WASHINGTON — The Pentagon must obligate $152 billion in 2025 reconciliation spending by the end of September to prevent an 8.3 percent reduction to the remaining balance. If the funds are not contracted out by Oct. 1, the start of fiscal 2027, the remaining balance will decrease.

Defense Secretary Pete Hegseth stated that $26 billion of these funds had been placed on contract by late April. This left $126 billion of the reconciliation funding to be spent over the five months following late April. A senior department official said the Pentagon has issued guidance to its program offices on how to spend the reconciliation money before the end of the fiscal year.

Lawmakers approved the One Big Beautiful Bill last year, which included roughly $152 billion for defense initiatives. This funding covers initiatives such as Golden Dome, two Arleigh Burke-class destroyers, munitions, and nuclear modernization. While not all defense spending in the bill was tied to specific weapons programs, the Pentagon retained latitude in executing the funding.

A senior department official said, "Our strategy focuses on maximizing the utility of every dollar in a timely, yet responsible, manner." Hegseth noted that obligation rates had been increasing. "We've got the floodgates about to open and apply to those priorities," Hegseth said.

Elaine McCusker, a senior fellow at the American Enterprise Institute and former acting comptroller for the Pentagon, said in a podcast interview that the slow release of funds has challenged the system. "The slow release of the funds, combined with other factors such as the acquisition strategies being used, workforce reductions and synchronization with the late appropriation of the base budget, have definitely challenged the system," McCusker said. "Even a loss of 8.3 percent during roll-over could have consequences." She added, "The department needs every dollar it can get to fix long-term problems." McCusker also said, "The obligation rates have been going up, particularly the last two months, and I think it is still possible they will get close to spending the money this fiscal year and on the right things."