Service Contractors Get Good News in White House’s Proposed Budget

Intelligence

Yes, it’s budget season. I know these articles don’t get as much attention as espionage or even FitBit stories, but they’re important, especially for cleared professionals. Since the bulk of the jobs for people with security clearances are in the national defense arena, how much money the DOD is getting and how it plans to spend it should be a hot topic. So let’s look at what we hope to get for the money.

The president has requested a $686.1 billion appropriation for the Department of Defense for Fiscal Year 2019, including $69 billion for Overseas Contingency Operations. This represents a $74.1 billion dollar increase from the request — still outstanding, as you know by now — for FY 2018.

The budget agreement allows for $716 billion in defense spending, which the White House says it “strongly supports.” The extra $30 billion is for Budget Function 053, “Other National Defense,” is just another way of saying the nuclear program, which is almost exclusively overseen not by DOD, but the Department of Energy.

Shiny new hardware, and the people to use it

People fixate on the hardware in the budget, and we’re looking to buy a lot of stuff. Like 77 F-35 Lightning II Joint Strike Fighters ($10.7 billion), 24 F/A-18E/F Super Hornet fighters ($2 billion), 15 K-46 Tankers ($3 billion), two Virginia class submarines ($7 billion), three Arleigh Burke class destroyers ($6 billion), and a Littoral Combat Ship ($1.3 billion).

But to give you an idea how much stuff the military buys, these MDAPs, or Major Defense Acquisition Programs, account for only 39 percent of the Pentagon’s total procurement budget of $144.3 billion. But wait… as large as that number is, it only comprises 21 percent of the DOD budget. In fact, procurement is third in line, behind the operations & maintenance and personnel accounts.

The personnel budget, at $152.9 billion, includes what the administration says is the largest military pay raise in nine years: 2.6 percent. But sorry, DOD civilians; once again, there is no pay increase planned for you.

This money also pays for expanding the force. The current authorized strength of 1,322,500 active duty and 816,400 reserve component service members would increase to 1,338,100 active and 817,700 reserve troops in the next fiscal year.

Operations and Maintenance is king

By far the largest chunk of change in the Pentagon’s plan is the part that pays for all the stuff those service members do with that new hardware: train.

Operations and maintenance , O&M, at $281.3 billion, will comprise 41 percent of all DOD spending in FY 2019. This is where those of us who work on service contracts make our bread and butter, and we’re not left out this year. The “administrative and service wide activities” portion of the O&M budget, where most of those service contracts live, gets a 3.6 percent bump, from $54.9 billion to $56.9 billion.

Sure, contracting officers will always exert “downward pressure” to conserve their contracting dollars, but the bump in spending in this category means that the vast majority of us will be able to pay the bills for another year.

Obviously, these figures represent just the administration’s plan. Congress will have some of its own ideas for how to spend this money, as we saw last year, particularly in aircraft. But with the administration’s proposal aligning with the budget deal’s agreed-upon defense spending levels, we’re a lot closer to a regular appropriation than we’ve been in years.

Won’t that be nice for a change?

Tom McCuin is a strategic communication consultant and retired Army Reserve Civil Affairs and Public Affairs officer whose career includes serving with the Malaysian Battle Group in Bosnia, two tours in Afghanistan, and three years in the Office of the Chief of Public Affairs in the Pentagon. When he’s not devouring political news, he enjoys sailboat racing and umpiring Little League games (except the ones his son plays in) in Alexandria, Va. Follow him on Twitter at @tommccuin

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