The House Armed Services Committee (HASC) reconciliation recommendations include roughly $150 billion for Department of Defense (DOD), outside the annual appropriations process. The HASC-approved bill includes funding for missile defense, supply chain resiliency, space, autonomous systems, and nuclear forces—all areas that FBIQ’s forecast identified as 10-year multi-billion- dollar growth opportunities for the past three years. In addition, HASC approved funding to help shore up the defense industrial base, to improve readiness, to support the Combatant Commander (COCOM) in the Indonesia Pacific Command (INDOPACOM), and to improve the quality of life for military personnel and their families. The Chairman’s mark was released on April 27. On April 29, the House Armed Services Committee voted 35-21 to report the recommendations with no amendments.
Chart I. Source: House Armed Services Committee, Congressional Budget Office, FBIQ. Totals may not add due to rounding.
This recommendation comes from the Armed Services Committee as part of a reconciliation instruction from the House Budget Committee. The instruction to the House was for an increase not to exceed $100 billion while the Senate’s instruction for the Armed Services Committee was not to increase the deficit by more than $150 billion. Although the budget authority (BA) for the bill is higher than the Senate’s instruction, the outlays (which impact the deficit) are scored slightly lower by CBO at $144 billion over the 10-year window. If enacted, this will be the first time DOD has received funding through reconciliation for operations. Because HASC chose not to direct the funds in this bill through specific appropriation accounts, tracking how DOD uses these funds will be difficult. For instance, the bill provides $7.2 billion for Space Based Sensors and $1.1 billion for the unmanned aerial system industrial base with no account detail for those distributions.
In a reconciliation bill, outlays matter more than budget authority because the outlays determine the deficit impact in any given year. CBO’s scoring of the bill is instructive from a planning standpoint because it indicates CBO’s projection of when the funds will spend. Chart II shows that there will be very little spending in FY25 with the preponderance of spending taking place in FY26, FY27, and FY28. Because federal agencies can obligate funds by signing contracts or grant agreements after budget authority is enacted and before outlays (CBO’s focus), outlays are a lagging indicator for contracting opportunities.
DOD is currently operating on an appropriation that is an extrapolation of FY24 spending extended through the end of the FY25 (September 30). President Trump introduced a “skinny” budget for FY26 last month that calls for an increase in the DOD topline of $113 billion from FY25 enacted levels. While the initial budget submission is light on details, there is overlap between the reconciliation recommendation and the request, particularly in the areas of missile defense, shipbuilding, space, aircraft, and nuclear forces. In the absence of a detailed budget request so late in the fiscal year, expect DOD to operate under another continuing resolution this fall that could last well into FY26 or for the entire year. If the DOD receives the reconciliation recommendation funding, those funds would be used as a head start on the President’s FY26 priorities, but they won’t be much of a head start as CBO’s scoring indicates almost no money going out the door in FY25 and just 27% of the total spending in FY26.