In December the National Defense Authorization Act was signed, authorizing a $738 billion budget for the Pentagon for the 2020 fiscal year. This is approximately $20 billion more than the 2019 budget, but a bit less than the $750 billion budget that the President requested to better compete with potential global threats including those from China and Russia.

The annual “Military Balance” reported from the International Institute for Strategic Studies (IISS) found that the increase in U.S. spending from 2018 to 2019, which amounted to $53.4 billion, was almost as large as Great Britain’s entire defense budget. Yet, the study also noted that China also increased defense spending at roughly the same 6.6% as the United States, while defense spending in Europe – driven by ongoing concerns over a potential threat from Russia – increased by 4.2% in the same period.

For 2020, the Department of Defense (DoD) will have a base budget of $658.4 billion, while an additional $71.5 billion is provided for U.S. military operations overseas. About $40 billion will go to the newly formed Space Force.

Billion With a “B”

Many Americans may ask whether $738 billion is really needed for the defense budget – and it is something Congress grapples with on a regular basis – it is probably difficult, too, for most Americans to even understand where the money is spent.

Last week the Center for a New American Security (CNAS) released a report, “Navigating the Billions: A Beginner’s Guide to the Defense Budget.” Author of the report, Molly Parrish, research assistant for the Defense Program at CNAS, addressed the dozens of acronyms and took aim at the data, which she noted was “spread over thousands of pages on various websites.”

The Pentagon’s budget makes up the largest percentage of the overall federal budget of the United States. It is determined by the DoD’s three primary decision-making processes, which include the “requirement systems; the programming, planning, budgeting, and execution (PPBE) system; and the acquisition system.” It is the PPBE system that is what essentially determines the numbers, the report notes.

Parrish explained the process in her study; from how it is written, how to read it and even how to use it. There are facts that could confuse many, such as the fact the President’s Budget Request is not law and that Congress holds “the power of the purse,” with the latter having the ability make changes as it sees fit, according to CNAS.

There are also two congressional bodies – the House Armed Services Committee (HASC) and the Senate Armed Services Committee (SASC) – that are there to take the budget request and turn into the National Defense Authorization Act (NDAA). It is only after those two committees approve the NDAA that it even moves to the floor of the House of Representatives, which must pass it before it can move to the Senate floor. If the House and Senate have differing opinions – which can and do happen when different parties are in control of each – these must be resolved in a congressional conference, says the CNAS report.

It is only after an identical bill passes both the Senate and House that the president can sign the NDAA into law. In other words, it is not a simple process – it is easy to see why the 1970s “School House Rock” segments never tried to address it!

“If someone is familiarizing themselves with DoD’s budget they should start with the budget briefs and overview books,” Parrish told ClearanceJobs. “These documents provide the reader with a breakdown of funding and the reasoning behind the request.”

She explained that the whole process begins with the Secretary of Defense delivering the “Defense Planning Guidance” (DPG) to the military services, which is based on national strategic documents that help determine what needs greater investment and what programs can be cut. Once the services have the DPG, the next step begins; this is the “Program Objective Memorandums” (POMs), which are the documents for specific programs and how funding for each will be allocated. From this services write their respective “Budget Estimation Submissions” (BESs), which are in essence the cost estimates of the various POMs.

All of the POMs and BESs are submitted to the Office of the Secretary of Defense (OSD), Cost Assessment and Program Evaluation office (CAPE) and the Office of Management and Budget (OMB) for review, and after some modification, the approval. OSD and OMB will release a joint document, “Resource Management Decision” (RMD), which addressed what should be in the budget. It is then included in the President’s Budget Request for the whole of the federal government.

The budget isn’t exactly easy reading, and a Parrish noted it is filled with dozens of acronyms – however the budget is commonly broken down by appropriation title and by military department. The five main appropriation titles include: Operation and Maintenance (O&M); Research, Development, Test, and Evaluation (RDT&E); Procurement; Military Personnel (MILPERs); and Military Construction (MILCON).

These are fairly self-explanatory, with O&M – the largest part of the budget – accounting for the training, upkeep and maintenance; while RDT&E is essentially the money to fund new equipment and technologies; procurement is the actual purchasing; MILPERs is the salaries, healthcare and retirement funding; and MILCON is the money that goes to building new bases around the world.

It is safe to say that the budget isn’t light reading, which is why CNAS offered its guide as a way to help those who aren’t trained in advance accounting to be able to understand exactly where some of that $738 billion will be going.

“The defense budget shouldn’t only be looked at by budget analysts and budget enthusiasts,” Parrish told ClearanceJobs. “The request, which is supposed to be driven by strategy, tells us what the department is buying and how much. In other words, the budget tells us whether the department is actually working to fund its strategy.”

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Peter Suciu is a freelance writer who covers business technology and cyber security. He currently lives in Michigan and can be reached at petersuciu@gmail.com.