The Department of Defense’s newly-released “spend plan” for its $152 billion in reconciliation funding takes significant risks—but these could pay off over time.
If you want to understand the Pentagon’s real strategy for its newly-apportioned $152 billion in reconciliation money, don’t read the press releases. Read the spend plan tables.
The spend plan that recently emerged appears to be a draft sent around for coordination within the Department of Defense (DoD), and not the final plan. But buried in the line-item detail is a revealing story about how DoD thinks about money, time, and management power.
Three themes stand out. First, DoD clearly intends to obligate every available dollar as quickly as possible. Second, the funding tables raise significant executability questions. And third, DoD is aggressively using the flexibility granted to it by Congress. This is both a spend plan and a positioning maneuver for the months ahead.
The Pentagon Wants to Spend Every Dollar As Quickly As Possible
The first notable feature of the spend plan is simple: although the money could be spent over several years, DoD intends to spend everything this year. Why? In large part, to affirm the urgent need, the capability of the acquisition system to meet that need, and to make sure it is all counted as part of the fiscal year (FY) 2026 budget.
The Office of Management and Budget (OMB) previously assumed that at least $37 billion of the total would be carried over to the FY 2027 budget, and would likely try to apply any unobligated balances against the White House’s future $1.5 trillion budget plan. In a resource-constrained environment, however, that is unacceptable to defense planners—and, more importantly, detrimental to warfighters.
The problem is that speed and strategy are not the same thing. The spend plan reflects urgency, but it does not always reflect clarity for action.
Gaps in Executability Are a Significant Risk
A closer look at several spend plan lines reveals substantial disconnects between top-line allocations and detailed breakouts below those lines. Some gaps are modest, but the pattern is unmistakable. Portions of funding are implied, assumed, or pushed into future-year follow-on requirements.
In private equity, this would be called “optimistic modeling.” In federal budgeting, it is an executability risk. In essence, there is a significant risk that some projects associated with the spend plan will fail or go over budget due to insufficient resources or poor implementation.
For example:
- The $29.2 billion for shipbuilding allocates $500 million to complete rescue and salvage ships, but details actual plans for less than half this amount for the Austal and Bollinger vessels.
- Another high focus area—munitions and supply chain—would get $24.8 billion, while three of the lines—Mk54 lightweight torpedoes, Army medium range ballistic missiles, and industrial base workforce—appear to leave a $54 million gap between what is allocated and what is described.
- The spend plan allocates $2 billion for the sea-launched nuclear cruise missile. The detailed line items only total $1.45 billion—leaving a gap of more than $500 million.
- The $532.6 million planned for Pacific Air Force biennial large scale exercise leave nearly 35 percent of the funds unallocated to a specific activity. While the final cost of such exercises can be a bit unpredictable due to a number of variables, this is a sizable mismatch.
Congress took a shot at closing serious capability gaps with this flexible, mission-focused infusion of cash. The Pentagon must now demonstrate it can actually turn dollars into delivered capability. Otherwise, this becomes a case study in how such a funding approach can be hard to justify.
DoD Has Subverted Congress’ Funding Expectations
The third major theme is how aggressively the department is using the flexibility embedded in the reconciliation language. For example, Congress specified workforce development funds to support the “submarine and surface industrial base.” However, though DoD plans to spend $450 million on maritime industrial base workforce development programs and $250 million to expand accelerated training in defense manufacturing, it all flows to the Virginia-class and Columbia-class submarine programs. Shipyards for surface vessels will have to compete with these programs under separate line items for more general shipbuilding manufacturing and technology efforts, receiving no attention of their own. That is not illegal. It is an exercise of discretion. But it is also a signal that submarines will remain the industrial base’s priority, regardless of broader authorizer language.
In the munitions section of the plan, the pivot to precision strike containerized launch is also revealing. Congressional intent tables provided $50 million for Precision Strike Missile (PrSM) increment development acceleration. DoD’s spend plan diverts that funding toward containerized launch infrastructure and containerized long-range weapons. The same pivot also appears in another munitions and supply chain line, where $300 million originally intended for ATACMS ($280 million) and GMLRS ($20 million) is being redirected toward PrSM production capacity expansion ($102 million), PrSM Increment 2 acceleration ($151 million), and sensor modifications ($46.1 million).
The pattern suggests two strategic choices: stretch out legacy ATACMS procurement, and double down on PrSM production capacity and containerized ground launch concepts. This is probably not a bad idea, but it is an interesting subversion of congressional intent. In effect, the department is using funding intended for munitions procurement to finance next-generation capacity and novel launch concepts, some of which were not specified in the intent tables.
While most of DoD’s hypersonic weapons program remains classified, the spend plan diverges from congressional intent tables. The intent table showed an allocation of a total of $400 million for Conventional Prompt Strike (CPS) and Long Range Hypersonic Weapons (LRHW), whereas the spend plan allocates $266.3 million to the Air Launched Rapid Response Weapon (ARRW) and the remaining $133 million to the Navy’s mini-cruise missile, the Multi-Mission Affordable Capacity Effector (MACE).
Elsewhere in the munitions and supply chain line, the spend plan substitutes SM-6 procurement for the $93 million line that intent tables allocated to SM-2s. This is not a trivial change. It reflects a doctrinal shift by DoD—prioritizing longer-range, more capable interceptors over legacy stocks. Again, flexibility is being used to reshape force design under the cover of implementation.
Similarly, the money allocated for Special Operations Command (SOCOM) is a bit muddled. The spend plan allocates $53 million for Western Pacific exercises, $300 million for mesh network communications, $1.64 billion for “equipment and readiness,” and $320 million for JSOC, with more detailed explanations classified. The $1.64 billion “equipment and readiness” section has a short unclassified description, but it is nearly all-encompassing regarding what it could cover.
Few Details on the “Golden Dome”
If lawmakers were looking for an indication of how DoD plans to spend the $24.4 billion they granted for missile defense in the reconciliation bill, they will have to keep looking. Only one of the plan’s twelve missile defense lines includes a description of how the funding will be spent. Eight lines say the details are classified, and three lines (including the $7.2 billion line item for space-based sensors) say “pending approval.”
This indicates that at the time this draft spend plan was written, $10 billion (41 percent) of the Golden Dome funding did not yet have an approved plan for how to spend it. The details behind $14 billion (57 percent) of the allocated funding will likely remain hidden from public view.
Major Investments in Autonomous Systems
In a potentially consequential move, the spend plan directs $1.5 billion to the newly established Defense Autonomous Warfare Group (DAWG). In Section 20004, $1 billion flows through the Office of the Under Secretary of Defense for Acquisition and Sustainment’s Industrial Base Analysis and Sustainment (IBAS) program—under the title “Expansion of one-way attack unmanned aerial systems industrial base”—to support DAWG oversight and execution. Another $500 million appears in Section 20005 to prevent delays in delivering attritable autonomous capabilities.
DAWG amounts to a rebrand of the “Replicator Initiative,” a DoD drone program that promised rapid, affordable mass in autonomous systems. It struggled with cost realism and production timelines. The question now is whether the new name will solve the old problems. If DAWG can translate $1.5 billion into fielded, attritable systems at scale, it could start to reshape the force. If not, it will become yet another example of Washington confusing announcement with execution.
Creative Destruction, or Creative Accounting?
Stepping back, the reconciliation spend plan reveals a Pentagon attempting something ambitious: using one-time funding to accelerate modernization, hedge technological bets, and reposition industrial capacity. That instinct is a good one, and what Congress intended—even if DoD is not following Congress’ instructions to the letter. Legacy procurement should not crowd out future capability, industrial base investments matter, and autonomous systems and precision fires are central to deterrence. But strategy requires alignment between intent, execution, and transparency.
Right now, the tables suggest three risks: executability gaps could slow the obligation of reconciliation funding, divergence from congressional intent and lack of transparency could trigger backlash, and organizational bets, like DAWG, remain unproven.
The Pentagon wants to quickly spend this flexible cash. The more important question is whether it can convert every dollar into credible deterrence. In budgeting, as in war, mass matters. But so does precision.
About the Authors: John Ferrari, Elaine McCusker, and Todd Harrison
Maj. Gen. John G. Ferrari is a nonresident senior fellow at the American Enterprise Institute. Over his 32-year US Army career, Ferrari, who is now retired, served as the director of program analysis and evaluation, the commanding general of the White Sands Missile Range, and a deputy commander for programs at the NATO Training Mission in Afghanistan. He has an MBA in finance and strategic management from the Wharton School at the University of Pennsylvania, an MA in national resource strategy and policy from the Industrial College of the Armed Forces (now called the Eisenhower School for National Security and Resource Strategy), and a BS in computer science from the United States Military Academy at West Point.
Elaine McCusker is a senior fellow at the American Enterprise Institute and previously served as the Pentagon’s acting undersecretary of defense (comptroller). Her writing on the military’s commissary system has appeared in The National Interest, The Military Times, and The Ripon Forum.
Todd Harrison is a senior fellow at the American Enterprise Institute, where he focuses on defense strategy and budgeting, the defense industrial base, and space policy and security. Previously, Mr. Harrison was senior vice president and head of research at Metrea, a senior fellow and director of Defense Budget Analysis and the Aerospace Security Project at the Center for Strategic and International Studies (CSIS), and the senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments. He has also served as a captain in the US Air Force Reserves and held affiliations with Johns Hopkins School of Advanced International Studies and George Washington University’s Elliott School of International Affairs.
