DoD obligates $142B from reconciliation bill before deadline, leaving billions subject to cuts

WASHINGTON — The Pentagon has obligated about $142 billion of the reconciliation funding allotted to it in last year’s “One Big Beautiful Bill,” leaving about 7 percent of the total pot susceptible to across-the-board spending cuts, a source familiar with the matter told Breaking Defense.

Another source, a defense official, confirmed that only 93 percent of the total amount had been obligated ahead of fiscal 2027, which started today, but could not provide further details about what funding lines remained unspent. 

The party-line reconciliation bill passed by Republicans last year included about $152 billion in defense spending, with billions for military modernization priorities including Golden Dome, two Arleigh Burke-class destroyers, munitions and fighter jets. The funding is available for several years, with the caveat that any funding not obligated before Oct. 1 would suffer an 8.3 percent cut known as sequestration.

That unspent 7 percent of funds — around $10 billion, according to Breaking Defense’s estimates — is now subject to that cut. In other words, roughly $830 million of defense buying power has simply vanished and cannot be used.

Reconciliation funding was initially slow to get out the door — much to the consternation of Congress, which pushed Pentagon officials to award contracts before the deadline. In late April, Defense Secretary Pete Hegseth told a Senate panel that only $26 billion had been placed on contract. 

By June, a senior department official told Breaking Defense that the Pentagon was moving ahead and had issued guidance to its program offices on how to spend the money as quickly as possible before the Oct. 1 deadline. “Our strategy focuses on maximizing the utility of every dollar in a timely, yet responsible, manner,” the official said at the time. 

Then in late July, Hegseth told the Senate Appropriations Committee that roughly $75 billion remained unobligated, but projected that 95 percent would be under contract by the end of the fiscal year to pay for a myriad of defense investments such as the Golden Dome air defense plan. 

It’s unclear whether the unspent funds will draw the ire of lawmakers. 

When asked by Breaking Defense on Wednesday afternoon whether all of the defense reconciliation funds were going to be spent by the close of FY26, Senate Armed Services Committee Chairman Roger Wicker said, “We’re very pleased with the amount that’s been executed,” before riding away on the Senate subway. 

But Elaine McCusker, a senior fellow at the American Enterprise Institute and previously the Pentagon’s acting comptroller, has said that the department needs every dollar it can get to “fix long-term problems.”

“Even a loss of 8.3 percent during roll-over could have consequences,” she told Breaking Defense in June.