Pentagon comptroller says space, AI, microelectronics key in next budget

Lawmakers are on the cusp of agreeing to a fiscal year 2022 spending agreement with a big increase for national defense.

A top Pentagon budget official thinks the debate on national security spending is about to “turn a corner,” as lawmakers are on the cusp of agreeing to a fiscal year 2022 spending agreement with a big increase for national defense.

Meanwhile, the Pentagon is soon to release its FY 23 budget request, with space capabilities featuring as a major focal point during internal discussions, according to Defense Department Comptroller Mike McCord.

The omnibus spending agreement is $782 billion in Defense funding, $42 billion — or 5.6% — above FY 21. Lawmakers added billions on top of the Pentagon’s budget request for additional platforms including ships and airplanes.

The House passed the omnibus on Wednesday, while the Senate is working to quickly take up the agreement.

The FY 22 spending bills are the first in a decade that haven’t been limited by the Budget Control Act of 2011 that capped both Defense and non-Defense spending

McCord, who spoke at the McAleese defense programs conference Wednesday, was also Pentagon comptroller throughout the Obama administration.

He hailed the end of the BCA caps, and despite the bleak situation in Ukraine, said lawmakers may be coalescing around the need for consistent national security spending.

“We have a lot of new things on our plate, a lot of things to be concerned about,” McCord said. “On the more positive side, I do think that we’re about to turn a corner on national security, I think we have a possibility of greater focus, greater consensus, more robust funding, more stable funding, if we can seize this opportunity.”

With an FY 22 budget nearly in hand, McCord also offered a preview of the Pentagon’s forthcoming FY 23 budget request.

“We are done,” he said. “Substantively, we are now doing the final assembly and starting to put the paint on and everything, but we are done and we hope that we will be able to present that to you soon.”

The Biden administration has yet to publish a new National Security Strategy, nor a National Defense Strategy. While they would ideally be released before the budget request, McCord said it’s “getting sportier by the day.”

Still, he said the FY 23 request is informed by the strategy discussions. And a key point in budget deliberations has been the primacy of space-based capabilities.

“Space has probably emerged in our internal reviews as the most important foundational area for everything that we’re doing, everything that we need to be doing, whether it’s versus China, versus Russia or anybody else.” McCord said.

Artificial intelligence and microelectronics are also key cross-cutting capabilities.

“I think some of these more foundational things, space, AI, supply chain resilience are going to be some of the big focuses that you should see from us,” McCord said.

Pentagon budgeteers have also been closely examining the effects of inflation on its more than $700 billion annual discretionary spending.

“The biggest near term concern that we have really is the inflation that did occur in ’21, that was higher than projected,” McCord said. “The inflation that is occurring in ‘22, that was higher than projected. So my emphasis has been on getting us caught up on that, as best we can.”

DoD is working closely with the White House Office of Management and Budget, he continued, to ensure consistent pricing policies across government.

But with the request largely being developed last fall and FY 23 not starting until Oct. 1, McCord said the challenge is in making projections deep into an uncertain future.

“I would sort of liken it to going through the supermarket and putting things in your cart,” McCord said. “But when you get to the checkout line, prices have changed. Everything that we put in the shopping cart was priced over a year ago, at what are no longer accurate prices. So again, I spend a lot of time working with OMB in the White House on that issue.”

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