A Little Applause for the 2022 Budget Request

By Tara Murphy Dougherty and Arun Seraphin

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The fiscal year 2022 budget request and congressional appropriations process is easy to criticize — its late submission, late completion and the negative impacts of these dates on the Defense Department and industry warrant some of these critiques.

There is, however, also quite a bit to applaud, especially when evaluated through a modernization lens.

In fact, what is most noteworthy about this year’s budget process is not which defense modernization programs are winners and which are losers, but whether the department is sufficiently funding its modernization strategy at all. Taking the 2022 request and the final appropriations law into consideration, it appears that Congress may be more serious about modernization than the Defense Department.

The appropriations law provides a record $18.9 billion for defense science-and-technology. This is more than $4 billion above the administration’s original budget request and is well above the $16.9 billion provided in 2021 appropriations. Congress also made very few cuts to the Defense Department’s proposal, totaling less than 1 percent of the specific science-and-technology programs requested.

Finally, the bill increased the overall defense topline by roughly $40 billion above the requested $715 billion, within which Congress committed a significant share of the added funds to important science-and-technology activities. Notably, this higher spending level does not include an additional estimated $2 billion, which will be transferred from other research-and-development accounts to fund the Small Business Innovation Research and Small Business Technology Transfer programs. In total, these funding levels represent a much-needed investment in critical modernization activities.

The final bill also provides funding dedicated to support the transition of technologies from research to acquisition programs of record and operational use. This transition — colloquially known as the “Valley of Death” — has been one of the greatest barriers to defense innovation since research-and-development in the United States shifted from predominantly federally funded activities to the commercial sector.

Funding for programs such as the Rapid Prototyping Program, the Joint Capability Technology Demonstrations program, the Rapid Defense Experimentation Reserve pilot and $100 million for the Agile Procurement Transition Pilot are all designed to provide bridges for innovative U.S. companies that otherwise find this valley impassable.

Ultimately, the increased funding for transition programs and the discussion on how best to manage increased funding flexibility — while also protecting taxpayer interests and providing transparency for industry — are positive steps. While strengthening the domestic defense industrial base, the bill also provides more than $1 billion for manufacturing technology programs of the services and the Office of the Secretary of Defense, the defense manufacturing innovation institutes and OSD’s industrial base analysis and sustainment program.

Unfortunately, there are still some areas that remain underfunded. Despite a common understanding that basic research programs create the workforce and intellectual property that both the defense industry and Silicon Valley depend on, these programs were only funded at $2.8 billion — short of the traditional goal of 15 percent of science-and-technology funds.

This and similar shortfalls in civilian science agencies’ budgets are a major risk to U.S. technological superiority, both on the future battlefield and in global market competition. The Pentagon and Congress also underfund the infrastructure needed to support development and deployment of emerging technologies. China is making a significant investment in its research and testing infrastructure to support its ambitious defense modernization goals, but the Defense Department still requests very few major construction projects for research activities.

Congress took some steps to remedy this problem by appropriating $125 million for future project planning and design, and for a few small construction projects at defense laboratories. But much more needs to be done.

When looking at the department’s stated modernization priorities, it is still not clear that these priorities have penetrated either the military departments’ programming or congressional appropriations processes, but there is some reason for optimism.

Space technology received a bump to more than $6 billion in 2022, with communications systems and biotechnology investments being the next two largest investment areas at roughly $2 billion and $1.7 billion respectively.

The president’s fiscal year 2023 budget request identifies areas for modernization and provides a significant increase to some areas — namely hypersonic and autonomous systems.

Current requests have increased 30 percent for both areas since last year. Other areas, like biotechnology and cyber also saw growth, indicating an effort to prioritize modernization to advance warfighting effectiveness.

Overall, the 2023 budget request sets science-and-technology funding at $16.4 billion, well above the 2022 requested level, but far short of the actual appropriated 2022 budget.

There are also few if any such projects on the department’s numerous unfunded priority lists.

This once again sets up Congress as being responsible to find funding from other requested programs to shore up the funding for the department’s modernization strategy. While this represents an opportunity to shape the portfolio for both the Appropriations Committee and the industry and university lobbyists who work with them, it may not always result in the most coordinated or sustainable set of activities.

We hope that the department can bring itself to match its rhetoric while building the 2024 budget request and prioritize these critical research and infrastructure activities that will create the emerging technologies of the future. 

Tara Murphy Dougherty is CEO of Govini, a decision science company, and Arun Seraphin, deputy director of NDIA’s Emerging Technologies Institute.

Topics: Budget

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