The idea of“Big.”

It is almost a daily occurrence that I am asked how big the defense budget is and how that stacks up with other countries.

In 2022 Congress approved a budget of $813 Billion for the year. By itself, the number looks massive, and it is much more than our advisories in stacking it up against the rest of the world. But does this number really paint a picture of the market opportunity that your company faces, or is this nothing more fictitious number I used as a kid when I said it’s a BaZillion?

The defense budget of the United States is scary big, but it includes so many different line items that to believe that $813 billion represent the total available market is silly. From this budget comes line items that many call the “beans and Bullets” or the consumables, for example, payroll dollars and munitions. Another way to consider it is how it is applied to the different branches of the service. As of 4 April 2022, the FY2023 presidential budget request of $773 billion included $177.5 billion for the Army, $194 billion for the Air Force and Space Force, and $230.8 billion for the Navy and Marine Corps (up 4.1% from FY2022 request).

But does that help?

Then there are the many diagrams that split the pie. For example, 15% go to research and development, 20% to procurement, 40% to Operations and Maintenance, and 24% to personnel. What does that mean, and how can I understand from these numbers the market potential? Again I would challenge you.

Recently, I saw an announcement that Canada just committed to a $19 billion deal for 88 F-35s. That led me to explore what other countries have been buying F-35 and the value of those contracts. I thought about the agreement for building submarines in Australia and the value it would bring to General Dynamics and others. The estimated value of this deal is more than $40 billion, with France receiving nearly a Billion dollars per the cancellation agreement. This led to another easily recognized $150 Billion in revenue for our friends at Lockheed and General Dynamics.

If you think about all the NATO countries and allies buying equipment, whether to upgrade an aging fleet of F-15s or to purchase replacements, you might want to look at the defense budgets of countries like Germany, Israel, Japan, and England. If you consider that every Javelin Missile sent to Ukraine from England is replenished by Lockheed and Raytheon, the number gets bigger.

As we sit here and debate the defense budget and the cost of the war in Ukraine, all hoping to understand the total available market for our high-performance computing solution, I will convey a cautionary note. You can’t consider the $150,000 that each HIMAR missile costs to launch, and as we adjust budgets to replenish the “beans and bullets,” the dollars spent on technology may be significant but a bit manic.