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Updated February 7, 2020
Defense Primer: Procurement
Background
tankers) in one fiscal year. In other words, the total funding
While the common use of the word procurement implies
necessary to acquire a useable end item is approved by
the process of obtaining goods or services, uses of the word
Congress in a single fiscal year, even though related work
procurement by national security experts and practitioners
may span many years. In a handful of cases, programs are
generally refers to a specific title within the annual National
procured using incremental funding. Under incremental
Defense Authorization Act (NDAA) and defense
funding, a system’s cost is divided into two or more annual
appropriations legislation.
portions, or increments, that can reflect the need to make
annual progress payments to the contractor as the system is
Appropriations for Procurement
built. Incremental funding has principally been used to
The Department of Defense (DOD) procurement
procure certain ships and submarines.
appropriations title provides funds for non-construction-
related investment costs—the costs to acquire capital assets,
Table 1. DOD Procurement Appropriation Subtitles,
such as an F-35 Joint Strike Fighter aircraft or a Virginia-
by Enacted Base Budget Amounts, FY2020
class submarine. Investment costs are distinguished from
expenses—the costs of resources consumed in operating the
U.S. $
Department, such as food and fuel. DOD uses procurement
Procurement Subtitle (Acronym)
(billions)
appropriations to obtain various categories of materiel, such
Shipbuilding and Conversion, Navy (SCN)
$24.0
as:
Other Procurement, Air Force (OPAF)
$21.4
new military hardware, such as aircraft, ships, armored
Aircraft Procurement, Navy (APN)
$19.6
vehicles, and other major equipment (e.g., radios and
satellites);
Aircraft Procurement, Air Force (APAF)
$17.5
upgrades to existing equipment, including extending
Other Procurement, Navy (OPN)
$10.1
service life or remanufacturing existing systems;
Other Procurement, Army (OPA)
$7.6
weapons and ammunition, ranging from air-to-air
missiles to rifle rounds; and
Procurement, Defense-Wide (PDW)
$5.3
spare parts, particularly those that are centrally
Procurement of Weapons and Tracked Combat
$4.7
managed.
Vehicles, Army (WTCV)
Weapons Procurement, Navy (WPN)
$4.0
Procurement funding authorized in a given fiscal year can
usually be obligated over a period of three years. The most
Aircraft Procurement, Army (APA)
$3.8
prominent exception is Navy Shipbuilding and Conversion
Missile Procurement, Army (MIPA)
$3.0
funding, which is available for five years.
Procurement, Marine Corps (PMC)
$2.9
The Department of Defense Appropriations Act, 2020
Procurement of Ammunition, Army (PAA)
$2.6
(Division A of P.L. 116-93) provided $133.9 billion in
procurement funding for DOD in the regular, or base,
Missile Procurement, Air Force (MPAF)
$2.6
budget (see Table 1), in addition to $11.8 billion in
Space Procurement, Air Force (SPAF)
$2.4
procurement funding designated for Overseas Contingency
Operations (OCO).
Procurement of Ammunition, Air Force (PAAF)
$1.6
Procurement of Ammunition, Navy and Marine
$0.8
NDAA and Defense Appropriations
Corps (PANMC)
CRS In Focus IF10515, Defense Primer: The NDAA Process, by
Defense Production Act Purchases
$0.1
Valerie Heitshusen and Brendan W. McGarry, and CRS In
TOTAL
$133.9
Focus IF10514, Defense Primer: Defense Appropriations
Process, by James V. Saturno and Brendan W. McGarry.
Source: CRS analysis of the FY2020 Department of Defense
Appropriations Act (Division A of P.L. 116-93) and accompanying
How is DOD Procurement Funded?
Joint Explanatory Statement.
Note: Numbers may not sum due to rounding and exclude Overseas
In general, Congress appropriates money for defense
Contingency Operations (OCO) funding for procurement programs.
procurement under a policy of full funding, which requires
Congress to fund the entire procurement cost of end items
(such as AIM-9 Sidewinder missiles or KC-46A refueling
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Defense Primer: Procurement
Figure 1. Milestones for Major Capability Acquisition
Source: CRS graphic based on DOD Instruction 5000.02, “Operation of the Adaptive Acquisition Framework,” January 23, 2020, p. 9.
agencies enter into contracts, employ personnel, or
Multiyear Procurement
otherwise commit to spending money.
Under 10 U.S.C. §2306b, Congress sometimes authorizes
multiyear procurement (MYP) for programs. MYP can
Relevant Statutes
achieve savings by committing to buy items over multiple
years from a contractor for a reduced price per unit.
Title 10, U.S. Code, Part IV—Service, Supply, and
Qualifying for MYP requires a program to meet several
Procurement.
criteria, including significant savings, stable funding and
design, and other standards. Recent examples include
Virginia-class submarines, DDG-51 Arleigh Burke class
destroyers, UH-60 Black Hawk helicopters, MV-22 Osprey
CRS Products
tilt-rotor aircraft, and C-130J Super Hercules cargo planes.
For information on the Defense Acquisition System, see CRS
Report RL34026, Defense Acquisitions: How DOD Acquires
More commonly, programs receive advance procurement
Weapon Systems and Recent Efforts to Reform the Process, by
funds for components of a unit that need to be purchased
Heidi M. Peters.
long before the unit itself is purchased. For programs using
For information on the ful funding policy in DOD
MYP, advance procurement may also be used to achieve
procurement, see CRS Report RL31404, Defense Procurement:
economic order quantity, which is defined as buying
Full Funding Policy—Background, Issues, and Options for Congress,
enough of an item to minimize the total cost.
by Ronald O'Rourke.
When Does a Program Enter
For information on special cases of procurement, see CRS
Procurement?
Report R41909, Multiyear Procurement (MYP) and Block Buy
Contracting in Defense Acquisition: Background and Issues for
Programs that will result in the acquisition of a major
Congress, by Ronald O'Rourke.
capability (e.g., an aircraft carrier or armored fighting
vehicle) officially enter procurement after they receive
For information on RDT&E funding see CRS In Focus IF10553,
Milestone C approval in the Defense Acquisition System.
Defense Primer: RDT&E, by John F. Sargent Jr.
Prior to moving to procurement, programs are considered to
For general information on defense procurement and contract
be in development and are generally funded through the
acquisition, see CRS In Focus IF10600, Defense Primer:
Research, Development, Test and Evaluation (RDT&E)
Department of Defense Contractors, by Heidi M. Peters and CRS
appropriation title. Some programs will receive
Report R44010, Defense Acquisitions: How and Where DOD
procurement funds before a formal Milestone C approval.
Spends Its Contracting Dollars, by John F. Sargent Jr., and
See Figure 1 for a high-level overview of milestones
Christopher T. Mann
associated with major capability acquisition, one pathway
within DOD’s adaptive acquisition framework.
How Else Does DOD Purchase Goods
Other Resources
and Services? How Does DOD
Procurement Relate to Defense
Department of Defense Comptrol er, Defense Budget
Contracting?
Materials, http://comptrol er.defense.gov/Budget-Materials.
DOD is authorized and appropriated procurement funding
DOD 7000.14R, “Financial Management Regulation,” Budget
for non-construction investments. DOD uses funding other
Formulation and Presentation: Procurement Appropriations, vol. 2B,
than procurement to purchase services (e.g., research,
ch. 4, November 2017, at https://comptrol er.defense.gov/
architectural design, or cleaning services) and smaller
Portals/45/documents/fmr/Volume_02b.pdf.
goods (e.g., gauze or light bulbs) because such purchases
are considered to be expenses rather than investments and
are funded in other parts of DOD’s budget.
Heidi M. Peters, Analyst in U.S. Defense Acquisition
Policy
Goods and services from the private sector are purchased
through contracts and accounted for as contract obligations.
Brendan W. McGarry, Analyst in US Defense Budget
These individual activities—most of which are too granular
IF10599
to be captured in appropriations data—are tracked at the
level of obligations. Obligation is the term used when
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Defense Primer: Procurement
Disclaimer
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