing important missions: the Red Sea is an excellent example of how current operations take precedence,” Navy Under Secretary Erik Raven told reporters at the Pentagon.

Without sufficient funds, he said, “we have to make tough choices. But between the ability to fight tonight and be ready for all the threats, versus preparing for the future and modernizing our forces — it is a tough decision, but we have to lay our chips somewhere, and that’s on the ability to perform our missions today.”

Raven said the Navy’s ability to make that prioritization, though, would require Congress to grant the services some “unprecedented flexibilities” in the form of massive reprogrammings, or moving money from one line item into another.

The Navy, for example, would have $26 billion in the wrong places, and would need Congress to approve $13 billion in formal reprogrammings — more than twice the money Congress approves for the entire Defense Department in a typical year, he said.

But the reprogramming frenzy would be vital to mitigate the risk the services would take in their modernization efforts and industry would face if contracts are delayed or nixed altogether.

The Army is facing a similar misalignment in funds, to the tune of $6 billion.

“These are production rate increases, new starts — both in programs for acquisition as well as military construction projects that we cannot start,” Army Under Secretary Gabe Camarillo said.

The Air Force’s misalignment in funds equates to over $13 billion and “impacts are particularly challenging in the Space Force, who has seen their budgets rising over the last couple of years,” Air Force Under Secretary Jones said.

‘Burning hotter’

Further complicating funding this fiscal year is the fact that Congress has yet to pass a sweeping supplemental request, which the Pentagon hoped would supply weapons to Ukraine and Israel in support of ongoing wars for both countries and would also fund the Southwest border mission. The lack of supplemental funding compounds the impact of a long-term CR, Camarillo said.

The Army is spending $500 million out of its base budget for operations costs in the European theater, another $100 million in the U.S. Central Command area of operations and another $500 million for the operations along the U.S. Southwest border.

“At one point in time, there was a thought that all of this could be funded through a supplemental, and it is now currently, today, in FY24, being funded 100% out of the Army’s base budget,” Camarillo said.

“We are just burning hotter than we normally would across all of our appropriations accounts,” he said. “[U.S. Army Europe and Africa] in Germany has explained that … they will run out of money this summer in the absence of extraordinary relief, aka a reprogramming.”

This will be a problem across the board, he added, to include running out of funds in the Army’s military personnel account.

Industry impacts

The services planned to ramp up munitions spending in FY24, to bolster their own stockpiles as a hedge against a future fight and to replenish allies’ and partners’ stocks.

A year-long CR puts that industry ramp-up in peril.

Camarillo said he was “particularly concerned” the CR would not allow the services to “send that strong signal to give industry the incentive to be able to facilitize, invest in a workforce and be able to do those extra shifts that we know that we need in order to restore our munitions.”

Camarillo said the Army intended to kick off a multiyear procurement effort for the Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) interceptors in FY24. Under a full-year CR, it would be $1.2 billion short to reach the production rates needed to achieve the economic order quantities and savings associated with the multiyear procurement deal.

Lockheed Martin has invested significantly in the PAC-3 MSE line to grow production from 550 missiles per year to 650. The Army requested in its FY24 budget $775 million to ramp up that production. The company intends to grow production beyond 650 in the following year, as demand increases due to the war in Ukraine and conflict in the Middle East.

Camarillo added the Army could not begin to field its Mid Range Capability missile to the first unit, which is important to its Pacific deterrence, due to new programs not being allowed to start under continuing resolutions. Nor could it increase production levels for the Guided Multiple Launch Rocket System, Javelin missile, and 155mm munitions.

“I will just say that we have always said our goal was to get on 155 artillery 100,000 per month rounds by the end of calendar year ‘25. We cannot get there unless we get both the appropriation and we get the supplemental,” Camarillo said.

“It’s very challenging, because we’re asking industry to lean as far forward as they possibly can and to make investments both in additional personnel, unique tooling and machining that’s required to ramp up production capacity,” Camarillo said.

And the Army planned to buy 225 Coyote counter-unmanned aerial system interceptors – a spending need that hits home, he said, due to the recent deaths of three soldiers in Jordan who were killed by a drone strike from Iran-backed militants — but those, too, could not be purchased in a year-long CR.

For the Navy, Raven said the sea service wanted to double its Standard Missile 6 spending — something particularly timely, as Navy ships are expending the older SM-2 missiles almost daily in the Red Sea, shooting down Houthi missiles and drones — but that cannot happen under the full-year CR.

After the Navy just last week awarded a maintenance contract to HII’s Newport News Shipbuilding to overhaul the attack submarine Boise – which has languished at the pier since 2015 and has been unable to undergo repairs at either a public or private repair yard – Raven said a full-year CR would render the Navy unable to actually fund and execute that contract this year due to a $600 million shortfall in the submarine maintenance funds.

It would also see a $800 million shortfall in amphibious ship spending that could put at risk America-class amphibious assault ship construction, a $2 billion shortfall in submarine construction spending that would threaten the Virginia-class attack sub program, and more.

For the Air Force, Kristyn Jones, who is performing the duties of the under secretary of the Air Force, said the service has five contractors onboard for its collaborative combat aircraft effort, but that wouldn’t be able to move forward.

The full-year CR would also hamper production increases on the Joint Strike Missile and the F-35A Joint Strike Fighter, both of which the Air Force says it needs for a high-end fight, as well as spending on the Joint Air-to-Surface Standoff Missile for facilitization to support future production increases.

“We hear over and over: the industry wants that solid demand signal so they know how to invest, they can support the facilitization — and by having this uncertainty, it really has negative impacts across the defense industrial base,” Jones said.

There is, however, a way Washington could help hold Ukraine over until Congress gets its act together. While the administration has declared it’s “out of money” for Ukraine aid, it retains the authority to give Kyiv over $4 billion worth of materiel from U.S. stocks. The administration has declined to tap this authority because it’s out of funding to replace the donated equipment. But there are key weapons America could send now without compromising U.S. military readiness.

Ukraine is suffering from a shortage of men and materiel, particularly artillery ammunition. Congress’ monthslong delay in passing supplemental aid funding has exacerbated this challenge. Yet after rejecting an aid bill passed by the Senate earlier this month, House Speaker Mike Johnson appears to be in no rush to tackle the issue. It could be months before a bill reaches the president’s desk. Ukraine can’t afford to wait that long.

Comparing Russian, Ukrainian forces two years into war

Since Russia’s February 2022 invasion, Washington has relied on presidential drawdown authority, or PDA, as its primary vehicle for Ukraine aid. PDA allows the administration to give foreign partners weapons taken from existing U.S. stocks, expediting delivery. Through PDA, the United States has provided Kyiv with regular shipments of artillery ammunition, air defense interceptors and other critical capabilities.

Normally, the Pentagon replaces equipment donated under PDA by procuring new systems or munitions, which the military receives within months or at most a year or two. In 2022 and 2023, Congress provided both additional PDA for Ukraine as well as funding to replace the donated equipment.

However, the PDA packages for Ukraine ground to a halt in late December. The issue isn’t a lack of PDA itself; the administration can still donate around $4.2 billion worth of weapons. Rather, as the Office of Management and Budget’s director explained, the administration made a “very tough decision” to forgo the remaining PDA because the Pentagon has run out of money to buy replacement equipment.

The Defense Department presumably worries, despite its $850 billion-plus annual budgets, that continued donations within this $4 billion limit could jeopardize U.S. military readiness, absent assured replacement funding.

The administration is obviously right to prioritize American warfighters. But the U.S. military’s vast inventories contain plenty of things that wouldn’t be missed by American troops but would be a godsend to Ukraine. The Pentagon could afford to wait to replace these items — if it bothers to replace them at all.

Most notably, the United States could probably spare some more cluster munitions for Ukraine’s Western-made artillery systems. Known as dual-purpose improved conventional munitions, or DPICM, these rounds release dozens of smaller sub-munitions, increasing lethality. The Biden administration first provided 155mm DPICM rounds to Ukraine last summer as Western stocks of standard shells ran low. Ukrainian forces have since employed these munitions to great effect.

While it’s unclear how many DPICM rounds Kyiv has already received, the United States probably has a lot left. America’s DPICM inventory reportedly totaled nearly 3 million rounds as of spring 2023. Some of those munitions may be expired or otherwise unsuitable for Ukraine, but a considerable portion is probably still available.

It’s doubtful sending Ukraine more now would harm U.S. readiness. Pentagon policy discourages U.S. commanders from using DPICMs, particularly those with a dud rate greater than 1%, which are supposed to be retired from service.

In addition to shells, Ukraine needs more protected mobility. Even outdated vehicles like the humble M113 armored personnel carrier could offer significant value if provided in sufficient quantities. M113s play a key role in evacuating wounded Ukrainian soldiers and moving forces around the battlefield, but Kyiv needs more of these vehicles. Absent enough armored vehicles, Ukrainian troops must rely on civilian alternatives that provide little protection against Russian artillery and other threats.

The U.S. Army has thousands of M113s in long-term storage and is actively replacing those still in service. Sending a significant number of them to Ukraine would prevent avoidable casualties. That’s especially important at a time when Kyiv needs to husband its scarce manpower.

To be clear, this stopgap solution would not obviate the need for Congress to pass additional security assistance funding. It would merely buy time. U.S. assistance for Ukraine will not be sustainable without that funding, and there’s a limit to what America should provide without assured replacements.

Administration officials may chafe at having to explain how they’re able to resume aid despite being “out of money.” They may also fear weakening — if only slightly — the pressure on House Republicans to pass the supplemental. But those are poor reasons not to take a simple step that would save Ukrainian lives.

Ukrainian troops are fighting not only for their freedom but also vital U.S. interests. America cannot afford to leave them out to dry indefinitely.

John Hardie is deputy director of the Russia Program at the Foundation for Defense of Democracies think tank, where retired Rear Adm. Mark Montgomery is a senior fellow.

At risk are a set of agreements dubbed Compacts of Free Association, or COFA, under which the U.S. provides aid and other services to three island states: Palau, Micronesia and the Marshall Islands. In return, those countries allow America exclusive military access to their territory, which in total is larger than the continental United States when including their surrounding waters.

Last year, after months of negotiation, the three states signed an updated agreement for $7 billion in U.S. support over 20 years. But that funding has not yet passed in Congress. In the meantime two of the three islands’ current pacts have expired and are now tied to the temporary spending bills that have kept the U.S. government open since late last year.

Palau’s agreement lapses at the end of this fiscal year, but the government there is facing budget shortfalls.

“We’re already late in getting this done,” Jedidiah Royal, the Pentagon’s deputy for Indo-Pacific policy, said in an interview with Defense News.

At stake for the Pentagon are three core security concerns.

The first is competition with China. The islands — collectively referred to as the Freely Associated States — sit near the U.S. territories of Guam and the Northern Mariana Islands and American partners such as Papau New Guinea and Australia. Defense officials consider it indispensable territory.

“They’ve been able to rely on that assumption of presence and access for all of their planning,” said Kathryn Paik, who until last year led the National Security Council’s portfolio for the region. “Every contingency you can imagine in the Pacific — Korea, Taiwan — everything depends on [those] assumptions of defense access.”

Right now, the U.S. has exclusive access to the three islands’ territory, meaning American ships can enter their waters and American planes can fly through their airspace. At the same time, America can also deny the same access to U.S. adversaries, in particular China.

That is crucial to maintaining deterrence in an increasingly competitive region, Siddharth Mohandas, then-deputy assistant secretary of defense for East Asia, said in testimony before Congress last year.

Another security concern involves the United States’ existing defense sites on the islands. The Marshall Islands are home to the Ronald Reagan Ballistic Missile Defense Test Site, and the U.S. is building a radar installation on Palau.

Royal said his office hasn’t studied how much it would cost to relocate these assets and therefore decline to attach a dollar figure to it. But he said that endeavor wouldn’t be cheap, and outside experts have estimated it could cost hundreds of billions of dollars.

Lastly, officials across the government are concerned about credibility. The hallmark of the Biden administration’s approach to the Indo-Pacific has been its work with allies and partners. In the last few years, the government has helped widen and deepen security ties with countries across the region, including the neighborhood affected by COFA.

In recent years, China has bolstered its influence with nearby island nations. The Solomon Islands flipped its diplomatic recognition from Taiwan to China in 2019, a win for Beijing, which considers Taiwan a renegade province and has threatened to take it back by force. Days after Taiwan’s presidential elections this year, in which a pro-independence candidate won, the island nation of Nauru also restored diplomatic relations with Beijing over Taipei.

The Freely Associated States have reminded the U.S. of their value, Royal said, but “they’re also telling us that we’re not the only game in town.”

Paik also emphasized concerns from the regional partners.

“We have been fighting against this skepticism that we’re hearing from leaders across the region: ‘Are you really here to stay this time?’” she said.

‘Working around the clock’

A bipartisan group of almost 50 House members this week wrote to the chamber’s speaker urging him to pass the agreements. And Royal’s office has increased its tempo of briefings before Congress on the issue in the last two months. He said his team hasn’t received pushback.

But the hitch involves funding trade-offs. House leadership has demanded $2.3 billion of the agreements be met with other spending cuts — against the administration’s position that the pacts shouldn’t require offsets.

COFA funding was included in the first draft of the fiscal 2024 National Defense Authorization Act, but didn’t make the final text when negotiators couldn’t agree to offsets in time. Neither did it make the most recent text of the $95 billion security supplemental that passed the Senate in February.

A congressional aide familiar with the discussions said the issue has the attention of leadership, and that representatives are asking to attach funding to the supplemental. But that bill itself has stalled.

“We’re just working around the clock to find the offset and then put it in the legislative vehicle that’s readily available,” the aide said.

In the meantime, U.S. access to the territories is up to the discretion of the countries party to COFA. Those nations can revoke that access at their discretion, and the longer it takes to fund the pacts in Congress, the more pressure their leaders will face to hedge against American dysfunction, said Arnold Palacios, governor of the Northern Mariana Islands.

“Patience is a virtue, but it also has its limits,” he told Defense News.

“We have to cannibalize some things in order to be able to keep other things alive,” Craig Martell, the Defense Department’s chief digital and AI officer, or CDAO, told reporters Feb. 22.

Congress has yet to pass a full defense budget for fiscal year 2024, which began Oct. 1, even as the Biden administration readies its fiscal 2025 spending blueprint. At least 40 continuing resolutions, or stopgap funding bills, have been enacted since 2010.

That record of funding uncertainty hurts talent and training initiatives as well as what’s known as the AI scaffolding, or the virtual infrastructure that makes models usable, accurate and relevant to the military, Martell said.

“That kind of behavior, of being agile, sitting next to the operator, building and growing and building and changing and building and iterating, is very difficult, if not impossible, to do under the conditions of a continuing resolution,” he said on the sidelines of the Defense Data and AI Symposium in Washington.

When does the continuing resolution expire, and how does it work?

The Defense Department sought $1.8 billion for AI in fiscal 2024. The department is juggling hundreds of AI-related projects, including some associated with major weapons systems such as the Joint Light Tactical Vehicle and the MQ-9 Unmanned Aerial Vehicle, the Government Accountability Office reported.

While the CDAO is relatively new — having been announced in 2021 and hitting its first full strides in 2022 — making the case for its existence and expenditures isn’t difficult, according to Martell, who previously worked on machine learning at Lyft and served as an associate chairman of computer science at the Naval Postgraduate School.

The public and private sectors are increasingly interested in AI and other pattern-recognition capabilities, and digital competition with China is steaming ahead. The Defense Department’s connectivity campaign known as Combined Joint All-Domain Command and Control hinges on data-and-analytics advancements made by the CDAO, as well.

Martell said he considers the budget struggles a normal part of the give and take in Washington.

“I don’t take the continuing resolution to be a slight against us,” he said.

The topic was consolidation. The Cold War was over, which meant America would spend less on defense. That also meant less money for the companies in the room. Officials flashed a black-and-white graph onto the wall, showing a plunge in how many contractors the Pentagon could afford. Companies would likely need to merge if they wanted to survive.

Norm Augustine — then-chief executive of Martin Marietta, which itself merged in 1995 to become Lockheed Martin — had been there, sitting beside the defense secretary. A day later, he returned to the Pentagon and grabbed a copy of that chart, expecting it to be a historic document. He still has it today.

Within a decade, the number of large prime contractors plummeted from 51 to five, creating the modern defense industry. Lockheed merged with Martin. Boeing merged with McDonnell Douglas.

“Sitting there at the Last Supper, I felt like I was sitting in a historical pivot point,” Augustine told Defense News. “They did the best [with] a bad hand, and we’re now paying the price for the bad hand.”

That price is a defense sector that can’t move as quickly as the Pentagon wants it to. America is now supplying materiel for the wars in Ukraine and Israel, which started a year and a half apart. The high demand has strained an industry that often struggled to meet needs long before Russia’s full-scale invasion of Ukraine in February 2022.

And these wars aren’t even the Defense Department’s top priority; that’s China, whose massive military buildup over the last 20 years is the pace America’s leaders say they must match. Nowhere is this clearer than in the Pentagon’s new defense-industrial strategy, which says China’s industrial might in many areas “vastly exceeds” that of the U.S. and its allies.

In response, the plan calls for “generational” investment in the industrial base. To do so, the Pentagon is now showing a new set of graphs.

Bill LaPlante, the department’s top weapons buyer, has a wall in his office covered with images plotting how long it would take to build more missiles and other munitions. His deputies are sharing these with company after company, he said — though the Pentagon isn’t making them public.

Call it a tale of two charts: In 30 years, the Pentagon went from a defense industry it considered too large to sustain, to one now too small to surge. To understand that path, Defense News spoke with analysts and industry executives as well as top industrial base policy officials dating back to the Clinton administration. They likened the sector to something of a spring-loaded door — where capacity slammed shut due to smaller budgets, changing preferences and a thinning workforce.

That door is now creaking open again as America retools its defense industry, workforce and suppliers to compete with an advanced adversary.

“It’s dusting off a lot of skills that we’ve had in this country that we haven’t used in a while,” LaPlante told reporters in December at the Reagan National Defense Forum.

Industrial base 101

Experts on America’s defense industry tend to speak about it like an intro economics course. They often note the sector doesn’t move like other markets.

Defense companies build what governments want, but rarely any more or anything different. The Pentagon’s orders, hence, have an unusual amount of sway over the shape of the companies fulfilling them.

“The defense industry is hypersensitive to and responsive to its customers,” said Steve Grundman, a senior fellow at the Atlantic Council think tank.

Grundman worked in the Pentagon in the 1990s, in the wake of the peace dividend. Military spending had surged under the Reagan administration as the U.S. competed with the Soviet Union. But when the USSR dissolved in 1991, ending the Cold War, America had no opponents left to outcompete. Defense spending fell each fiscal year from 1985 to 1998, according to the Center for Strategic and Budgetary Assessments think tank.

Specifically, the Pentagon’s spending on procurement, research, development and construction dropped 44% during that time period, CSBA found.

America needed a defense industry built for peacetime. So arrived the Last Supper, a name Augustine himself gave the 1993 dinner. Even at the time, he said, it appeared to be sound policy. Defense spending was bound to fall, leaving the Pentagon with two choices: a sprawling industry versus a smaller, more efficient one.

Defense officials encouraged the latter. Alongside the plummet of prime contractors, the number of mid-tier and small suppliers also cratered as companies merged in order to lower costs.

Eventually the government said enough was enough. In the late 1990s, it blocked Lockheed Martin’s plan to buy Northrop Grumman. The era of major consolidation was over.

Its effects were twofold: less competition and less ability to surge. The first, in many cases, has meant the Pentagon’s orders take longer, cost more and are vulnerable to brittle supply chains. The second — caused both by consolidation and more efficient manufacturing techniques — makes it harder to respond to sudden conflicts.

Heading into the 2000s, leaders in large part began to favor weapons that were more advanced but would be fewer in number. Defense Secretary Donald Rumsfeld labeled it a “transformation” that would vault the Pentagon’s arsenal a whole generation ahead.

Some of these advanced weapons — such as the Army’s Future Combat System and the Navy’s Littoral Combat Ship — did not work out as intended. And the shift toward fewer, more capable systems further encouraged companies to consolidate.

In 1998, five companies built surface ships and two made tracked combat vehicles. By 2020, those numbers had fallen to two and one respectively.

“As dumb as it sounds, given how much we spend on defense, oftentimes the volume for any single supplier isn’t enough,” said Dave Bassett, a retired Army lieutenant general, who until December ran the Defense Contract Management Agency.

‘A wake-up call’

The peace dividend did not survive America’s wars in Iraq and Afghanistan.

The 9/11 attacks followed by the two conflicts swelled the Defense Department’s budget. When adjusted for inflation and including supplemental funding, Pentagon spending rose an average of 7% from fiscal 1999 to fiscal 2008, according to CSBA.

This spending went toward a new set of threats.

As an example, Bassett and other experts interviewed by Defense News singled out a class of heavily armored vehicles developed for the wars. The mine-resistant, ambush-protected vehicle program was Defense Secretary Bob Gates’ top priority. With heavy investment, the Pentagon fielded more than 13,000 MRAP vehicles in three years.

The program has since become a talisman for some who argue the defense industry can move nimbly if given the proper resources. But it’s also a reminder of where those resources went for more than 15 years. From 2001 onward, the Pentagon needed weapons for counterinsurgencies.

Those are far from what Ukraine needs to defend itself against Russia — an industrial-age war defined by the use of artillery and small drones. Even further are the needs of defending Taiwan, an island nation threatened by a leading manufacturing powerhouse.

“If what you’re facing is an Iraqi threat, you’re probably not going to have the same capacity as when you face a Russian and the Chinese threat,” said Bill Lynn, deputy defense secretary during the Obama administration and now chief executive of Leonardo DRS.

And the change in capacity had become clear to defense officials.

Brett Lambert, who ran industrial base policy for the Pentagon while Lynn was deputy secretary, remembers a tornado in 2011 that struck Joplin, Missouri — nearly hitting a major battery supplier.

“We realized that even though the plant itself was not hit, we didn’t have a backup,” Lambert said. “That was a wake-up call to me.”

Another warning came in the form of a four-year study of major weapons programs Lambert helped lead. He found, in large part, that prime contractors didn’t understand their own supply chains.

But while the alarm went off, no one woke up, said Robert Lusardi, a former Pentagon industry official. The study’s data, he noted, largely faded into the ether.

“Nobody used it,” he said.

‘There’s never just one problem’

Eric Chewning was vacationing with his family at the Outer Banks in summer 2017.

Sitting on the North Carolina beach with his kids, Chewning — then a partner at the consulting firm McKinsey and Co. — scrolled through his phone and saw a news release about an executive order. President Donald Trump was instructing the Pentagon’s first top-down review of its defense-industrial base since the Eisenhower administration.

“I say to myself: ‘Who are they going to get to do that?’ ” Chewning told Defense News in an interview.

Later that day, he was walking back from the beach when he got a call from the Pentagon asking if he would interview for the top industrial base policy role. In October, he took the job, which meant he would be the one running the study.

“The mindset was: How do we holistically now transition ourselves from the post-9/11 wars, where there really wasn’t ever a question around our ability to generate enough material capability, to one focused on competition with an economic peer?” Chewning said.

What he found is that doing so wouldn’t be easy — in large part because of what was happening with the American workforce. By the time the defense industry consolidated in the 1990s, the U.S. was decades into a deep manufacturing slide.

From the late 1970s to 2017, the country lost 7.1 million manufacturing jobs, or 36% of the sector’s workforce, according to the study Chewning led. Such declines serve as a challenge to any attempt to quickly bulk up America’s defense industry. Even with more advanced factories that now heavily rely on robotics, weapons still need people who know how to build them.

This is part of why capacity is so difficult to add once it’s gone, said Bassett, the retired Army general. It takes years to find and train skilled workers, as companies across the country have seen in the recently tight labor market.

While leading the Defense Contract Management Agency, Bassett studied business traits that would help predict manufacturing problems. A significant one he found was the share of blue-collar employees who had been on the job for less than a year; once it reached a certain threshold, he said, quality issues were almost guaranteed.

While the 2018 study led to some reforms, it did not reverse the trend in manufacturing, which only got worse as older workers retired en masse during the COVID-19 pandemic. Like many reports in Washington, it pointed to major issues that existed alongside other difficulties, all competing for time and money.

“There’s never just one problem,” said Chewning, now a vice president at the shipbuilder HII. “The immediate problems get the most attention.”

By 2022, the problem had become immediate. Russia launched a full-scale invasion of Ukraine, and Washington continued sending weapons to aid Kyiv.

The U.S. has given Ukraine a staggering amount of security aid — more than $44 billion since February 2022. Despite that sum, one of the lessons for many in the Pentagon has been that industry was unprepared for a crisis.

Arguably, nowhere is this more obvious than in America’s supply of 155mm artillery shells.

The 155mm round — next to small drones – has defined fighting in Ukraine. For self-defense, Kyiv needs 60,000-80,000 shells per month, Michael Kofman, an analyst at the Carnegie Endowment for International Peace, told Defense News.

That rate well surpasses the pace at which Ukraine’s Western allies could resupply them. Even with an extra $1.5 billion from Congress in 2023 to increase production, America was making 28,000-30,000 shells in December, said LaPlante, who is in charge of acquisition and sustainment at the Pentagon.

The Defense Department’s goal is to reach 100,000 rounds per month by the middle of 2025. But that pace likely won’t be possible without more funding from Congress, which has stalled a security spending bill requested by the White House.

But funding hasn’t slowed down production in recent years; from FY16 to FY23, Congress added 7.3%, or $79.3 billion, to the White House’s requested Pentagon procurement fund, according to CSBA. The problem is inconsistent demand, which LaPlante illustrated with another chart last fall.

Starting with the Gulf War 30 years ago, munition orders have gone up and down in a series of peaks and valleys: A crisis breaks out, the Pentagon surges supply, it reaches the number a couple years later, then the crisis wanes and supply falls.

“That’s one of the challenges that we have now — that inability to make adjustments because of the lack of investment that we’ve made to the industrial base historically,” Justin McFarlin, who leads industrial base development for the Pentagon, told Defense News.

Munitions are often at high risk for such whiplash. Eric Fanning noticed this pattern after years of holding senior positions with the Navy, the Air Force and the Army. Much of each service’s spending power was sewed up in large systems, such as aircraft carriers and fighter jets. More inexpensive items ended up tapered to make the budget fit. And because the Pentagon’s demand affects supply, the companies fulfilling those orders trimmed capacity over time.

Now orders are up again — this time for 155mm shells and a bevy of other munitions. For some, Congress has allowed the Pentagon to issue long-term contracts that keep demand stable for years. But for others, companies are left worrying government demand won’t last, according to Fanning, now head of the Aerospace Industries Association.

“That sense of long-term commitment is still not quite there,” he said.

‘First contact with the enemy’

The Pentagon says it’s signaling future commitments in its new industrial base strategy. The document focuses on four areas: creating resilient supply chains, ensuring workforce readiness, creating business-friendly acquisition policies and bolstering the national security marketplace.

“These are not new ideas,” Halimah Najieb-Locke, acting deputy for industrial base policy, told Defense News. “But they haven’t been said with the [needed] authority.”

In a separate briefing with reporters in January, Najieb-Locke previewed the Pentagon’s goals for its defense-industrial base over the next three to five years. One is to speed up long-lead items, such as ball bearings or solid-rocket motors that slow down the production of important weapons. Others include retooling obsolete parts of the supply chain and using more funding from the Defense Production Act, which allows the Pentagon to issue national security-related grants.

“We no longer can afford to ignore [issues in the industrial base] and hope for better,” Najieb-Locke told Defense News. “We have to take decisive action.”

But there are problems outside of the Pentagon’s control.

The first is politics. As of publication, Congress had yet to pass a full defense spending bill — the latest entry in more than a decade of continuing resolutions. Defense remains a largely bipartisan issue, but there is a widening gap within the Republican Party — one reason Congress hasn’t passed additional aid for Ukraine, Israel and Taiwan.

Today’s security environment “demands a substantial, long-term increase in resources for our national defense,” Sen. Roger Wicker, R-Miss., the ranking member of the Senate Armed Services Committee, told Defense News in a statement.

Some of his colleagues in the House are more skeptical. “The American people work diligently to earn every dollar, but it seems the [Defense Department] has become a master of squandering those funds without batting an eye,” Rep. Glenn Grothman, R-Wis., told Defense News in December.

The second external problem is innovation. In decades past, the Pentagon used to be upstream of new technology — think GPS or the internet. It’s since found itself downstream, said Lynn, the former deputy defense secretary, and much of the current advances in artificial intelligence and drones are coming from the commercial sector.

Learning how to better work with these companies is one of the strategy’s goals. Doing so, said Najieb-Locke, will involve updating the Pentagon’s buying policies to better align with the commercial sector — a market that the Pentagon has less influence over.

“Because of that rapid change [in technology], a lot of our assumptions of what will be there in time of need have [proved] to be in some cases overblown,” said Najieb-Locke.

A third challenge is America’s adversaries. The Russia-Ukraine and Israel-Hamas wars are a reminder that competitors ultimately help decide how fast America’s defense industry must work, and when.

Chris Michienzi learned this lesson from her time working on the Pentagon’s industrial base policy. For about eight years she helped steer the department’s approach to industry and saw challenges evolve. When the war in Ukraine began in 2022, she was one of a few officials working on aid to Kyiv.

Many of the problems of the last 30 years were on display. A worker shortage hampered attempts to surge key munitions, she cited as an example.

“The department gets the industrial base that it pays for,” she said.

Michienzi left her post last summer. In January, when Defense News spoke with McFarlin, who leads industrial base development for the Pentagon, the interview took place in Michienzi’s old office — a small, windowless cube.

No one had filled the space, and it was instead turned into a conference room — helpful for McFarlin as he briefed companies on the government’s new strategy.

“The saying I grew up [with] was: No plan survives first contact with the enemy,” McFarlin said. “We can plan, but we also have to be able to pivot and adjust.”

But before the U.S. issues that exemption, it wants Australia to adopt export control laws similar to its own. And several Australian defense companies are unhappy about legislation pending in Australia’s parliament that would replicate a U.S.-style export control regime.

They say importing the stringent U.S. export control laws could hinder their ability to effectively collaborate and do business with non-AUKUS countries.

Australia and Britain have long sought a carveout within Washington’s International Traffic in Arms Regulation, or ITAR, export control regime. Defense companies in all three countries have argued ITAR’s rigorous restrictions on sensitive defense exports stymies a key AUKUS goal of jointly developing disruptive technology such as quantum computing, artificial intelligence and hypersonic weapons.

The U.S. Congress passed legislation in December to give Australia and Britain an ITAR exemption for AUKUS, on the condition that both countries implement similarly tough export control laws. Canada is currently the only country to enjoy a special ITAR exemption.

Before Australia and Britain receive their exemptions, Secretary of State Antony Blinken must certify they have each implemented comparable export control regimes.

Michael Biercuk, the chief executive of Q-CTRL, an Australian firm specializing in quantum technology that has offices in Sydney, Los Angeles and London, said the company is “supportive of the idea of making a control-free zone, if you will, between Australia, the U.S. and the U.K. in support of AUKUS.

However, “we don’t think the right way to do it is to bring in the totality of the system that everybody in the world says doesn’t work,” he added, noting the policy would “fundamentally limit exports outside of that AUKUS bubble, and this is not something that is helpful to the local community of vendors who are heavily reliant on export markets.”

Andreas Schwer, the chief executive of EOS, an Australian company specializing in high-tech remote weapons stations, directed energy and counter-unmanned aircraft systems, told Defense News stricter, more ITAR-like regulations in the country “will make life extremely difficult for us to export into any non-AUKUS country.” He said it can sometimes take six months to a year to get simple upgrades formally approved for NATO allies under ITAR.

“This is something which is hated by most of the western European procurement agencies,” said Schwer. “That’s the reason why they always prefer non-ITAR offers. I expect that the same will happen with Australian products. As soon as we have similar regulations in place, they will also say we don’t want to have Australian ITAR components.”

But proponents of ITAR argue it’s a crucial tool for keeping U.S. technology out of the hands of rivals such as China and Russia. Mike Burgess, director general of the Australian Security Intelligence Organisation, warned last year of an uptick in online espionage attempts aimed at the country’s defense industry since AUKUS was announced in September 2021.

U.S. Under Secretary of State for Arms Control Bonnie Jenkins told lawmakers this week the U.S. must “make sure that we protect our intellectual property.

“We know there’s countries like China who want to steal information,” she added.

Jenkins noted Britain updated its espionage laws in July 2023 as part of the National Security Act and pointed to Australia’s proposed export control overhaul pending a review in parliament.

Biercuk said the Australian proposal was “rushed” and called it “a catastrophically bad piece of legislation.”

Still, NIOA Group chief executive Rob Nioa, noted “really what the U.S. wants to do is protect U.S. [intellectual property. “If it was technology that originated in America, it was always subject to those controls,” Nioa told Defense News. “Our concern will be if that captures Australian uniquely produced intellectual property and prohibits it from going to other places.”

NIOA Group is an Australian munitions company which also owns U.S.-headquartered Barrett Firearms and has a joint venture company with Rheinmetall.

Yet, he added, a comparable Australian export control regime “might streamline” some export approval processes by allowing Canberra to administer them “instead of having to go back to the U.S. for approval.”

“Until we see how it’s implemented, I’m not going to automatically panic,” he said. “People are nervous about it though in Australia because people are nervous about the unknown.”

The latest National Security Scorecard from data analytics firm Govini revealed countless China-based firms remain deeply embedded in Defense Department supply chains across 12 critical technologies. Consider as well as that the draft version of the Pentagon’s National Defense Industrial Strategy noted that “today’s [defense-industrial base] would be challenged to provide the required capabilities at the speed and scale necessary for the U.S. military and our allies and partners to engage and prevail in a major conflict.”

This is what happens when just-in-time defense manufacturing meets dependence on Chinese companies, not to mention firms in Taiwan that Beijing could blockade during a crisis on which many, if not all, precision weapons and modern platforms depend.

The recently passed fiscal 2024 National Defense Authorization Act barely affects the timeline for eliminating the Pentagon’s dependence on selected Chinese companies and materials. The narrow scope and lengthy time frames of current government efforts to alleviate our supply chain dependencies send an unspoken message to Beijing: The DoD does not have, nor will it soon have, the supply base required to prosecute a long war against China. The message to Taiwan is that we can’t build the weapons and platforms needed to defend you in a protracted war without access to these at-risk supply chains.

Thankfully, there are solutions that the Pentagon and the administration can take to armor the Achilles’ heel of our defense supply chains.

First, they can focus on resiliency rather than independence, entailing the pursuit of multiple solutions to ensure the DoD has sufficient stocks — or access to the production — of the products, materials and services required for a long conflict. To build resiliency, the Pentagon can focus on increasing the size of its inventories, cultivating new second and near-shore sources, and redesigning munitions and platforms that are especially critical for an Indo-Pacific fight.

Resiliency requires assessing the true extent of China- and Taiwan-based dependencies, and remediating them.

Second, the Pentagon should ask Congress to invert its approach to how it defines, analyzes and addresses Pentagon supply chain vulnerabilities. To date, the government’s efforts have largely focused on inputs, as well as suppliers based in so-called covered countries like China. But if the government inverts its approach from inputs (e.g., rare earths) to outputs (e.g., an F-35 jet), it will address dependencies in a more holistic manner, forcing a review of the full supply chain.

Requiring the defense-industrial base to quickly conduct a bottom-up analysis by critical munition and platform that identifies each node in its supply chains — something it could readily by law do with commercial software — would establish a baseline for modeling different platform and munition inputs under different scenarios. These models would rapidly identify potential and growing risks as well as assist the DoD in proactively addressing them. They would also help avert a scenario where the DoD has to reactively scramble to address the collapse of a critical node far down in its supply chains.

Lastly, like the U.S. had during World War II with the War Production Board, someone or some organization should be in charge of these efforts. The Federal Acquisition Security Council may be the best organization to fill that role, as it would be well placed to roll up our supply chain dependencies, place them against requirements to create demand signals and determine how best to fill them.

These actions could be included by the Pentagon in its budget for the coming fiscal year — or given their urgency, a single, focused bill, an executive order, or a future emergency supplemental.

No one knows if or when tensions with China could spiral into armed conflict. But there’s no doubt that the world is becoming more dangerous. The U.S. must send a message to Beijing that we are prepared to prosecute a long war if needed. And the U.S. must also send a message to Taiwan that it will be able to support the island in a time of need. Without ending China’s chokehold on our defense supply chains, we will be hard-pressed to send either.

Retired U.S. Army Maj. Gen. John G. Ferrari is a senior nonresident fellow at the American Enterprise Institute think tank. Ferrari previously served as a director of program analysis and evaluation for the service. Mark Rosenblatt runs Rationalwave Capital Partners, which invests in public and private technology companies.

“We have this wonderful vision, lots of great programs that we have teed up,” Andrew Hunter told reporters at the Air and Space Forces Association’s Air Warfare Symposium here. “[We] still need that FY24 budget to make it real.”

The Pentagon is now operating under its third continuing resolution of fiscal 2024 as Congress continues to draft defense spending legislation. The latest stopgap deal, passed in January, funds the government through March 8.

Like a traditional CR, the measure pauses funding at the prior year’s levels — fiscal 2023, in this case — and prevents the Pentagon from starting new programs and increasing procurement quantities for existing efforts. While the department is accustomed to operating under a continuing resolution for at least a portion of each fiscal year, the 2023 Fiscal Responsibility Act adds a twist.

The law stipulates that all federal agencies would face a 1% cut from fiscal 2023 funding levels if the government was still operating under a CR on Jan. 1, 2024 — which it was. However, the language includes a four-month grace period, so while that initial deadline has passed, Congress has until April 30 to approve FY24 appropriations and avoid slashing the executive branch’s spending.

While lawmakers tend to reach an annual appropriations agreement by March or April each year, Air Force officials signaled a growing concern that Congress could miss the late April deadline.

During this week’s conference, the Department of the Air Force distributed a fact sheet outlining the impact a 1% cut would have on its two services, the Air Force and Space Force. The measure would reduce the service’s buying power by nearly $13 billion and put $2.8 billion in space modernization projects on hold. It would also limit production increases for key programs like the F-35 Joint Strike Fighter, Small Diameter Bomb and Joint Air-to-Surface Standoff Missile, and delay seven Space Force launches, according to the department.

Air Force Secretary Frank Kendall said in keynote speech Monday that the congressional funding standoff has caused significant delays to his vision for modernizing the service. When he took on the role in 2021, he revealed seven “operational imperatives” meant to inform Air Force and Space Force budget priorities.

Initiatives driven by those priorities, 19 of which were included in service’s FY24 budget request, have yet to be fully funded.

“It would be very disappointing to me to have been in office for an entire administration and have never received any of the needed resources to be competitive — resources that we identified in the first six months I was in office,” he said.

Key among those efforts, Kendall said, is the Air Force’s Collaborative Combat Aircraft program, which will field fleets of drones powered by autonomous software and designed to fly alongside crewed fighters.

The service hopes to narrow its pool of potential CCA providers from five companies to two or three in fiscal 2024, but that timeline depends on when funding is available.

“We’re moving ahead with a sense of urgency on CCAs,” Kendall told reporters Tuesday. “As a preamble, everything depends upon FY24 being appropriated.”

For the Space Force, which requested $30 billion in FY24, the automatic cuts have an outsized impact. The $2.8 billion in stalled modernization projects represents nearly 10% of the service’s total budget.

The Space Force’s budget has nearly doubled since it was created in 2019, and Chief of Space Operations Gen. Chance Saltzman told reporters Feb. 13 that funding delays are having “an acute effect” on the service as it continues to grow.

“Our ability to do all the missions that are required is being severely impacted by not being able to get the resources that we’ve asked for,” he said.

The legislation, which passed in the chamber 70-29, faces an uphill battle in the House amid opposition from former President Donald Trump, the leading candidate in the Republican presidential primary. House Republicans are increasingly resistant to additional assistance for Ukraine — and foreign aid more generally.

“Today we make [Russian President] Vladimir Putin regret the day he questioned America’s resolve, and we make clear to others like China’s President Xi [Jinping] not to test our determination,” Senate Majority Leader Chuck Schumer, D-N.Y., said on the floor after the vote. “And we send a clear, bipartisan message of resolve to our allies in NATO.”

But House Speaker Mike Johnson, R-La., reiterated his opposition in a statement on Monday mere hours before the Senate moved forward with its final vote.

“The mandate of national security supplemental legislation was to secure America’s own border before sending additional foreign aid around the world,” Johnson wrote in a statement. “In the absence of having received any single border policy change in the Senate, the House will have to continue to work its own will on these important matters.”

President Joe Biden’s foreign aid request stalled for two months in the Senate after Republicans held up a procedural vote in December, demanding immigration policy changes in exchange for their support. This led to two months of negotiations, only for Trump to disparage the deal after Senate Democrats agreed to immigration restrictions. Senate Republicans then backtracked on the deal and moved forward with a bill solely focused on foreign aid.

Trump also demanded Saturday on his social media network, Truth Social, that the foreign aid bill be “done as loan, not just a give away.” He said at a South Carolina rally that same day he “would encourage [Russia] to do whatever the hell they want” to NATO members who do not spend enough on defense.

The European Union earlier this month passed $54 billion in economic support for Ukraine after Hungary dropped its opposition.

The Senate bill includes another $60 billion in security and economic aid for Ukraine, $48.4 billion of which is for military support through the Pentagon.

The military support includes $19.9 billion for the Pentagon to backfill weapons sent to Ukraine through U.S. stockpiles and $13.7 billion for the Ukraine Security Assistance Initiative, allowing the Defense Department to ink longer-term contracts to send weapons to Kyiv. There’s also $1.6 billion in foreign military financing, allowing Ukraine and European countries impacted by Russia’s invasion to use the money to buy weapons from U.S. defense contractors.

Sen. Lindsey Graham, R-S.C., called on the House to implement Trump’s idea of turning “the supplemental aid package into a loan instead of a grant,” though it’s unclear how that would work for the majority of military aid in the bill, which is allocated for Pentagon contracts. Graham adamantly called for a defense spending supplemental last year to circumvent the $886 billion national security spending cap in the debt ceiling deal.

The House failed to pass a stand-alone Israel aid bill last week amid opposition from Biden and Democrats unhappy with the lack of Ukraine assistance in the package.

Meanwhile, three members of the Senate Democratic caucus voted against the foreign aid package Tuesday over concerns about the humanitarian crisis in Gaza and the high civilian death toll amid Israel’s monthslong offensive against Hamas.

“One the one hand, I strongly support aid to Ukraine,” Sen. Jeff Merkley, D-Ore., said in a statement before voting against the bill. “On the other hand, I strongly oppose sending more offensive military aid to Israel at a time when they are using American weapons in what President Biden has called an ‘indiscriminate’ campaign of bombing.”

Sens. Bernie Sanders, I-Vt., and Peter Welch, D-Vt., also voted against the Senate bill.

The bill includes $10.6 billion for the Defense Department to continue providing munitions and other weapons to Israel. That amount includes $4 billion for the Iron Dome and David’s Sling air defense systems as well as $1.2 billion to procure the Iron Beam laser system to counter short-range rocket threats. There’s also another $3.5 billion in foreign military financing for Israel to buy more military equipment with cash grants.

Another $2 billion in foreign military financing from the bill would go to Taiwan and other Indo-Pacific security partners. Additionally, the bill has $1.9 billion for the Defense Department to backfill weapons sent to Taiwan from U.S. stockpiles, providing the Pentagon’s long-requested funding that will allow it to use presidential drawdown authority to quickly transfer weapons to Taipei.

The U.S. hopes to deter a possible Chinese invasion of Taiwan in the coming years by positioning as much materiel on the island as possible.

U.S. Indo-Pacific Command would get another $542 million to respond to its fiscal 2024 unfunded priorities list. Another $2.4 billion in the bill would go to U.S. Central Command to resupply munitions it used in response to the ongoing attacks from Iran-backed proxies in the Middle East since the Israel-Hamas war began in October 2023.

The bill also includes $3.3 billion to get the submarine-industrial base on course for the AUKUS agreement with Australia and Britain.