S. 4784, the National Defense Authorization Act for Fiscal Year 2027

Bill Summary

S. 4784 would specify authorizations of appropriations totaling $1.1 trillion for 2027.

Some of the bill’s provisions would affect the costs of defense programs after 2027 but would not authorize appropriations for those years. Those provisions would mainly affect force structure, compensation and benefits, and multiyear procurement of weapons systems. CBO expects that costs for later years will be covered by authorizations in future defense authorization acts.

Several provisions of S. 4784 would affect direct spending. The bill would extend the authority for the Department of Defense (DoD) to provide loans and loan guarantees for advanced technologies. The bill also would authorize multiyear procurement contracts for E‑2D aircraft and for components for intercontinental ballistic missiles (ICBMs) and would increase spending from the Defense Industrial Base Fund.

Estimated Federal Cost

CBO estimates that implementing S. 4784 would increase spending subject to appropriation by $1.1 trillion over the 2027-2036 period, assuming appropriation of the specified amounts. In addition, enacting the bill would increase direct spending by $29.6 billion and affect revenues by less than $500,000 over the 2027‑2036 period, CBO estimates.

The estimated budgetary effects of S. 4784 are shown in Table 1. Nearly all of the estimated costs fall within budget function 050 (national defense); additional amounts fall within functions 150 (international affairs), 600 (income security), and 700 (veterans benefits and services).

Basis of Estimate

For this estimate, CBO assumes that S. 4784 will be enacted in fiscal year 2027 and that the authorized amounts will be appropriated in that year. Outlays were estimated using historical spending patterns for similar programs.

Spending Subject to Appropriation

S. 4784 would specifically authorize appropriations of $1.1 trillion for 2027. Almost all of that amount would be for defense programs; $30 million would be for nondefense programs (see Table 2).

The amounts authorized for defense programs in 2027 would be $252.9 billion (or 28 percent) more than the $891.4 billion in discretionary funding that was appropriated in 2026. S. 4784 would increase authorizations by the following amounts:

• $9.7 billion (or 5 percent) for military personnel,
• $34.9 billion (or 10 percent) for operations and maintenance, and revolving funds,
• $92.4 billion (or 57 percent) for procurement,
• $76.0 billion (or 53 percent) for research and development,
• $32.8 billion (or 166 percent) for military construction and family housing, and
• $7.0 billion (or 21 percent) for atomic energy activities.

The bill would authorize $30 million in 2027 for nondefense programs. Of that amount, $15 million would be for the Veterans Health Administration to fund initiatives to share health care resources with DoD. The other $15 million would be for the Department of State to clean up Agent Orange in Vietnam.

Estimated Costs for Selected Provisions for 2027 Through 2031

Several provisions in S. 4784 would affect the costs of various defense programs after 2027. The estimated effects of some of those provisions are shown in Table 3and described below. Any spending would be subject to the appropriation of the estimated amounts. The net costs of those provisions for 2027 are included in the total specified authorizations described above, but costs over the 2028-2031 period are not included because CBO expects that those amounts would be specifically authorized in future defense authorization acts.

Military End Strength and Compensation. The bill would affect the force structure of the various military services by setting end-strength levels for 2027. CBO estimated costs for future years using those same levels. The bill also would affect compensation and benefits for uniformed personnel and civilian employees of DoD.

For 2027, title IV would authorize end-strength levels for active-duty personnel and personnel in the selected reserve of 1,342,900 and 777,800, respectively. Of the reservists, 92,525 would serve full-time on active duty in support of the reserves. In total, when compared with levels authorized under current law for 2026, active-duty end strength would increase by 40,100, and selected-reserve end strength would increase by 4,400. The number of selected reservists who would serve in full-time support positions would increase by 160. The specified end-strength levels for each component of the armed forces are detailed below, along with CBO’s estimate of how they would affect DoD’s costs. Those costs include basic pay, allowances, bonuses, and health care, as well as operating costs for training and maintenance.

Active Duty. Section 401 would increase the authorized number of active-duty personnel by 40,100. End strength would increase by 15,000 for the Army, 12,000 for the Navy, 8,900 for the Air Force, 2,800 for the Space Force, and 1,400 for the Marine Corps. CBO estimates that those changes would increase DoD’s costs by $35.5 billion over the 2027-2031 period.

Selected Reserve. Section 411 would increase the authorized end strengths for the six reserve components in DoD by a net of 4,400. The section would authorize an increase of 3,300 for the Army National Guard, 1,100 for the Air National Guard, and 1,100 for the Marine Corps Reserve. End strength would decrease by 1,000 for the Navy Reserve, decrease by 100 for the Air Force Reserve, and remain the same for the Army Reserve. CBO estimates that those changes would, on net, increase DoD’s costs by $1.0 billion over the 2027‑2031 period.

Full-Time Selected Reserve. Section 412 would increase the number of reservists who serve full-time on active duty in support of the reserves by 160. That change would increase DoD’s costs by $0.1 billion over the 2027-2031 period, CBO estimates.

Reserve Technicians. Section 413 would decrease minimum end-strength levels for dual‑status military technicians by 1,231. CBO estimates that such a reduction would decrease costs for civilian salaries and expenses by $0.8 billion over the 2027-2031 period. (Dual-status technicians are federal civilian personnel required to maintain membership in a selected-reserve component as a condition of their employment. Reducing their number would not change the number of reservists set by sections 411 and 412 and thus would not affect reserve compensation.)

Expiring Bonuses and Allowances. Section 611 would extend for one year DoD’s authority to enter into agreements to pay certain bonuses and allowances to military personnel. The authority to enter into such agreements currently expires after December 31, 2026. Some bonuses are paid in lump sums; others are paid in annual or monthly installments over several years of military service. Using information from DoD’s budget request for fiscal year 2027, CBO estimates that extending that authority through December 31, 2027, would cost $13.6 billion over the 2027‑2031 period.

Multiyear Procurement and Block Buy Contracts. S. 4784 would authorize DoD to enter into multiyear procurement contracts and block buy contracts to purchase vehicles, ships, aircraft, munitions, and other systems. Multiyear procurement contracts that are authorized under 10 U.S.C. §3501 permit the government to enter into contracts covering acquisitions for more than one year, even though the total funds required for all years are not appropriated at the time the contracts are awarded. Under long-standing precedent, use of that authority is not classified as direct spending. Multiyear contracts under other provisions of law are not afforded similar treatment. Contracts that would cost more than $500 million must be specifically authorized in both an authorization act and an appropriation act. Lawmakers sometimes authorize contracts that would cost less than that threshold.

Block buy contracts are also used to procure items over a period of more than one year but are not subject to the same statutory restrictions as multiyear procurement contracts and do not require authorization in an appropriation act. CBO used information about procurement plans and unit prices from the military services to estimate the costs of some of the contracts that would be authorized by the bill.

Infantry Squad Vehicle. Section 111 would authorize the Army to enter into multiyear contracts beginning in fiscal year 2027 to procure Infantry Squad Vehicles. Those unarmored ground transport vehicles are designed to move soldiers and supplies across terrain that is too rough for heavier vehicles. The service currently plans to procure 10,156 vehicles in several configurations over the 2027‑2031 period at a cost of $2.2 billion.

Amphibious Ships. Section 121 would extend through September 30, 2030, the Navy’s authority to enter into block buy contracts to procure LPD-17 San Antonio class or LHA-6 America class ships. That authority expires on September 30, 2026. The LPD‑17 is a midsize amphibious transport ship, and the LHA-6 is a large amphibious assault ship. CBO estimates that under such contracts, the service would procure three LPD-17s and one LHA-6 over the 2027‑2031 period at a cost of $14.0 billion.

F‑35 Aircraft. Section 132 would authorize DoD to enter into multiyear contracts to procure F‑35 aircraft. The F‑35 is a multimission fighter operated by the Air Force, the Marine Corps, and the Navy. The department currently plans to procure 425 F‑35 aircraft over the 2027‑2031 period at a total cost of $61.4 billion.

F‑15EX Aircraft. Section 133 would authorize DoD to enter into multiyear contracts to procure F‑15EX aircraft. The F‑15EX is a multirole fighter aircraft with long range and extra capacity for bombs and fuel. CBO estimates that under such contracts, the department would procure 148 F‑15EX aircraft over the 2027‑2031 period at a cost of $18.1 billion.

Various Programs. Section 801 would authorize DoD to enter into multiyear contracts for 19 programs, most of which are munition programs. Because of the number of contracts authorized and the uncertainty about how many items the department would buy and when it would buy them, CBO cannot estimate the costs of those contracts.

Direct Spending and Revenues

CBO estimates that enacting S. 4784 would increase direct spending by $29.6 billion and affect revenues by less than $500,000 over the 2027‑2036 period (see Table 4). Most of that spending would come from extending DoD’s authority to provide loans and loan guarantees to entities that produce advanced technologies and from providing contract authority for weapons systems.

Strategic Capital Loan Program. Section 902 would extend through 2038, DoD’s authority to provide direct loans and loan guarantees to entities that produce advanced technologies and materials, such as biochemicals and microelectronics. That authority expires after 2028 under current law. On the basis of current loan activity, CBO expects that DoD would issue loans and loan guarantees to support inherently governmental activities. Such support is not eligible for treatment as credit under the Federal Credit Reform Act of 1990 (FCRA). Under that law, direct loans and loan guarantees from the federal government to nonfederal entities are recorded on a present-value basis.[1] In contrast, CBO estimates the cost of loans for governmental activities as the full amount of those loans in the year that DoD provides or guarantees them. CBO classifies the use of that loan authority for governmental purposes as an increase in direct spending because the amount recorded by DoD would be less than the full cost to the government. In contrast, DoD records the subsidy cost of those loans according to FCRA.

On the basis of the average loan volume authorized for DoD over the 2024-2026 period and accounting for the effects of inflation, CBO estimates that the costs of loans and loan guarantees under section 902 would total $24.1 billion over the 2027-2036 period.

Contract Authority for Procurement Programs. Two provisions would authorize military departments to enter into multiyear contracts without recording an obligation for the total cost of the contract up front. Because those contracts would not be authorized under 10 U.S.C. §3501, they are considered contract authority and are classified as direct spending.

E-2D Aircraft. Section 126 would authorize the Navy to enter into contracts over the 2027‑2029 period to procure 12 or more E-2D aircraft. The E-2D provides surveillance radar coverage for naval vessels and aircraft and can operate from aircraft carriers. CBO estimates that under such contracts, the Navy would procure 12 E-2D aircraft over the 2027‑2029 period at a cost of $4.2 billion.

ICBM Components. Section 1516 would authorize the Air Force to enter into contracts to procure certain components for intercontinental ballistic missiles. Land‑based ICBMs are nuclear missiles capable of reaching targets around the world. CBO estimates that under such contracts, DoD would procure arming and fuse assemblies, nuclear-certified tractors and trailers, arming and disarming switch replacements, and test support equipment over the 2027‑2029 period at a cost of $1.3 billion.

Industrial Base Fund. Section 1054 would authorize DoD to spend available balances in the Defense Industrial Base Fund on new purposes. The 2025 reconciliation act provided $3.3 billion in mandatory budget authority to that fund. CBO estimates that roughly 5 percent of that funding will not be spent under current law and that DoD would spend $80 million over the 2027-2036 period under section 1054. Changes in outlays from currently enacted appropriations are classified as direct spending.

Payment Processing Services. Sections 621 and 623 would allow more people to shop at DoD commissary stores, which would increase overall sales and the number of payments made using credit and debit cards. An interchange fee is assessed on card payments, and the Department of the Treasury pays those fees on behalf of the commissary system using mandatory appropriations. On the basis of card usage data from the Federal Reserve and DoD, CBO estimates that interchange fees at commissary stores equal 0.9 percent of sales.

Section 621 would permanently extend shopping privileges of people who are authorized to shop at commissaries only by DoD policies, including federal civilian employees and contractors assigned overseas. Under current law, those people will lose that eligibility on January 1, 2027. Using commissary sales data on currently eligible shoppers and food costs from the Department of Agriculture, CBO estimates that enacting section 621 would increase the number of commissary shoppers by about 55,000 per year and that each customer would spend an average of about $3,400 annually. On that basis, CBO estimates that interchange fees would increase by $17 million over the 2027-2036 period.

Section 623 would extend for one year a program that allows DoD civilian employees to shop at 16 commissary stores. Using data on sales, CBO estimates that the extension would increase sales by about $20 million and direct spending for interchange fees by $200,000.

In total, CBO estimates that enacting sections 621 and 623 would increase direct spending by $17 million over the 2027-2036 period.

Funding for Future Requirements. Section 1247 would authorize DoD to use appropriations available for activities under the Indo-Pacific Maritime Security Initiative during the appropriation’s period of availability and the two fiscal years thereafter. Generally, fixed-term appropriations may not be used for requirements that arise after the period of availability. In 2026, DoD received $336 million for operational testing and evaluation activities, which remain available through 2027. CBO expects that some of those amounts will not be spent under current law and estimates that enacting the extension would increase outlays by $2 million over the 2027-2036 period. Because those changes in outlays would come from currently enacted appropriations, they would be classified as direct spending.

Other Provisions. Enacting some sections of S. 4784 would have insignificant effects on direct spending and revenues over the 2027-2036 period, generally because they would affect very few people, would have offsetting effects, or would involve transactions of very small amounts.

• Section 124 would authorize DoD to donate three retired F-14 aircraft. In CBO’s judgment, those aircraft are unlikely to be sold under current law.
• Sections 222, 357, 634, 882, 1213, 1214, 1226, 1236, 1250, and 1503 would affect agencies’ abilities to accept and spend, without further appropriation, amounts received from nonfederal entities for various purposes. The collections are classified as offsetting receipts (or reductions in direct spending); the spending of those receipts is direct spending.
• Sections 351 and 1076 would affect DoD’s authority to use working capital funds for capital investment and minor construction projects at certain military installations. Through working capital funds, DoD is authorized to incur obligations in advance of appropriations. That type of authority, called contract authority, is classified as direct spending.
• Section 503 would reauthorize DoD to offer early discharges to warrant officers, effective as of October 1, 2025, which could convey retroactive benefits, such as involuntary separation pay. The cost of those retroactive benefits is classified as direct spending.
• Section 506 would change the pay grades and retirement policies for permanent professors at the U.S. Army War College. Those modifications could change when some professors retire or the amount of their retired pay. Military retirement is paid from mandatory appropriations.
• Section 511 would clarify that participation in a professional education program, such as law school or medical school, only counts toward a reserve officer’s years of service for retirement purposes if DoD has approved their participation. That provision could delay some reserve officers’ retirements or reduce the amount of their retired pay. Military retirement is paid from mandatory appropriations.
• Section 543 would enable certain former service members who retired early in the 1990s with at least 15 but fewer than 20 years of military service to have their retired pay increased at age 62. Their recalculated pay would include their years of post-military employment in qualifying public and community service, such as teaching or law enforcement.
• Section 544 would increase the number of service members authorized to participate in DoD’s excess leave program to attend law school, which could subsequently affect the use of education benefits administered by the Department of Veterans Affairs. Those benefits are paid from mandatory appropriations.

Section 585 would change the rules for awarding the Medal of Honor, which could increase the number of medals awarded. Recipients and surviving spouses receive benefits, some of which are paid from mandatory appropriations.

Section 636 would increase the amount the Secretary of Defense may repay on federal student loans for certain members of the Selected Reserve. Because some loans would be repaid sooner, CBO expects that, on net, the government would receive less interest over the life of those loans.

• Sections 703 and 708 would change the cost of providing health benefits to service members, military retirees, and their dependents. Health benefits for DoD retirees who are eligible for Medicare or retirees from the other uniformed services (the Coast Guard, the National Oceanic and Atmospheric Administration, and the Public Health Service) are paid from mandatory appropriations.
• Section 713 would increase the ability of service members to use health facilities of the Department of Veterans Affairs and of veterans to use DoD health facilities. Mandatory appropriations provide some funding for those facilities.
• Section 813 may require DoD to renegotiate the terms of certain contracts for procuring missiles. Renegotiating contracts funded with current appropriations could change when those funds are spent. Because those changes in outlays would come from currently enacted appropriations, they would be classified as direct spending.
• Sections 2841 and 2842 would authorize the Army to convey several parcels of land to nonfederal entities. The Army could be reimbursed for administrative costs related to the conveyance, and those collections could be spent without further appropriation.
• Sections 537, 539D, 539E, 1072, 1082, and 1262 would affect the number of people who would be subject to civil or criminal penalties for prohibited conduct (including under the Uniform Code of Military Justice) and change penalty amounts. Such penalties are recorded as revenues, and a portion of those penalties can be spent without further appropriation.
• Section 3113 would allow the National Nuclear Security Administration to use contract authority or third-party financing to construct facilities to test the effects of nuclear explosions. Those forms of financing allow agencies to incur obligations in advance of appropriations, which is classified as direct spending. CBO anticipates that the agency would be unlikely to use that authority because of security concerns, legal challenges, and market constraints.

Uncertainty

Many of CBO’s estimates for S. 4784 are subject to uncertainty, but two types of provisions in particular are difficult to estimate.

The costs of extending DoD’s authority to provide loans and loan guarantees to entities for advanced technologies under section 902 could be significantly more or less than CBO estimated. The costs would depend on the number of loans and guarantees that DoD would subsidize.

The costs associated with multiyear procurement and block buy contracts under sections 111, 121, 126, 132, 133, 801, and 1516 could be more or less than CBO estimated. The total cost of such contracts would depend on unit costs, quantity, and procurement schedules. In addition, DoD has not estimated any potential savings that could be realized from using those contracts, and CBO did not include an assumption of savings in its estimate.

Pay-As-You-Go Considerations

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays that are subject to those pay-as-you-go procedures are shown in Table 4.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting S. 4784 would increase net direct spending by more than $2.5 billion in one of the four consecutive 10-year periods beginning in 2037.

CBO estimates that enacting S. 4784 would increase on‑budget deficits by more than $5 billion in one of the four consecutive 10-year periods beginning in 2037.

Mandates

S. 4784 would impose intergovernmental and private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). CBO estimates that the cost of those mandates would fall below the annual threshold established in UMRA for intergovernmental and private-sector mandates ($107 and $214 million in 2026, respectively, adjusted annually for inflation).

Military End Strength. Title IV would increase the costs of complying with existing intergovernmental and private-sector mandates under the Servicemembers Civil Relief Act (SCRA) by increasing the number of active-duty service members relative to current law. The SCRA requires public and private entities to grant service members and some reservists, while on active duty, with various protections for business and tax transactions, consumer contracts, and court procedures.

The SCRA imposes private-sector mandates by requiring creditors to charge no more than 6 percent interest on a service member’s debt obligations incurred before they began active duty, provided that the service member notified the creditor. SCRA also allows courts to temporarily stay certain civil proceedings, such as evictions, foreclosures, and repossessions. The SCRA prohibits lenders from using a service member’s personal assets to satisfy a trade or business liability during their service. It also allows service members to terminate residential and automobile leases and some consumer contracts under certain conditions.

Under the bill, the number of active-duty service members covered by the SCRA would increase by 40,100, about 3 percent more than under current law. The cost of the mandate would depend on various factors such as how many service members use the SCRA’s protections; the frequency and duration of their deployment; and the market rates for car loans, personal loans, mortgages, and credit cards. CBO estimates that the incremental cost of compliance for private entities would amount to several million dollars in lost interest revenue each year and that costs associated with terminated leases and service contracts would total between $10 million and $15 million.

The SCRA imposes intergovernmental mandates by allowing service members to maintain a single state of residence for paying state and local individual income taxes rather than the state in which they are stationed. Service members may also request deferrals of certain state and local fees. CBO estimates that the incremental cost to state and local governments would be several million dollars in lost revenue each year.

Betting on Military Operations. Section 1083 would prohibit any person from placing, accepting, or facilitating bets on military operations. That prohibition would include bets on contingency operations, sensitive military operations, the introduction of U.S. forces into hostilities, and authorizations for military force or war.

Under current regulations, prediction market exchanges that are registered with the Commodity Futures Trading Commission, such as Kalshi, are not permitted to offer contracts or trades on wars and assassinations. The commission can cancel such contracts or trades on a case-by-case basis. Because prediction market exchanges based in the United States are already subject to restrictions on contracts and trades, CBO estimates that the cost for those entities to comply with the additional betting restrictions would be small.

The bill also would limit people and private entities in the United States from placing bets on military operations through prediction market exchanges based outside of the country, such as Polymarket (the primary prediction market exchange for military operations). The cost of the prohibition for people in the United States would be the winnings that they otherwise would have obtained. Because Polymarket already restricts trades on military operations for users in the United States, CBO estimates that the cost of the mandate would be small. CBO did not estimate any revenue losses for Polymarket because entities based outside of the United States are not within the scope of UMRA.

Preemptions. The bill would expand a preemption of state and local laws by allowing licensed medical professionals in the National Guard to provide care to members of the uniformed services in any state during a title 32 deployment. (Under a title 32 deployment, troops remain under the command of their governor while being funded by the federal government.) The bill also would eliminate a sunset on a preemption that allows licensed nonmedical professionals of DoD to provide counseling services to military families in any state. Although those preemptions would limit the application of state laws, CBO estimates that they would impose no duty on state, local, or tribal governments that would result in additional spending or a loss of revenues.

Previous CBO Estimate

On June 26, 2026, CBO transmitted a cost estimate for H.R. 8800, the National Defense Authorization Act for Fiscal Year 2027, as reported by the House Committee on Armed Services on June 15, 2026. For fiscal year 2027, CBO estimates that S. 4784 would authorize the appropriation of $1,144 billion—$2 billion less than the $1,146 billion that would be authorized by H.R. 8800. CBO also estimates that S. 4784 would increase direct spending by $29.6 billion over the 2027-2036 period. H.R. 8800 would not significantly affect direct spending over that period.

Estimate Prepared By

Federal Costs:
Caroline Dorminey (for procurement and security assistance)
William Ma (for operations and maintenance, and military justice)
Christopher Mann (for military construction and family housing)
Aldo Prosperi (for research and development and the Strategic Capital Loan Program)
David Rafferty (for military retirement)
Dawn Sauter Regan (for military and civilian personnel)
Matt Schmit (for specified authorizations and military health care)

Mandates: Brandon Lever

Estimate Reviewed By

David Newman
Chief, Defense, International Affairs, and Veterans’ Affairs Cost Estimates Unit

Kathleen FitzGerald
Chief, Public and Private Mandates Unit

Christina Hawley Anthony
Deputy Director of Budget Analysis

Estimate Approved By

Return to Reference (Page 2)

Return to Reference (Page 2)

Return to Reference (Page 3)

Return to Reference (Page 5)