Biden budget has clear priorities even with uphill battle

Deltek’s Deniece Peterson made it clear during a presentation on President Biden’s fiscal year 2024 budget proposal is “aspirational," so whatever gets through Congress will be different than the request his administration submitted on March 9.

But a few things are very clear. From the topline budget, federal spending is huge -- $1.8 trillion in total discretionary funding. That number divides into $842 billion for defense and $942.4 billion for civilian agencies.

Defense would go up by 3.2% under Biden’s proposal, while civilian funding would increase 7.8%.

Those exact numbers may shift to a degree, but Peterson explained during the presentation on Tuesday how Biden's budget proposal is a statement of priorities.

The money focuses on these areas in particular: national security, cybersecurity, research-and-development, infrastructure modernization, public health, climate resiliency and clean energy.

Many of these priorities are found in the proposed R&D funding line, which would see rapid growth.

“The concern is that the U.S. is behind on many fronts -- national security, public health, climate resiliency and technology,” said Petersen, the senior director of federal market analysis at Deltek.

Digging into defense priorities specifically, she said the budget proposal includes increases across almost all of the appropriation groups -- operations and maintenance, procurement, and R&D. Only military construction sees a decrease, mostly at the Air Force.

The increases in cyber include more money to implement the Cybersecurity Maturity Model Certification, the Defense Department's in-the-works standard for contractors to follow on cyber and supply chain security.

Many signs point to the final rule's release within the next few months. Other cyber-related priorities include more spending on cloud computing.

Biden's proposed budget for the space domain sees a bump with $33.3 billion request. Spending will go toward resilient architectures, space command and control, missile warnings, global positioning system enhancements, and satellite communications.

Petersen also broke down the R&D spending with $1.8 billion proposed for artificial intelligence and $1.4 billion for the military's JADC2 networking construct.

The numbers also reflect the growing emergence of near-peer rivals such as China and Russia. The Biden budget proposes $9.1 billion for resilient and distributed air basing, and new missile warning and tracking.

Petersen also analyzed the proposed civilian funding lines that also hit on many of the same themes of the defense proposal -- cybersecurity, climate, infrastructure and R&D.

Biden has proposed $23 billion for climate resilience across several departments -- Interior, Agriculture, Homeland Security and Defense. Another $16.5 billion is requested for climate science and clean energy innovation.

In the infrastructure category there is a lot of highway construction funds, but also $3.5 billion for the Federal Aviation Administration's National Aerospace System that represents an increase. The highway construction bucket of $76.1 billion also includes money for safety and transit, categories generally rich in technology.

Public health also sees increases such as these: $1 billion for the Cancer Moonshot, $1 billion for the Biomedical Advanced Research and Development Authority, and $8.1 billion for the Indian Health Service.

When Petersen focused specifically on IT spending, she was only able to peg the defense IT request at $38 billion to $39 billion because DOD hasn’t released its IT investment details yet.

On the civilian side, the IT budget request is $73.5 billion. Maybe budget themes include reducing cybersecurity risk, modernizing legacy systems, a digital-first customer experience, and data as a strategic asset.

The big spenders for cybersecurity are led by DHS, which requested $3.1 billion for the Cybersecurity and Infrastructure Security Agency. Also high on the list is the Justice Department with $1.4 billion and Treasury at $1 billion.

It should come as no surprise that Petersen is warning that finalizing a fiscal 2024 budget will be contentious on Capitol Hill and that the entire government environment will likely see several continuing resolutions. These days, the first quarter of any fiscal year is regularly funded under a CR before a final budget is enacted.

Petersen offered a few recommendations and conclusions:

The federal government will increase the scrutiny of its suppliers' supply chain security, so contractors need to build in resilience and traceability into their internal processes.

She also expects DOD to redirect resources from legacy systems to priority technologies such as cybersecurity and cloud computing. This could drive greater use of Other Transaction Authority contracts. Contractors need to be ready for that.