Mid-Year Defense Reprogramming, Part One—Tough Choices | American Enterprise Institute

The Pentagon submitted what appears to be the first part of a request for mid-year movement of funds among accounts to Congress, typically called an omnibus reprogramming. These requests carry out fact-of-life changes that always occur during the year of execution, but also realign funds into accounts that are running short due to a variety of factors.

The request would move $4.3 billion between appropriations with most of the money ($3.76 billion) going to Military Personnel accounts. The Army components—Active and Guard—would get the largest share ($1.1 billion each), followed by the Air Force ($716.7 million), Navy ($569 million), Marine Corps ($129.6 million), and Space Force ($92.3 million). The transfer is to cover higher than planned average end-strength, pay, and permanent change of station moves.

The Army Guard would also get close to $500 million in Operations and Maintenance (O&M) money for “critical operational missions that advance state and national priorities, and strengthen community safety,” which, combined with the military personnel increase for emergent mobilization and training, sounds like homeland defense related deployments within the United States.

What is interesting is that very little of the money would transfer to the O&M accounts, which uniform leadership have warned are strained due to contingency operations in the Middle East and Caribbean. This likely means a reliance on the supplemental request to be followed by a second reprogramming only if no emergency money is provided.

The two biggest losers by account in this reprogramming action are shipbuilding, which would take an $812 million cut, and Air Force aircraft procurement, which would be reduced by nearly $774 million.

From a Service perspective, the Air Force and Space Force would lose a combined $1.5 billion, while the Navy/MC would take a hit of nearly that amount and the Army accounts would give up $1.34 billion (Table 1). With one notable exception, the Navy and Air Force are essentially self-funding their military personnel shortfalls while also contributing to the Army shortfalls from the only other sources available—research, development, test and evaluation (RDTE) and Procurement—sacrificing future modernization for must-pay bills now.

The exception is Army O&M, which would transfer a total of $746 million to cover part of the military personnel shortfall. According to the reprogramming, the Army is doing this by incrementally funding contracts and adjusting periods of performance. It is also cutting back on base activities and reducing morale, welfare and recreation. Both actions are typical during disruptive and destructive continuing resolutions, but definitely not the best way to do business. To make up the rest of the shortfall, the Army is also cutting missile procurement ($235.3 million) and other procurement ($182 million), among other accounts.

In addition to shipbuilding, the biggest sources in the Navy are RDTE ($207 million), Marine Corps procurement ($187 million), other Navy procurement ($107 million), and Navy aircraft procurement ($80 million).

For the Air Force, after the aircraft procurement account, the big sources come from Air Force RDTE ($269 million), Space Force RDTE ($266.5 million) and Air Force Military Personnel ($99 million), most of which comes from lower than projected Basic Allowance for Housing requirements due to the mix of rank and fewer members with families.

In each case on the accounts noted, the story gets even more complicated at the program level where in very few instances are there the easy fact-of-life changes that yield savings without consequences. For example, justifications often note the reduction supports other priority needs or comes from a delay in contract award rather than an actual requirement reduction or contract adjustment that resulted in an asset.

In the shipbuilding account, the programs impacted are the CVN-81 (-$200 million) for a 24-month delivery slip from February 2032 to February 2034 due to what is noted as “shipbuilder construction footprint constraints.” And second, the T-AGOS (-$612.2 million), which defers the first follow ship from 2026 to 2027.

In the aircraft procurement account, the F-35 program would take a total $261 million cut, followed by T-6 with $118 million, the KC-46A at $69.3 million, and the F-15 warning system at $57 million.

Interestingly, there are no defense-wide sources as part of this reprogramming action, which also signals a part two request is possible as the industrial base, missile defense and health programs will likely be in the mix as well if the Department struggles to protect as much training as it can while meeting funding gaps caused by fuel price increases and contingency operations.

The mix of sources the military departments are using to cover the military personnel shortfalls makes it clear that covering additional O&M gaps will require even tougher choices and sources from defense-wide priorities. Help from Congress on a supplemental is required–the sooner the better.