Two Key Trends in DoD Contracting spend — R&D, Training and Exercise

This week marked anniversary of September 11. Nearly 3,000 people died on Sept. 11, 2001, making it the deadliest terrorist attack on U.S. soil.
I thought this would be an appropriate time to take a retrospective view on the Department of Defense contracting spend in the past 17 years, to understand the key trends.
In July of 2018, Congressional Research Service released a study “Defense Acquisitions: How and Where DoD Spends it Contracting Dollars”, based on FPDS (Federal Procurement Data System). You can access the full report here.
There are two major trends:
  1. Between 2008 and 2017, the amount of DoD contracting spend that is dedicated to Education and Training has increased by 16.7%
  2. For almost 20 years, DOD has dedicated an ever-smaller share of its contracting dollars to R&D, with such contracts dropping from 15% of total contract obligations in 2000, to 8% in 2017.
Some additional facts from this research report:
  1. In FY 2017, DOD obligated more money on federal contracts ($320 billion in current dollars) than all other government agencies combined.
  2. DOD’s contract obligations were equal to 8% of all mandatory and discretionary federal spending.
  3. Services accounted for 41% of total DOD contract obligations, goods for 51%, and research and development (R&D) for 8%.
  4. This distribution contrasts with the rest of the federal government, which obligated a larger portion of contracting dollars on services (71%), than on goods (21%) or research and development (8%).
  5. From FY2000 to FY2017, DOD contract obligations increased from $189 billion to $320 billion (FY2017 dollars). The increase in spending, however, has not been steady. DOD contract obligations over the last 17 years were marked by an annualized increase of 11.5% between FY2000 and FY2008, followed by an annualized decrease of 6.5% from FY2008 to FY2015, and then increased again from FY2015 to FY2017 by 6.5% annually.
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