With a new administration stepping in, the defense community anticipates significant changes to military budgeting. Fiscal planning for 2025 remains incomplete, and 2026 budget submissions face delays. Adjustments to defense programs and shifting priorities due to global threats are likely. For defense contractors, understanding these changes is key to aligning strategies and securing future contracts.

Key Changes in the Budget Process

The new administration may delay the 2026 budget submission until late spring or early summer. Though the possible delay will create market uncertainties for industry, with a Republican-led House and Senate, we may see faster approvals, as both chambers could agree on priorities and reduce gridlock. Despite this, we expect tight timelines and key adjustments to programs. These could affect equipment quantities on major weapon system platforms and allocation of more funding to new initiatives, like unmanned surface vessels.

Impact on New Programs and Spending

A continuing resolution would cap budgets at prior-year levels, delaying new programs for 2025, such as the Landing Ship Medium (LSM) program. The lack of 2025 appropriations has already caused delays, and the new administration may bring further changes, impacting 2026 timelines and allocations. With rising global tensions involving China, Russia, and other regions, the administration could reprioritize spending to address these threats.

How SMA: The Program Lifecycle Company Can Help

Our team, led by experienced consultants such as John Prior, Ajay Patel, and Jacque Keats, offers deep insights into military budgeting and past administrations. With our industry expertise and connections, we provide clients with timely alerts and analysis on changing budget priorities, helping them seize new opportunities or manage constraints. Our strategic advisory services guide clients through program adjustments, ensuring they align with defense priorities and identify new opportunities in a shifting budget landscape.

In this changing environment, we stay committed to delivering up-to-date intelligence and strategic advice. As always, our over-arching goal is empowering clients to adapt to emerging defense priorities.

RDML Chuck Goddard (US Navy Ret.) is an SMA Vice President for Business Development. He was previously responsible for the FFG-62 program, and retired from the US Navy after a 30-year career, culminating as PEO Ships.

Tawnia Luong is the Senior Marketing Specialist at SMA: The Program Lifecycle Company. With an MS in Digital Audience Strategy, she blends her academic background with SEO experience to craft compelling content that resonates with wide audiences.