On Wednesday night, the Department of Defense announced a review of the Department’s 2026 fiscal plans, stating an 8% budget reallocation. In that review, they identified 17 categories to where money will be refocused. So, we ran an initial analysis of each of these areas to understand how much funding is included in each. We’ll be posting much more about this over the coming weeks, but here’s a first cut.

Southwest Border Activities

The Defense Security Cooperation Agency’s (DSCA) budget includes O&M funding for border security. The DSCA requested $382M in FY25, down from $520M in FY24. It’s likely to see a large increase in FY26.

Combating Transnational Criminal Organizations in the Western Hemisphere

Similarly, the DoD funds counter-drug activities worldwide, with a particular focus on cartels activities in the Western Hemisphere. The FY25 funding request for Drug Interdiction and Counter-Drug Activities totalled $913M, a slight decrease from $970M the year prior, including emphasis and additions from HAC-D Congressional Marks.

Audit Activities & Systems

While the DoD has never passed an independent audit, money is being directed towards both organizations and programs to develop software systems to achieve this goal. This includes offices like the headquarters Defense Contract Audit Agency and the service level Army Audit Agency. In addition, programs like the General Fund Enterprise Business System (GFEBS) in the Army are one of about a dozen programs developing systems to support the audit process. The FY25 budget requested over $4.9B with most of the money coming from O&M.

Nuclear Modernization (Including NC3)

Nuclear Modernization encompasses the United States’ efforts to enhance its nuclear arsenal and associated systems. FY25 funding totaled $49.4B — $18.0B to RDT&E, $6.3B to procurement, and $25.1B to O&M. One of the large programs driving the modernization spend in RDT&E is the Ground Based Strategic Deterrent (GBSD), which requests $3.7B in FY25 for its development. This is followed by other efforts like the B-21 Raider, and the Survivable Airborne Operations Center (SAOC) on the NC3 side of the house. Total forecasted funding for the R&D and procurement of these systems is forecasted to total $95.4B through FY29.

Collaborative Combat Aircraft

The Collaborative Combat Aircraft (CCA) is the Air Force's uncrewed aerial system that works alongside manned aircraft to achieve air superiority under the Next Generation Air Dominance program, with funding rising from $392.2M in FY24 to $557.1M in FY25’s request. The program, which uses digital engineering, agile development, and open architectures, is forecast to receive $8.3B in total funding over the next four years.

Virginia-class Submarines

The Virginia Class Submarine program is a key element in the Navy’s fleet, and is at full production. The FY25 budget request totalled $5B, with most of that going to procurement, except $273.8M for RDT&E. The program is expected to receive $29.1B over its forecast, the majority of which will remain for procurement. Notably, the new Columbia-class expected to be ready in 2031 was not included in this list.

Executable Surface Ships

While it’s not immediately clear what is classified as “Executable”, Surface Ships could include a broad category of vessels including aircraft carriers, destroyers, and even the new generation of unmanned surface vessels. While most of this would fall under the Navy, programs like the Army’s Maneuver Support Vessel (Light) could also be a critical program as the Army’s contribution to activities in the Indo-Pacific. 

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The FY25 budget totaled $44.5B, with approximately half going to O&M, and the other $20.2B for procurement. RDT&E only accounts for about 3% of this overall budget. The program's funding is projected to reach $90.2B through FY29, maintaining similar proportional allocations.

Homeland Missile Defense

Homeland Missile Defense consists of a series of counter-missile, strategic deterrence, and tactical interceptor programs that aim to identify and neutralize missiles or high speed threats. In FY25, the budget included $28.4B with the majority of the money dedicated to RDT&E on missile identification/warning and counter-missile technology. Future funding for this effort is expected to reach $105.5B by FY29.

One-Way Attack/Autonomous Systems

Loitering munitions and autonomy have become a major focus after extensive usage in Ukraine. Attritable systems like these have continued to grow in funding, with $801.3M requested for FY25, over double its funding in FY24. Driving this is the procurement of the Navy’s programs like GOALKEEPER and WHIPLASH, as well as LASSO on the Army side. While future forecasted funding is currently minimal, this is likely to change in the next request.

Counter-small UAS Initiatives

Counter-small Unmanned Aerial Systems are focused on using technologies like directed energy, lasers, and more to neutralize smaller threats in Groups 1-3, including modified, commercially available platforms. The FY25 request totalled $1.1B, with the Marine Corps’ Ground Based Air Defense (GBAD) program as one of the main efforts. The majority of the $4B in future funding will shift towards procurement after heavy investments in R&D over the past several years. 

Priority Critical Cyberspace

Cyberspace consists of three main initiatives spanning across cybersecurity, cyberspace operations, and cyber research. The portfolio was funded $14.5B in FY25 and is expected to balloon to $36B through FY29. The majority of the funding, over two thirds, is set-aside for RDT&E and O&M, with just $2.9B reserved for PROC.

Munitions

Munitions include a lot - everything from bullets, missiles, launchers, and weapons themselves. Most of this money is going towards production, with FY25’s procurement funding request equaling $29.5B. But $11B is still allocated to RDT&E for improvement of existing systems and development of new ones, like when the Army fielded the Next Generation Squad Weapon last year that was in development for years. On the whole, procurement funding is anticipated to increase over the next few years, with RDT&E staying consistent. Total funding is expected to reach $146.7B through FY29.

Core Readiness, including full DRT funding

DOD Core Readiness encompasses the ability of the joint forces to assess their capacity and capability while balancing the ability to appropriately respond to high-end conflict. Efforts under this category include Directed Readiness Tables, Pacific Deterrence Initiative, and the Optimized Fleet Response. In FY25, the combined branches were allotted $156B, with almost all funding directed to O&M across all branches.   

Munitions and Energetics Organic Industrial Bases

The Munitions and Energetics Organic Industrial Bases refer to the network of facilities and organizations within the DoD that are responsible for the production, maintenance, and demilitarization of munitions and energetic materials. These include Army Ammunition Plants, Activities, and Depots. The Army is in the middle of a 15-year, $18B Organic Industrial Base Modernization Implementation Plan that’s set to modernize facilities, processes, and the associated workforce.  So, FY25’s budget request includes $1.7B, with money in both O&M for the operation of existing facilities, and procurement focused on upgrading those. 

Executable INDOPACOM MILCON

Beyond platforms and manpower, a focus on construction projects in the Indo-Pacific will continue. In the FY25 request, Pacific Deterrence Initiative funding totalled $6B for INDOPACOM-oriented projects, with about $1.7B dedicated to military construction across all branches.

Combatant Command Support Agency (INDOPACOM, NORTHCOM, SPACECOM, STRATCOM, CYBERCOM, and TRANSCOM)

Out of the 11 COCOMs, only six were called out, with “Combatant Command Support Agency” (CSA) (the lead service responsible for supporting the COCOM) as the budget focus. This refers to headquarters level funding, which totalled $1.7B in FY25. Almost all of this comes from O&M. Beyond this specific headquarters and related administrative cost, much more money flows to the COCOMs through the programs and subordinate units (e.g. United States Army Pacific) that make up the unified command.

Medical Private-Sector Care

Lastly, this category refers to funding for DoD healthcare through civilian private health care providers, which is an essential part of the Defense Health Agency’s work. Funding for this totalled $20.6B in FY25, a slight increase from $19.9B in FY24. 

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Thanks for reading. You can expect much more analysis like this to come. Questions, comments, or found this helpful? We’d love to hear from you.