Join War on the Rocks and gain access to content trusted by policymakers, military leaders, and strategic thinkers worldwide.
No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law
-Article I, Section 9, Clause 7, U.S. Constitution
Weeks ago, Secretary of Defense Pete Hegseth gave a speech announcing the Pentagon’s intentions to embrace more aggressive acquisition reforms. One of the most significant changes is to shift from a program focused acquisitions to portfolio concepts. According to Hegseth:
We will shift funding within portfolios’ authorized boundaries swiftly and decisively to maximize mission outcomes. If one program is faltering, funding will be shifted within the portfolio to accelerate or scale a higher priority. If a new or more promising technology emerges, we will seize the opportunity and not be held back by artificial constraints and funding boundaries that take months or even years to overcome.
The goal is to provide acquisition teams with more flexibility to shift money between various programs in reaction to real-time developments. This will allow more rapid integration of quickly changing commercial technologies, and faster shifts from programs that are off-track to those more likely to deliver mission capabilities.
For Congress to spend money, there are typically two committees that need to weigh in. Policy committees, such as the House and Senate Armed Services Committees, must authorize spending. They create the framework of what to prioritize, how the department should be run, and, each year, pass the National Defense Authorization Act, which grants permission for the Pentagon to spend money. However, final spending decisions rest with the House and Senate Appropriations Committees. These committees are responsible for the twelve major spending bills that fund all discretionary activity in the government.
The biggest obstacle to shifting the Department of Defense to a portfolio management structure comes from congressional appropriators. Regardless of party affiliation, appropriators jealously guard their role as the arbiters of spending allocation in defense and other Federal roles. They have consistently opposed giving the Pentagon this degree of flexibility. A knock-down, drag-out fight between the Trump Administration and Congress now looms.
Currently, the system is designed to fund specific program elements — like line-item budgeting for the procurement of the F-35, or research and development of the new Collaborative Combat Aircraft. The portfolio approach, however, funds a broad mission area, allowing the Pentagon to rapidly shift money from a failing system to a promising new technology without needing a new vote from Congress. This shift from line-item specificity to mission-area flexibility is where the conflict with appropriators lies.
These reforms reflect recommendations made by the Commission on Planning, Programming, Budgeting, and Execution Reform in 2024, and are reflected in two slightly different portions of the FY 2026 National Defense Authorization Act currently being negotiated between the House (the SPEED Act) and the Senate (the FoRGED Act). As laid out in earlier analysis here at War on the Rocks, there are differences between the two, but both align well with the shift towards portfolio management. Many analysts see the momentum in the National Defense Authorization Act, the commission, and the department as evidence that this reform is rapidly moving forward.
However, the main obstacles to achieving many of the goals laid out in this reform are not the armed services committees, but the appropriations committees. Congressional appropriators are famously and fiercely protective of their spending prerogatives. “The legislative branch must be eternally vigilant over the powers and authorities vested in it,” Sen. Robert Byrd, the longtime chairman of the Senate Appropriations Committee, warned — a line that remains the committee’s unofficial creed. The committees have previously rejected efforts to enact a portfolio approach and, based on their actions in this year’s budget process, are unlikely to be supportive now.
Congress’ inherent power over spending is significant. In Federalist 58, James Madison described its authority thusly,
The House of Representatives cannot only refuse, but they alone can propose, the supplies requisite for the support of government … This power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people.
Appropriators view it as their job to protect and defend this authority against Executive encroachment. That this often allows them to more directly support their constituents through the direction of spending is simply, to them, a happy benefit.
Attempts towards enacting more portfolio-based spending have been tried previously and appropriators rejected them repeatedly. While there is evidence that appropriators may be more willing to listen to proposed reforms, it will require clear communication and strong engagement from the department. The historical record indicates that this will be difficult to achieve.
For example, in its Fiscal Year 2021 legislation, appropriators forcefully pushed back on the Air Force’s request for a large pool of funds that it could allocate flexibly:
The Air Force’s [FY]2021 budget request for research, development, test and evaluation proposes to eliminate funding for 14 program elements within the budget activities for applied research and advanced technology development, and consolidate funding for multiple budget program activity codes totaling approximately $955,000,000 into one existing and five new program elements … The granting of additional budget flexibility to the Department is based on the presumption that a state of trust and comity exists between the legislative and executive branches regarding the proper use of appropriated funds. This presumption presently is false.
Other services have also sought — and been denied — flexible spending latitude. In all of these cases, appropriators were not rejecting portfolio logic directly so much as defending the visibility and control mechanisms that undergird their institutional authority. There is little evidence that the appropriations committees have become more enamored of this idea of late.
This year provides strong evidence that a transition to portfolio managed acquisitions faces a hostile reception with appropriators. In the FY2026 President’s Budget Request, the U.S. Army created a series of broad new funding vehicles under a newly created “Agile Portfolio Management” budget activity. These rolled up a series of pre-existing line items related to drones, counter-drone systems, and electronic warfare, giving the Army greater latitude to shift funds between projects in these areas. Neither the House of Representatives nor the Senate funded this proposal in their appropriations bills, which were drafted over the summer.
In response to this rejection, Army Secretary Daniel Driscoll announced that there may need to be a “holy war” with the Congress over funding flexibility.
Specifically, we have asked to consolidate down in electronic warfare, drone and counter-drone … This is 1 percent of our budget and we are in like a holy war over whether we’re going to have the authority for 1 percent of our budget to have the flexibility to buy different makes and models.
This rejection is notable partly because it comes after the Planning, Programming, Budgeting, and Execution Reform Commission and both National Defense Authorization Act drafts endorsed greater flexibility — demonstrating that appropriators remain unmoved even in the face of broad bipartisan push.
Given appropriators’ strong position within Congress, this sets up a conflict with Hegseth and the administration around any potential reform. While the power of appropriators has declined from its historical heights, they remain a significant obstacle. While the administration has demonstrated a clear willingness to push the boundaries of its Constitutional prerogatives, it remains to be seen if acquisition reform will be a fight it wants to have.
In addition, as evidenced by earlier attempts, the more the executive branch takes liberties with existing funding and reprogramming authorities, the more likely it is that Congress will impose additional limits. History suggests that when the executive branch stretches reprogramming authority, Congress tends to retaliate by narrowing it. The danger is that a unilateral push toward agility could trigger a cycle of restrictions that leaves the Department with less flexibility than it began with.
As I have written before, this sort of budget and acquisition reform will not succeed without Congressional buy-in. Advocates of reform have made great strides in creating a consensus within the policy community, but it remains to be seen if they are able to find a formula that respects appropriators’ prerogatives while embracing the flexible concepts that are undergirding reform.
There are multiple paths the Department of Defense can pursue to bring Appropriators onboard but there will be limits to the extent to which they will concede authority. At a minimum, the department will need to ensure robust and sustained communication with the relevant committees, but they should also consider proposing additional options. Creating a looser portfolio structure that continues to provide line-item level detail on individual programs but with enhanced reprogramming authority within the structure seems like an easy way to both maintain existing authorities and create the flexibility the department desires.
Another potential way to ensure Congressional cooperation would be to start small and build out from there. Focusing on specific mission or capability activities as pilots or focus areas to establish trust and standard procedures could also be helpful — focusing on small aerial drones or a particular munition line could be a way of easing into the concept.
Alternatively, the department could attempt to force the issue through a White House veto threat. While the appropriators are powerful, it is entirely possible they could be overruled by Republican Party leadership and forced to accept restrictions rather than tank a carefully negotiated omnibus bill. This path would pose significant dangers as, should it fail, it would poison the well and it is entirely possible the reforms could die a quiet death.
In such a scenario, the appropriations bills maintain the existing structures and the White House declines to follow through on its veto threat rather than accept a shutdown. Outside of the defense acquisition reform community (a vocal but ultimately small constituency), there is little public outcry on this issue and leadership would be loath to risk serious disruptions over such an issue.
Given rising instability in the world and the potential for peer-level conflict, getting this right is crucial. Let’s hope a solution can be found that allows for flexible, rapid acquisitions and that respects the power of the purse provided to Congress in our Constitution. The Department of Defense and advocates ought to engage with the appropriations committees and be willing to accept compromise paths to portfolio acquisitions to ensure that reforms can move forward.
Matt Vallone is President of NFI, where he manages the development, marketing, and production of data analytics and solutions. Prior to working at NFI, he was Director of Forecasting & Budgets at Janes, where he led a global team of defense and space-focused analysts in producing research products and data analysis. He has worked in the U.S. House and Senate and served as the Legislative Director for Congresswoman Carol Shea-Porter.
**Please note, as a matter of house style, War on the Rocks will not use a different name for the U.S. Department of Defense until and unless the name is changed by statute by the U.S. Congress.
