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Do You Process the Right Environmental Factors?

I recently hosted an interactive Zoom session for all comers focused on the release of the FY24 budget. I was determined to break the mold a bit and not simply rattle off a list of programs that the FY24 budget would either fund or not. My aim was to help the audience process the release of the budget in context.

This session was advertised as a 30-minute overview of what to watch for and how to capitalize on the recent release of the FY24 budget. Dozens of attendees pre-registered and opted-in to attend.

Some of the items discussed include:

1. The election of a new Speaker of the House

While historic in the number of rounds of voting, most don’t know how many there were. Speaker McCarthy is in position and we’ll see how strong his hold on the gavel is when the challenging issues come through. The debt ceiling appears to be first up.

2. A public rebuke of the Chair of the House budget committee (Rep Jody Arrington) by Speaker McCarthy

This would suggest all is not sunshine and roses as they plot their path forward.

3. The budget was delivered to Congress a month late by President Biden

There was no real reason why and it doesn’t appear to matter.

4. How attendees could do their own research

I identified examining public budget documents, the services’ unfunded priority lists, and the public comments of agency officials since the budget’s release as valuable strategies.

5. I discussed the economy and weighed the implications of recession versus inflation

The Department of Defense was burned badly by grossly underestimating inflation in the FY23 budget submission. I identified that this recession is different than the most recent recessions in that it is affecting society quite unevenly.

6. Interest rates appear to be a new phenomenon to a new generation in the C-suite

For those that rose in the ranks over the past ten years, the cost of money was of mild interest or no interest. Now money is being priced with interest in a more traditional sense, and it must be factored in.

7. I talked about what a defense company could and should be doing right now in the budget process

Specifically:

  • Preparing for the $1-2 billion mid-year reprogramming. For all sorts of reasons, the FY23 is not executing as planned and the department will move lots of funds. Amounts over $10 million must be approved by Congress.
  • Preparing for the reality of end-of-fiscal-year sweep-up funds. By July and August, program managers have a very good idea of what the under obligation could be in their respective areas.
  • Speak with your outside voice when highlighting your readiness to move more quickly to deliver capability on budget and ahead of schedule.

8. I took questions in an ask-me-anything format

This helped those willing to be a little vulnerable in front of others to see new ways to look at their issues.

There’s more to the budget than its public release.

Reading the tea leaves and interpreting what is both said and unsaid by agency officials can inform your actions. Budgets are political documents and must be absorbed in context.

I opened the session by asking who had read the Wall Street Journal front page. Only a few had done so. I then asked what headline did they think had the most potential to impact their business. The responses varied. That variance is actually OK. What matters is that you consider how accurately reported news, and the potential for change, might impact your business.

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