U.S. Department of Defense Contract Spending and the Supporting Industrial Base

This report analyzes contract obligations for products, services, and research and development (R&D) by the U.S. Department of Defense (DoD), overall and by its key components (Air Force, Navy, Army and civilian agencies). It thereby seeks to provide an in-depth assessment of the trends currently driving more than half of all federal contract dollars. The report also includes findings on the industrial base supporting DoD in its missions.

The timeframe analyzed extends from 1990 to 2011, and the Federal Procurement Data System (FPDS) is the primary source of data on government contract obligations in this report. In a change from previous reports, FPDS data for DoD are now available from 2000 to 2004, which makes the CSIS research team no longer dependent on Department of Defense Form 350 (DD350) data. Numbers will differ from previous reports due to a change in constant dollars (all dollar figures in this report are in Fiscal Year 2011 dollars and all years are fiscal years) and to continual updates of back-year data in FPDS. However, this difference is never greater than $10 billion between years.

The first section of this report presents an overview of defense contract obligations. In the second section, the contract obligations data are divided into three categories: products, services, and research and development (R&D). Next, the report presents data on contract obligations by the three military departments. In addition, this report includes a category titled “Other DoD,” consisting of defense agencies and other entities within DoD (such as the Defense Logistics Agency, Missile Defense Agency, Defense Threat Reduction Agency, U.S. Special Operations Command, etc.). The report then analyzes trends by three key contract characteristics: level of competition, type of funding mechanism, and type of contract vehicle. Lastly, the report analyzes the industrial base supporting DoD. It lists the top 20 contractors in 2001 and 2011 and notes the differences and similarities between the two years. Further detail into the industrial base supporting DoD is provided via separate top 20 contractors lists for products, services, and R&D contracts. Lastly, to present a more in-depth picture of the supply side for the years 2000 to 2011, contract awards are broken down into four contractor size categories: small, medium, large, and the “Big 6” defense contractors (Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, Raytheon, and BAE Systems).