U.S. DoD Defense Spending

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Welcome to the DoD Defense Spending Section on AeroWeb. This section covers defense spending both by spending type (procure-ment, RDT&E, O&M, MILPERS and MILCON), military service, and defense program.



Sequestration Information


In early January 2013, Congress reached an agreement that averted the fiscal cliff. The deal, however, did not resolve the issue of spending cuts. As Congress failed to reach an agreement, automatic spending cuts known as sequester went into effect on March 1, 2013. The sequester entails FY 2013 federal spending cuts in the amount of $85 billion of which $31 billion ($37 billion including previous years' cuts) will be in defense. The U.S. is the largest defense market in the world and the aerospace & defense industry depends heavily upon U.S. government contracts. Major cuts in defense spending will therefore have a significant impact on the revenues and profits of most major aerospace & defense OEMs and their suppliers. On Tuesday March 26, 2013, President Obama signed into law a government-funding bill that ended the 2013 budget fight and locked in $85 billion in sequestration cuts. Further information about FY 2013 and FY 2014 sequestration is available below.



FY 2012


In FY 2012, (fiscal year started October 1, 2011) the DoD spent a total of $655.4 billion dollars - $533.1 billion Base and $122.3 billion for Overseas Contingency Operations (OCO).



FY 2013


In FY 2013, (fiscal year started October 1, 2012) the DoD is projected to spend a total of $615.0 billion dollars - net of $31.3 billion in FY 2013 sequestration cuts. Of this amount, $527.8 billion is Base Request and $87.2 billion are for Overseas Contingency Operations (OCO). A closer look reveals a DoD budget reduction of $40.4 billion or -6.2% from FY 2012 to FY 2013. This decrease is mainly due to sequestration.



FY 2014


Turning to the budget for FY 2014 (fiscal year starting October 1, 2013), the National Defense Authorization Act (NDAA) 2014 passed by Congress on January 16, 2014, provides a total of $607.5 billion for the DoD. Total FY 2014 DoD sequestration was initially projected at $52 billion, however, with the NDAA 2014, this figure is reduced by approximately $20 billion to $32 billion (close to FY 2013 sequester level). Of the $607.5 billion DoD budget, $105.1 billion is for procurement, $146.2 billion for Military Personel (MILPERS), $67.9 billion for RDT&E, and $8.4 billion for Military Construction (MILCON) with Operations & Maintenance (O&M) and other costs making up the remaining $279.9 billion.

Changes to DoD Defense Programs


The FY 2013 DoD Budget included the termination of six major programs to save $9.6 billion from FY2013-FY2017. The programs terminated were the RQ-4 Global Hawk Block 30, C-27J Spartan Joint Cargo Aircraft, HMMWV recap, the Defense Weather Satellite System (DWSS-NPOESS), C-130 Avionics Modernization Program (AMP), and the Medium Range Maritime UAS. On top of that, the DoD has restructured the following programs to save a total of $41.8 billion from FY2013-FY2017: F-35 Lightning II, Ground Combat Vehicle (GCV), Family of Medium Tactical Vehicles (FMTV), Ohio Class Replacement SSBN(X), and the Joint Air to Ground Missile (JAGM).

In FY 2014, terminations include the Missile Defense Agency's Precision Tracking Space System (PTSS) development program and the Air Force Expeditionary Combat Support System (ECSS) development effort. Also, the DoD plans to restructure the Standard Missile SM-3 Block IIB program.

Change in Spending FY2013-FY2014: Total DoD O&M Procurement RDT&E MILPERS MILCON
-1.22% /// -4.28% -2.49% -2.30% -6.32%
Change in Spending FY2012-FY2013: Total DoD O&M Procurement RDT&E MILPERS MILCON
-6.16% -4.91% -7.22% -3.39% -5.49% -21.37%

Total DoD Defense Spending and Procurement | FY 2008 - FY 2014    (updated Jan 31, 2014)

National Defense Authorization Act (NDAA) 2014: PDF Logo

Looking at the chart above, you can see that total DoD defense spending (Base + OCO) grew from $673 billion in FY 2008 to $696 billion in FY 2010. Since FY 10 defense spending has fallen every year. In January 2014, the National Defense Authorization Act (NDAA) was passed by Congress, providing a total of $607.5 billion for the DoD in FY 2014. In FY 2013, the DoD received $615.0 billion net of $31.3 billion in sequestration cuts.

In FY 2014, the total OCO request is $80.7 billion compared to $87.2 billion and $122.3 billion in FY 2013 and FY 2012, respectively. The level of defense spending in FY 2015 and beyond is still highly uncertain.

DoD spending on procurement (Base + OCO) has dropped from $165.0 billion in FY 2008 to $135.8 billion in FY 2010. Procurement spending will decrease from $109.8 billion in FY 2013 to to $105.1 billion in FY 2014.

DoD Defense Spending from FY2008 to FY2013 and FY2014 - Base, Procurement and Total

DoD Spending | Military Personnel, O&M, Procurement, RDT&E, and Military Construction (MILCON)

As a result of large defense budget cuts coupled with sequestration, all types of spending will decrease from FY2012 to FY2013. In FY2014, further budget cuts are expected.

As illustrated by the chart (left), the largest share of the DoD budget is for Operations & Maintenance (O&M) activities. For FY2013, O&M expenses are budgeted at $272.7 billion net of $20.3M in sequestration cuts and down 4.9% from FY2012.

Procurement spending was higher than Military Personnel expenses in FY2008, however, that has since changed. In FY2013, Military Personnel expenses are budgeted at $149.7 billion (no sequestration cuts) down 5.5% from FY2012. For FY2013, DoD spending on Procurement is budgeted at $109.8 billion net of $9.8M in sequestration cuts and down 7.2% from FY2012.

Another major DoD expense is RDT&E (Research Development Test & Evaluation). For FY2013, DoD spending on RDT&E is budgeted at $69.6 billion net of $6.1M in sequestration cuts and down 3.4% from FY2012.

Another DoD expense is MILCON, which is a term for Military Construction. In FY2013, DoD spending on MILCON is budgeted at $8.9 billion net of $0.8M in sequestration cuts and down 21.9% from FY2012.

The defense spending figures include Overseas Contingency Operations (OCO).

DoD Defense Spending by Cost Type FY2008 to FY2013 - O&M, MILPERS, Procurement, RDT&E, MILCON

U.S. Defense Spending by Top DoD Defense Programs | FY2011 - FY2012 - FY2013 - FY2014

In Fiscal Year (FY) 2013 (October 1, 2012 - September 30, 2013), Classified DoD Programs, when viewed as an aggregate, are to receive by far the most funds. In total, classified programs account for $33.2 billion ($17.7 billion procurement + $15.5 billion in RDT&E funds). The F-35 Lightning II (Joint Strike Fighter) receives direct total spending of $7.3 billion and, in FY2013, the DoD procures 29 F-35s at a cost of $4.9 billion (31 and 35 aircraft procured in FY11 and FY12), while the program accounts for another $2.4 billion in RDT&E funds.

Other top FY 2013 defense programs are the DDG 51 AEGIS Destroyer, the SSN 774 Virginia Class Submarine, the P-8A Poseidon, F/A-18E/F Super Hornet, the Littoral Combat Ship, V-22 Osprey, AEGIS BMD incl. SM-3, and C-130 (all).

Note that our data may not in all instances match the numbers in the official DoD Major Acquisition Program Data Book, mainly due to the fact that we include spending on modifications (to provide a more accurate view of how much is spent on each system).

FY2011 FY2012 FY2013(p) FY2014(e)

Rank Program Name Type User $ Million $ Million $ Million $ Million

Top 10 DoD Programs and Costs

Classified DoD Programs
F-35 Lightning II (JSF)
DDG 51 AEGIS Destroyer
SSN 774 Virginia Class Submarine
P-8A Poseidon
F/A-18E/F Super Hornet
Littoral Combat Ship
V-22 Osprey
AEGIS BMD & SM-3
C-130 Hercules (all variants)

Other
Aircraft
Ship
Ship
Aircraft
Aircraft
Ship
Aircraft
Missile
Aircraft

JOINT
JOINT
NAVY
NAVY
NAVY
NAVY
NAVY
JOINT
MDA
JOINT

37,815.0
9,682.3
3,274.6
5,468.2
2,908.7
2,382.9
1,478.9
3,071.0
1,814.0
2,130.9

36,148.7
9,162.3
2,256.9
4,953.8
2,911.5
2,516.3
2,144.1
2,984.9
2,274.0
2,506.5

33,211.8
7,282.3
4,866.3
4,812.4
3,084.5
2,902.1
2,327.9
2,185.7
2,184.9
1,938.2

31,977.9
8,444.7
2,299.1
5,579.7
3,851.9
624.3
2,469.3
2,134.1
2,087.2
2,398.5

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DoD Defense Spending by Military Service in Detail | FY2000 - FY2013 (figures include sequestration)

In the following, we focus on DoD defense spending by service and cost/expense categories. There are major differences in the way the military services spend their funds. For example, the Army is relatively "low-tech" compared to the Navy and the Air Force, due to the fact that the Army spends a higher proportion of funds on Military Personnel and O&M while spending less on Procurement and RDT&E.

The Navy and Air Force spend more money on Procurement and RDT&E than the Army, even though the latter receive more funding in total. This is explained by the Navy's and Air Force's greater demand for technology (aircraft, missiles, ships etc.). At the same time, the Army relies heavily on manpower to operate. In the following, the differences in spending are highlighted and discussed.

Total DoD Spending by Service | FY2000-FY2013

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DoD Total Budget by Military Service FY2000 to FY2013

As illustrated, the Army receives the most DoD funding followed by the Navy and the Air Force. In FY2013, the Army will receive $175.0 billion down from $203.5 billion or -14.0% from FY2012.

In FY2013, the Navy will receive $170.5 billion down from $173.9 billion or -1.9% from FY2012.

In FY2013, the Air Force will to receive $151.7 billion down from $162.8 billion or -6.8% from FY2012.

Clearly, while the Army has experienced massive budget cuts over the last three fiscal years, the Navy and USAF have been much less impacted.

The numbers include Overseas Contingency Operations (OCO).

Procurement Spending by Service | FY2000-FY2013

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DoD Procurement Spending FY2000 to FY2013

As illustrated, the Navy is expected to receive the most DoD procurement funds in FY2013 followed by the Air Force and the Army. For FY2013, the Navy is projected to receive $44.7 billion down from $46.0 billion or -3.0% from FY2012.

In FY2013, the Air Force will receive $36.9 billion down from $40.5 billion or -8.9% from FY2012.

In FY2013, the Army will receive $20.5 billion down from $24.9 billion or -17.5% from FY2012.

Clearly, the Army is procuring much fewer vehicles, aircraft, spare parts and support services compared to the peak in FY2008 (FY2008-FY2013: -69.5%).

The numbers include Overseas Contingency Operations (OCO).

RDT&E Spending by Service | FY2000-FY2013

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DoD RDT&E Spending FY2000 to FY2013

The Air Force will receive the most DoD RDT&E (Research Development Test & Evaluation) funds in FY2013 followed by Defense-Wide activities (e.g. DARPA and MDA programs), the Navy and the Army. For FY2013, the Air Force is projected to receive $25.3 billion down from $26.4 billion or
-4.3% from FY2012.

In FY2013, the Navy will receive $16.7 billion down from $17.7 billion or -5.2% from FY2012.

In FY2013, the Army will receive $8.7 billion up from $8.3 billion or +3.6% from FY2012.

Clearly, the Air Force is the "High-Tech" branch of the military.

The numbers include Overseas Contingency Operations (OCO).

O&M, Operations & Maintenance | FY2000-FY2013

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DoD O&M Expense FY2000 to FY2013

As illustrated, the Army will receive the most DoD O&M (Operations & Maintenance) funds in FY2013 followed by Defense-Wide activities, the Navy and the Air Force. In FY2013, the Army will receive $79.5 billion down from $96.6 billion or
-17.8% from FY2012.

In FY2013, the Navy will receive $61.8 billion up from $58.2 billion or +6.2% from FY2012.

In FY2013, the Air Force will receive $54.3 billion down from $57.6 billion or -5.7% from FY2012.

The defense spending figures include Overseas Contingency Operations (OCO).

Military Personnel Expenses | FY2000-FY2013

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DoD MILPERS Expense FY2000 to FY2013

As illustrated, the Army will receive the most DoD Military Personnel (MILPERS) funds in FY2013 followed by the Navy the Air Force. There are no defense-wide MILPERS expenses budgeted in either FY2012 or FY2013.

In FY2013, the Army will receive $63.0 billion down from $68.6 billion or -8.2% from FY2012.

In FY2013, the Navy will receive $44.2 billion down from $47.7 billion or -7.4% from FY2012.

In FY2013, the Air Force will receive $34.2 billion down from $36.6 billion or -6.8% from FY2012.

Clearly, the Army relies heavily on manpower.

The numbers include Overseas Contingency Operations (OCO).

MILCON, Military Construction Costs | FY2000-FY2013

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DoD MILCON Spending FY2000 to FY2013

As illustrated, Defense-Wide construction are expected to receive the most DoD funds for MILCON (Military Construction) in FY2013 followed by the Army, the Navy and USAF.

In FY2013, the Army will receive $2.7 billion down from $4.0 billion or -32.9% from FY2012.

In FY2013, the Navy will receive $1.9 billion down from $2.4 billion or -22.0% from FY2012.

In FY2013, the Air Force will receive $0.4 billion down from $1.4 billion or -70.3% from FY2012.

From the numbers above it is clear that the FY2013 budget for MILCON has been hit particularly hard.


The numbers include Overseas Contingency Operations (OCO).


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