Munitions Procurement and the Fiscal Year 2027 Defense Budget

This report argues that the FY27 defense budget’s request for a significant increase in munitions procurement is necessary to close munitions shortfalls, enable the U.S. military to project power globally, and deter potential aggressors—but alone it is not sufficient. The FY27 budget requests appropriations for a historic increase in missile and interceptor purchases. But successfully ramping munitions to this extent requires three things to converge: large and stable funding for munitions purchases over a sustained period, acquisition processes that are fast enough to turn dollars into deliveries, and an investment in the defense industrial base that builds toward achieving those targets. Across two administrations, the United States has been unable to sustain all three together, and the DoW’s own spending and production plans indicate that the acceleration will not deliver munitions faster, is unlikely to sustain increased spending over time, and will not necessarily drive increased outputs in terms of delivered munitions.

A Historic Bet on Munitions Acceleration

The first step in achieving the targets outlined by the Trump administration is to secure the funding needed to scale munitions production and support that increase over time.⁸ The FY27 budget request is a massive increase over prior years and projects a sustained level of munitions acquisition over at least the next five years. However, it is not guaranteed that Congress will appropriate the full request as submitted, and Future Years Defense Program (FYDP) plans are subject to change during future budget cycles. The increase in funding for munitions beginning with the FY27 budget request is a historic departure from previous years and raises serious questions regarding whether those plans can be sustained.⁹

The FY27 Munitions Acceleration Is an Unprecedented Investment

The FY27 defense budget request outlines an ambitious plan for accelerating the acquisition of key munitions. This report’s analysis focuses on 10 of the munitions receiving the most significant increase in procurement funding. These 10 munitions are drawn from the MAC’s full list of 14 prioritized munitions. For the purposes of this report’s analysis, these munitions include PAC-3 Missile Segment Enhancement (MSE) interceptors, Advanced Medium-Range Air-to-Air Missiles (AMRAAM), Precision Strike Missiles (PrSM), THAAD interceptors, JASSM land-attack cruise missiles, LRASM antiship cruise missiles, Tomahawk cruise missiles, SM-6 missiles, and two Standard Missile 3 (SM-3) variants. In contrast to the MAC’s list, this report combines Tomahawk land-attack missiles and maritime strike variants into the same category since they are programmed together. It includes the SM-3 IB alongside the newer SM-3 IIA variant to demonstrate longer-term trends in defense budgeting for the combined SM-3 family of missiles. This analysis does not include emerging programs like the Joint Advanced Tactical Missile or those programs still in research and development, including the Low-Cost Cruise Missile and Low-Cost Hypersonic weapon.

The increase in funding across these 10 programs is an unprecedented request that relies on two legislative uncertainties: Congress’s approval of the broader $1.1 trillion discretionary defense budget request and the passing of the $350 billion reconciliation request, which provides greater flexibility to the Pentagon.¹⁰ Across the 10 munitions focused on in this report, roughly $9 billion resides in the discretionary budget request whereas most of the funding requested to support the munitions ramp relies on $40.5 billion contained within the reconciliation portion of the FY27 request, which is far less certain to pass.¹¹

The increase in munitions procurement requested in the FY27 defense budget seeks an 8.5 times increase after a decade of volatile spending on these 10 munitions. The average annual funding for these munitions enacted between FY16 and FY26 was $5.8 billion annually in real FY27 dollars, which the FY27 request dwarfs with its total of $49.5 billion (Figure 1).¹²

Figure 1: Ten-Program Munitions Portfolio, Procurement Funding, FY16–27¹³

While the FY27 budget request is an immediate surge in funding for these key munitions, it also signals a planned shift toward funding munitions at greatly expanded levels into the future.¹⁴ Following the initial investment of $49.5 billion requested for FY27, the administration’s FYDP plans for annual spending on these munitions to average $26.7 billion through FY31, which is a 46 percent decline from the surge in funding requested for FY27 (Figure 2).¹⁵

Figure 2: A Front-Loaded Surge Followed by a Sustained Plateau¹⁶

The per-program breakdown of the FY27 munitions surge reflects an effort to replenish the munitions that were depleted during the war with Iran while continuing to build out magazine depth across the full portfolio to maintain readiness for a major conflict with China in the Pacific. The ramp-up in munitions procurement is dominated by large increases in the quantity of air and missile defense interceptors (Figure 3). The quantity of 3,203 PAC-3 MSE interceptors is 12 times the quantity planned for in the FY25 FYDP.¹⁷ And similarly, the quantity of THAAD interceptors requested in FY27 increases 18 times from the 48 planned for in the FY25 FYDP to 857.¹⁸ AMRAAM missiles, which can be used as an air- or ground-based anti-air capability, are also on track to surge—increasing 10 times from the 178 planned for in the FY25 FYDP to 1,811.¹⁹ While there are still absolute increases in the number of offensive strike munitions requested for FY27, the Tomahawk missile’s expansion stands out alongside the relative increases seen in the defensive interceptor category, increasing from 22 missiles in FY25 to 815 in FY27.²⁰ Notably, JASSM and LRASM procurement surges the least at 1.8 times and 1.6 times respectively.²¹ The inventory of JASSMs is a concern after the Air Force stated it used at least 1,000 JASSMs against Iran as of July 2026.²²

Figure 3: Every Munition in the Portfolio Is Ramping Up Procurement, Some More Than Others²³

The Munitions Ramp Rests on an Uncertain Funding Basis

The marked increase in funding beginning in FY27 is a necessary first step toward replenishing munitions stockpiles, but it will not overcome the last 10 years of inadequate funding and operational expenditure, so sustained appropriations are needed. The MAC’s efforts to replenish munitions stockpiles rely on two bets that undercut the likelihood of success because they are unlikely to succeed for multiple years.

The first bet is the overwhelming emphasis being placed on reconciliation spending to support increased munitions funding for FY27. Reconciliation had not previously been used to fund defense procurement at anything approaching this scale before FY26. As noted in previous CNAS Defense Program research, reconciliation is a politically risky vehicle through which to fund defense modernization because it relies on single-party control of the executive branch and both houses of Congress to pass.²⁴

In FY26, reconciliation money accounted for 36 percent ($3.4 billion) of the money enacted toward the munitions this report focuses on. The FY27 request increases the importance of reconciliation even further, with 82 percent ($40.5 billion) of the funding for these munitions coming from reconciliation.²⁵ FY26’s $151.5 billion in defense reconciliation funding was the first such use, and the FY27 request more than doubles it.

The fragility of the munitions acceleration’s reliance on the reconciliation process became acute in July 2026 when the House of Representatives released a draft reconciliation bill that cut the DoW’s request by 83 percent. This initial legislation would fund only $60 billion against the Pentagon’s initial $350 billion reconciliation request.²⁶ Representatives Mike Rogers (R-Alabama) and Jodey Arrington (R-Texas) have proposed an additional reconciliation package to get closer to the Trump administration’s $350 billion reconciliation request. However, the significant gap between the House’s draft reconciliation bill and that requested by the Pentagon suggests there is limited support for the spending package within Congress.²⁷ The DoW is also requesting $67 billion in supplemental funding to support the Iran war. While not directly tied to the munitions acceleration initiative, this bill requests $21 billion for munitions spending.²⁸

The second bet is that future funding will be able to sustain the munitions acceleration plans outlined by the administration. The FY27 budget request’s FYDP plans for a sustained increase in munitions procurement over the next five years, but out-year plans are subject to change and fluctuate based on prior appropriations, industry capacity, and shifting priorities—they represent plans rather than commitments.²⁹ Moreover, the FY27 FYDP does not account for future reconciliation funding, suggesting that the munitions surge will have to rely on consistent funding through the base budget in future years. Even with base budgets well above pre-FY27 levels, that plateau sits inside the discretionary topline. Should the topline fall short of FYDP plans, the services would have to find the difference elsewhere, and munitions have historically been the bill payer. Reconciliation does provide the administration flexibility to spend appropriated funding across a five-year timeframe.³⁰ This allows the DoW to obligate funds drawn from the FY27 reconciliation package across the FYDP. However, given that the Pentagon plans to sustain high levels of munitions procurement across that timeframe, there would in all likelihood be insufficient funding available from the reconciliation package to support expanded procurement across five years without increasing future base budget requests.

Increased Funding Is a Necessary but Insufficient Demand Signal

The FY27 defense budget request makes a first step toward improving the U.S. military’s munitions inventories that is necessary but insufficient on its own to realize its munitions goals. However, the fragility of the reconciliation process and the emphasis the budget request places on reconciliation funding are a serious risk. This request is, therefore, only a signal of the Pentagon’s demand for munitions in FY27 and the years to come. To achieve its goals, the munitions acceleration initiative must also be able to efficiently place the money it receives on contract across multiple years.

From Dollars to Deliveries

The second condition for accelerating munitions procurement is a faster and more consistent process to facilitate the conversion of appropriated money into contracted munitions purchases. The DoW presents its framework agreements and its proposed multiyear procurement vehicles as the mechanism through which it will convert the FY27 budget into improved procurement outcomes.³¹ The primary benefit of multiyear procurement is not necessarily the marginal cost savings at the unit level, but rather consistent demand for future production.³² Multiyear procurement agreements signal to manufacturers that investments made by industry in manufacturing capacity today will be rewarded with sustained investments in large munitions order quantities by the government into the future.³³

The commitment that the framework agreements signal to industry is softer than the DoW has indicated in its rollout of the new approach to multiyear contracting. Even once the framework agreements are converted into multiyear procurement contracts, they are a modest signal of government commitment and sustained demand toward industry for two reasons.

First, the multiyear procurement contracts intended to convert the framework agreements into binding acquisition vehicles do not yet exist for every munition in the acceleration portfolio.³⁴ The seven-year framework agreements that the DoW is relying on to incentivize industry investment in production capacity are still only commitments to pursue multiyear contracts. Until those contracts are signed, the DoW’s demand signal rests on nonbinding promises of intent made to industry. The framework agreements, therefore, rely on industry investing its own capital in production capacity based on demand that is nonbinding and not yet solidified through contracts and appropriated funding.

Second, multiyear procurement contracts are reversible, though doing so carries cancellation penalties for the Pentagon.³⁵ These agreements bind the government to annual purchasing of the covered munitions, but they are subject to the congressional annual authorization and appropriation process. Programs can be cancelled, planned purchases can be reduced, and multiyear procurement authority can be rescinded.

Lengthy Acquisition Lead Times Are a Consistent Source of Procurement Delays

Improved demand signals do little to accelerate the overall acquisition process itself. The DoW can commit to multiyear procurement agreements and receive appropriations to purchase munitions pursuant to those agreements. But it still must go through the process of awarding contracts for those munitions, the production of completed munitions by industry, and ultimately, the delivery of those completed rounds to the Pentagon. According to an FY23 report by the Army Science Board, slow contracting consistently drives delayed deliveries, prevents industry from committing to investments in production ahead of demand, and drives final unit costs upward.³⁶ However, contracting delays are only a minor reason munitions take so long to be delivered.

Since FY24, the process of converting appropriated defense funding into contracts for production and delivery of munitions has taken a few months for most programs, with the worst example being an 11-month lag between appropriation and contract obligation for the FY24 purchase of LRASM missiles (Figure 4).³⁷

Figure 4: Production Consumes Most of the Acquisition Pipeline³⁸

Addressing lags in the initial contracting process would help expedite the overall acquisition timeline for munitions, but it would only affect the initial portion of a much longer process that spans the funding, contracting, production, and delivery of completed munitions. The bulk of the acquisition timeline lies in the interval between when a contract is awarded and when a completed munition is delivered. In order for the DoW’s munitions acceleration to make a difference in near-term magazine depth, the time it takes for munitions to be delivered must be reduced. This is discussed in a subsequent section on investments in production capacity.

The Pentagon’s plans for the FY27 munitions acceleration show limited improvement in delivery timelines. Across the seven framework programs with contracts funded for FY27, none carry a shorter award-to-delivery timeline than their most recent preramp contract (Figure 5). The Pentagon’s FY27 budget justification books maintain its pre-acceleration plans for JASSM, PrSM, and LRASM. However, for munitions where it adjusted its delivery timelines for FY27—including PAC-3 MSE, AMRAAM, SM-6, and Tomahawk—the time-to-delivery actually increased. The timeline for FY27 contracts associated with PAC-3 MSE missiles grew by two months, SM-6 and Tomahawk missiles grew by four months, and the timeline for Air Force AMRAAMs grew by nearly an entire year. Therefore, while the DoW’s munitions acceleration plan bets on both buying more munitions and delivering those munitions faster, its own planning documents project even longer timelines for many of the munitions included in that plan.³⁹ It is unsurprising that delivery timelines did not meaningfully improve because most of the framework agreements meant to drive munitions acceleration capacity have not yet been converted into contracts, and the capital expenditures planned by industry have not yet converted into expanded production capacity.

Figure 5: Award to First Delivery for FY27 Contracts Against Each Program’s Preramp Baseline⁴⁰

Intent Is Not a Binding Commitment

Multiyear procurement and faster acquisition are two necessary and distinct requirements for implementing munitions acceleration. The timelines the DoW laid out need both to succeed. However, neither multiyear procurement nor faster contracting are likely to deliver improved acquisition performance in the near term, which undercuts the likelihood of the Pentagon’s munitions acceleration goal to produce results at speed and scale. Multiyear contracts may shave weeks or months off the overall acquisition timeline, but production takes up the bulk of the process. Across a 36–64 month acquisition pipeline, the median time from award to first delivery is 72.5 percent of that full pipeline, with only the remaining portion being affected by appropriations and contracting.⁴¹ Until the framework agreements are converted into multiyear procurement contracts, industry’s incentives to make the preemptive investments in production capacity and cost savings needed to deliver munitions at the scale and on the timelines outlined by the DoW are limited.

The DoW has indicated that it is trying to solidify its commitments by requesting a significantly increased defense budget and entering nonbinding framework agreements with several munitions manufacturers. But the fundamental question remains whether increased investment in weapons procurement and manufacturing delivers sufficient munitions quickly enough.

Demand-Driven Capacity Investments

The final condition necessary for munitions acceleration to succeed is expanded industrial capacity to produce and deliver completed munitions at the scale requested by the DoW on accelerated timelines. This section characterizes the scope of investments planned or underway to expand industry’s capacity to meet the demand established by the DoW going forward.

Investments in the industrial base supporting munitions production are not all the same. Since FY26, the government has programmed significant money toward discrete investments in the industrial base in three ways. First, it expanded the industrial base’s ability to assemble finished weapons with investments in the infrastructure, facilities, and tooling that combine subcomponents into completed all-up rounds (referred to as facilitization). Second, it increased the availability of subcomponents through increased production capacity and expanded the pool of certified suppliers. Third, the government has committed to increasing the stockpile of critical raw materials that feed into the overall supply chain and expanding access to those materials through new suppliers. There are also the under-specified commitments that the government has made to invest money in the defense industrial base as part of its own end of the framework agreements. These include promises of future investments to complement industry investments already underway. Motivated by the commitments made through the DoW’s framework agreements, defense contractors have expanded their own capital expenditures targeting production improvements.

Prior efforts to leverage multiyear contracts to expedite munitions production did not produce the desired effect. Government commitments were inconsistent and did not persist long enough to generate significant investment by industry. However, there are positive signs that the unique approach taken by the framework agreements’ seven-year timelines is generating much-needed investments by both the government and industry.

Government Investment Is Broadening from Individual Programs to the Munitions Ecosystem

Prior to FY26, program-level investments in the production capacity and industrial base supporting a munitions program remained relatively limited. From FY16–23, portfolio-wide industrial base investments ranged from 0 to 5 percent of that year’s total procurement spending. Beginning in FY24, the portion of a program’s total cost going toward industrial base investments began to climb. FY26 spending surged industrial base investments to 16 percent—a total of $1.52 billion. The FY26 reconciliation package and the DoW’s reconciliation spending plan also programmed an additional $3.5 billion to the munitions industrial base, targeting subcomponent materials supply chains and manufacturing modernization.⁴²

At the program level, government investments in the munitions industrial base target production capacity through investments in the infrastructure and tools required to expand and modernize production lines (Figure 6). Several programs received targeted production investments in the 2026 reconciliation to increase the program’s production rate, which has not yet been fully realized. FY26 was a rare single-year injection of capacity funding for specific programs that leveraged the flexibility of reconciliation funding to enact upfront investments in specific munition lines. The SM-6 missile received $225 million alone to increase its production capacity from 96 missiles per year to a forecasted maximum rate of 360 missiles per year.⁴³ Similarly, the PrSM missile received $277.8 million to increase its production rate from 400 missiles per year to a projected maximum rate of 550 missiles per year. AMRAAM also received $225 million in reconciliation funding to increase its production level to a maximum rate that remains classified. Finally, the Tomahawk program received $250 million to increase its production rate to 800 new all-up rounds (AURs) per year as well as 300 conversion kits produced annually to convert existing Tomahawk rounds to maritime strike variants.⁴⁴

Figure 6: The Government’s Direct Per-Program Capacity Investments Are Modest, Uneven, and in Two Cases, Zero⁴⁵

The FY27 defense budget request takes a broader approach by leveraging Title III of the Defense Production Act (DPA) to invest in critical supply chains and subcomponents. This shift toward broader investment and away from a program-specific approach aligns with the Pentagon’s effort to motivate industry to take on recurring capital expenditure investments in the production lines for the munitions they produce. In the FY27 budget request, the Pentagon is asking for a total of $30.4 billion for DPA Title III investments. Nearly 20 percent of that total ($5.6 billion) is directed toward munitions production alone. When combined with the $1.4 billion for hypersonic missiles and $6.8 billion for critical chemicals like propellants and energetics, roughly 46 percent of the entire DPA Title III request feeds directly into the munitions industrial base (Figure 7).⁴⁶ With the DPA investments, government spending is directed toward increasing the number of subcomponent manufacturers and improving access to critical materials. Production and final assembly are being addressed by industry.

Figure 7: Where the FY27 Defense Production Act Title III Request Goes⁴⁷

Industry’s Investments Are Focused on Production Chokepoints

Munitions manufacturers have pledged investments in their own production capacity to complement increasing government investment in industrial base inputs and expanded demand for munitions. Since January 2026, when the DoW announced its first framework agreement with Lockheed Martin to triple the production of PAC-3 MSE interceptors, additional framework agreements have been announced.⁴⁸ Framework agreements for key missiles provide a nonbinding Pentagon commitment to buy a set number of munitions for up to seven years via multiyear contract agreements. In return, industry has made nonbinding commitments to make investments of its own to expand production capacity.

Lockheed Martin—which produces the THAAD and PAC-3 MSE interceptors and the JASSM, LRASM, and PrSM missiles—has been at the forefront of these investments. As part of its framework agreements, Lockheed Martin pledged to invest up to $9 billion through 2030 on munitions production capabilities and broke ground on a new munitions production facility in Troy, Alabama, in January 2026, and recently opened a new interceptor facility in Courtland, Alabama.⁴⁹ The company is also investing $150 million toward expanding its facility in Pike County, Alabama, which produces JASSM and LRASM cruise missiles.⁵⁰ On February 4, 2026, RTX’s Raytheon entered into a set of five framework agreements with the DoW, committing to accelerating the production of Tomahawk, AMRAAM, SM-3, and SM-6 missiles based on seven-year multiyear contracts for each of the munitions.⁵¹ Raytheon pledged a $115 million capital investment to expand its missile facility in Huntsville, Alabama, by over 50 percent in order to meet the demand the Pentagon promised.⁵²

There have also been several framework agreements made with manufacturers of key subcomponents of munitions.⁵³ In August 2026, the Pentagon signed two framework agreements with Northrop Grumman to accelerate the production of THAAD components and PAC-3 MSE short-range missiles (SRMs), which the manufacturer has invested over $2 billion toward expanding production through its own capital expenditures since 2019.⁵⁴ Additional framework agreements for munitions seekers have been announced. In March 2026, the Pentagon signed a seven-year framework agreement with British Aerospace (BAE) Systems to expand seeker production at its Nashua, New Hampshire, and Endicott, New York, facilities.⁵⁵ Following this agreement, BAE pledged $250 million for capital investments supporting THAAD, AMRAAM, and Tomahawk production.⁵⁶ In April 2026, Boeing signed a framework agreement to triple the production of PAC-3 MSE seeker units, pledging to make additional investments in its Huntsville, Alabama, facility to build on the $200 million in investment there since 2024.⁵⁷ Finally, Honeywell Aerospace signed a framework agreement in March 2026 to expand production of navigation systems and electrical subcomponents for munitions produced by Lockheed Martin and Raytheon—pledging $500 million of its own capital to modernize and expand their capacity to supply these components over several years.⁵⁸ Despite significant investment pledged by those firms involved with the Pentagon’s framework deals, their capital expenditures are not contractual agreements and are vulnerable to the same nonbinding conditions as the multiyear procurement contracts on the government’s side of the framework agreements. Industry investments in production are in effect sunk costs once they have been made; however, they can cease to continue those investments into the future at any point.

Higher Procurement Volume Could Lower Costs—If It Materializes

The FY27 munitions acceleration initiative banks on increased investment in the munitions industrial base to improve the scale and speed at which new munitions are produced. The size of the FY27 munitions buy, and those planned for in its out-years, would in theory drive down the program’s average procurement unit cost (APUC, or inferred cost) by spreading the costs of fixed program overhead and ongoing capacity investments across more AURs. Scaling the size of the munitions portfolio’s procurement plan may solve magazine depth concerns in the long term, but in the near term it could also drive programs toward more efficient spending—with less money being allocated per AUR toward overhead and a greater portion of the money going toward buying munitions themselves.

These effects are evident in recent munitions procurement trends. For instance, as AMRAAM procurement scaled from 168 AURs in FY22 to 831 in FY24, the gap between the reported unit cost and its inferred cost dropped from $400,000 per AUR to only $23,000. These shifts are not, however, automatic. Between FY22 and FY26, the DoW programmed $838 million toward improving production capacity for the SM-6 missile while average annual procurement held at 125 AURs per year. During this period, the gap between the reported unit cost of the SM-6 and its inferred cost grew from $1.52 million to $3.62 million. Had the annual purchase of SM-6 scaled alongside the investments made in production capacity, the overall cost of the program might have been spread across a greater number of munitions and produced a higher return on those investments. The FY27 defense budget request’s munitions acceleration plans are placing a bet on following AMRAAM’s path, not the SM-6’s path (Figure 8). However, this trajectory will only materialize if Congress appropriates funding sufficient to purchase the large number of munitions needed to realize a return on the capacity investments already programmed and those requested in FY27 and beyond.⁵⁹

Figure 8: Higher Procurement Quantities Dilute Overhead Costs⁶⁰

Sustained Government and Industry Investment Is Needed to Ramp Up Production to Meet Announced Demand

The FY27 defense budget request sets ambitious targets for munitions production and lays out the Pentagon’s plan for sustaining higher procurement rates throughout the FYDP. The increase in average annual procurement in the years each munition was in production (FY16–25) ranges from a roughly 2 times increase for the JASSM cruise missile to a roughly 11 times increase for the PrSM missile and a staggering 21 times for THAAD interceptors. While these figures are planned to decrease over the next five years, the out-year averages are still well above pre-FY26 levels.

Despite the increase in munitions procurement planned over the coming years, production lead times and annual delivery rates are not projected to improve enough to meet demand. Lead times for most munitions (6 out of 10) remain unchanged. Similarly, the production rates projected by the Pentagon’s budget documents signal an uneven increase in annual deliveries that, at best, appear aspirational in the near term. In several cases, the FY27 budget’s production schedules have not yet caught up to the reconciliation plan’s targets. For instance, the spending plan set THAAD on a path to 400 interceptors per year, but the FY27 production books still cap its maximum rate at 96—against an FY27 order of 857. This raises the question whether the plan laid out by the FY27 budget request is even achievable. It remains uncertain, for instance, whether PAC-3 MSE interceptor production rates can increase from 550 interceptors per year to 2,000, even with the investments described here. While the investments in production capacity are necessary, they will take time to pay off—new factories must be built, workforce training must take place, and new supply chains have to begin producing components.⁶¹

The infusion of funding promised by the Pentagon’s framework agreements and programmed by the FY27 budget request has not changed near-term production expectations (Table 2). This compounds the fact that these munitions are being used at a rapid pace in the war with Iran and does little to satisfy the existing munitions backlog for most programs. Munitions placed on contract today must still be placed in line with existing contracts moving through the assembly line. While it may take only a year or two to fulfill the FY27 budget request’s munitions orders once production begins, it will still take years for those contracts to deliver them—as evidenced by the continued trend toward three- or four-year lead times for most munitions (Table 3). The surge in munitions orders and investments in the munitions industrial base is a real difference-maker for production capacity. But it will only meaningfully accelerate munitions production if (1) demand for large quantities of munitions continues and industry continues to expand production, and (2) the framework agreements convert into contracts that provide a more credible commitment than existing multiyear contracting processes.⁶²

Even where both hold, there is a limit to how far the production of exquisite munitions can be compressed. Weapons designed for capability rather than producibility take longer to build than cheaper alternatives, and no amount of investment in capacity changes that. Lower-cost munitions, which trade capability for reduced cost and easier manufacturing, offer one way to complement inventories of exquisite munitions that will likely remain in high demand into the future.

Table 2: Capacity Estimates Rose Across Most of the Portfolio⁶³

Table 3: The FY27 Order Against What the Lines Can Actually Build⁶⁴

Conclusion and Recommendations

Short-term budgetary actions to increase spending on munitions procurement are a necessary step toward improving the U.S. military’s weapons inventories. But on their own, they will not be able to correct systemic issues within defense acquisition. This report outlined three conditions that the FY27 defense budget’s munitions acceleration initiative requires to succeed.

The first condition is securing increased funding for munitions procurement that is stable and consistent year over year. The FY27 budget is only a starting point—manufacturers require sustained demand signals from the DoW to invest in the manufacturing changes needed to expand production capacity and meet demand.⁶⁵ The FY27 budget indeed requests a massive and discontinuous investment in procurement spending for the munitions in this report’s portfolio. From FY16–26, average annual procurement spending on these munitions was $5.8 billion in FY27 dollars. The FY27 request of $49.5 billion is more than an eight-fold increase against this average. However, two problems stand out against the FY27 request and long-term modernization plans. First, the FY27 funding requested for these munitions is overwhelmingly provided by reconciliation. This raises considerable doubts about the sustainability of spending historically large sums of money on munitions procurement going forward. Second, the FYDP plans for spending on these munitions to plateau at an average of $26.7 billion per year through FY31. Without reconciliation, the base budget will carry modernization spending into the future, which invites the risk that the munitions plans may be reduced to meet budget topline restrictions.

The second condition is a faster acquisition and contracting process that allows the U.S. government to turn appropriated funds into contracts with munitions producers on accelerated timelines. The DoW’s MAC announced aggressive annual production targets for critical offensive and defensive munitions that will not be possible without a faster contracting timeline.⁶⁶ The FY27 budget projects that most of the munitions in this portfolio with FY27 contracts already specified will take longer to deliver than the timelines laid out in prior budget requests. That said, contracting is not the most critical phase of the acquisition pipeline. While improving the time it takes to put appropriated munitions on contract reduces the time-to-delivery by months, production remains the most critical bottleneck.

The third condition is a significant expansion of the annual production capabilities for the defense industrial base responsible for manufacturing, building, and assembling the munitions and their subcomponents. The FY27 budget requests funds to purchase quantities of munitions that far exceed the annual amounts ordered in previous years and plans to sustain increased annual buys into the future. Yet, without investments and improvements in the defense industrial base tasked with fulfilling those orders, the munitions acceleration plans will face an uphill battle.⁶⁷ Both government and the defense industry are making strides to invest in munitions production capacity. The FY27 budget request signals a shift in Pentagon investment in munitions production away from program-specific investments toward a much broader investment approach that targets improvements in the supply chains supporting munitions production. Total DPA Title III investments targeting munitions-specific supply chain efforts totaled $13.9 billion and accounted for 46 percent of the DoW’s total DPA Title III request for FY27. On the flip side, the Pentagon’s framework agreements with industry are driving defense contractors to significantly increase capital expenditures into their own production capabilities, based on the promise of seven years of greatly increased munitions procurement by the Pentagon. Despite the intensity of investment in production, the munitions acceleration initiative is not slated to deliver on its objectives for many years, undercutting expectations that the MAC would expand and accelerate munitions production.

Recommendations for Congress

Congress should consistently pass annual defense appropriations bills on time. The DoW cannot convert its framework deals into contracts until Congress passes an FY27 defense budget and accompanying reconciliation funding bill. As of September 2026, an FY27 defense spending bill has not been enacted, and the Pentagon has only been able to convert small portions of the framework agreements into contracts using unobligated funds from prior budget years. Absent these multiyear contracts, the industry’s incentives for making its own investments into production capacity are only tied to the loose commitments offered by the framework agreements announced so far. Since 2008, Congress has only delivered a defense appropriations bill prior to the start of the fiscal year twice. Continuing resolutions in place of a full appropriations bill prevent the DoW from converting framework deals into multiyear procurement agreements and delay its investments in the defense industrial base. These delays leave industry to make its investments without the DoW holding up its end of the agreement.

Congress should develop an appropriation bill for the FY27 defense budget and a reconciliation bill that is executable given industry’s capacity to produce and deliver munitions. The munitions procurement plan outlined in the DoW’s FY27 defense budget request would stretch the delivery of munitions contracted in FY27 across several years. Congress has the authority to amend the FY27 budget as it sees fit and should exercise that authority to develop a defense appropriation bill and reconciliation funding package that is achievable. Too often, Congress appropriates procurement funding for items that stretch the backlog of contracted orders far into the future. Increasing the backlog of contracted munitions will do little in the near term to address the shortfall in munitions, made even more acute by the war with Iran. Congress may consider adjusting the DoW’s budget request to place funding for certain munitions in the FY27 base budget to ensure that funds for those munitions are obligated within that spending period. Congress may also add more stringent spending guidelines to any reconciliation package it enacts, requiring the Pentagon to obligate funds on a rolling basis with specific annual spending guidelines rather than the blanket five-year obligation window associated with traditional reconciliation funding.

Congress should exercise stringent oversight of munitions acceleration to reconcile stated objectives for munitions production output against the plans specified in the annual defense budget request. Congress can encourage expediting production timelines and ensuring that schedules are met through the National Defense Authorization Act (NDAA) and its oversight functions. If Congress determines that munitions deliveries are not meeting the targets set by the framework agreements between DoW and industry, it should exercise its authority to modify or rescind the multiyear procurement authorities covering those munitions programs.

Recommendations for the Department of War

The DoW should quickly convert the seven-year framework agreements into multiyear contracts once the FY27 defense appropriation and reconciliation bills are enacted. Multiyear procurement (MYP) vehicles signal intent for continued demand for expanded munitions production. Multiyear contracts improve upon framework agreements by carrying congressional authorization and appropriation, establishing planned funding across budget years, and implementing cancellation penalties to offset industry’s investments should the government backtrack on its plans. Prior uses of MYP to drive industry efficiency did not accelerate munitions deliveries or prompt significant investments in capacity by industry. However, the unique nature of the framework agreements’ seven-year timeline and the reciprocal commitments by industry to invest significant capital expenditures suggest that if both the Pentagon and industry uphold their side of the nonbinding agreements, the outcome may be different this time.

The DoW should develop a plan for transitioning munitions acceleration into the base budget for long-term sustainment. The current emphasis placed on reconciliation for expanding munitions stockpiles is neither sustainable nor a reliable vehicle for defense modernization. For munitions acceleration to succeed over many years and truly deliver the quantity of munitions required, procurement funding for these programs will ultimately have to come from future base budgets. The FY27 FYDP plans for a plateau in munitions spending that extends munitions funding at levels well above the prereconciliation era of munitions procurement. What is not clear is how these plans will contend with spending requested for competing modernization programs across the Joint Force and how increasing costs for operations, maintenance, and personnel will affect munitions spending plans. Historically, munitions have been cut to offset rising expenses in these other areas, and without an existing wedge for these munitions programs within the base budget, the risk of munitions once again being a bill payer is high.

The DoW and defense industry should invest in the full pipeline of munitions production. For the historic increase in munitions production to succeed, both industry and government will have to make investments in the country's capacity to deliver more munitions on accelerated timelines. The DoW has shifted its investment toward more fungible inputs to the munitions industrial base—such as SRMs, long-lead components, and critical materials—and should continue moving toward securing key supply chains and authorizing additional suppliers, expanding the availability of the industrial base's foundational building blocks. Industry, for its part, should continue to invest in its own production lines, which assemble and deliver completed munitions. With the framework agreements and the FY27 budget request, there are positive signs that both sides are committed to this dual investment approach—a requirement for the sustained expansion of production capacity needed to fulfill the munitions acceleration initiative's delivery targets.

The DoW should continue to invest in alternative, lower-cost munitions that can be produced faster and in greater quantities. Exquisite munitions take longer to make than their cheaper counterparts, and no amount of investment in munitions production will change that. The Pentagon should consider what alternative options are available that rely on more readily available supply chains, cost less per munition, and can be produced in larger quantities in less time. Lower-cost systems can help the Joint Force address the munitions shortfall in the near term while production of exquisite munitions takes time to ramp-up. These complementary systems can offset the use of high-end systems for missions such as drone and air defense, relieving the burden on more expensive systems and reserving those munitions for higher-risk missions like cruise and ballistic missile defense.

About the Author

Carlton Haelig is a fellow with the Defense Program at the Center for a New American Security (CNAS). His research and expertise include national security strategy, force design and employment, and military innovation.

Prior to CNAS, Haelig was a postdoctoral fellow with the America in the World Consortium at the Clements Center for National Security at the University of Texas and the Kissinger Center for Global Affairs at Johns Hopkins University’s School of Advanced International Studies. He has held prior research and analysis positions at the University of Pennsylvania Center for Ethics and the Rule of Law, RAND, and the Historical Office of the Office of the Secretary of Defense.

Haelig holds a PhD in security studies from Princeton University, where he directed the Strategic Education Initiative at the Princeton Center for International Security Studies. He also completed an MA in public affairs at Princeton, an MA in international security at George Mason University, and a BA in political science and history at Rutgers University.

About the CNAS Defense Program

Over the past 19 years, CNAS has defined the future of U.S. defense strategy. Building on this legacy, the CNAS Defense Program team continues to develop high-level concepts and concrete recommendations to ensure U.S. military preeminence into the future and to reverse the erosion of U.S. military advantages vis-à-vis China and, to a lesser extent, Russia. Specific areas of study include concentrating on great power competition, developing a force structure and innovative operational concepts adapted for this more challenging era, and making hard choices to effect necessary change.

Acknowledgments

The author wishes to thank Susanna Blume, Todd Harrison, Stacie Pettyjohn, and Maura McCarthy for their helpful feedback and comments. The author also thanks his colleagues on the CNAS Defense Program for their thoughtful input throughout the completion of this project. This report was made possible with general support to CNAS.

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