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Updated December 9, 2021
Defense Primer: Procurement
Background
necessary to acquire a useable end-item is approved by
While procurement implies a process of obtaining goods or
Congress in a single fiscal year, even though related work
services, the word also refers to a specific title and
may span many years. In some cases, programs have been
associated accounts within the annual National Defense
procured using incremental funding, a funding policy
Authorization Act (NDAA) and defense appropriations
typically associated with research and development
legislation.
activities. Under incremental funding, a system’s cost is
divided into two or more annual portions, or increments,
Appropriations for Procurement
that can reflect the need to make annual progress payments
The Department of Defense (DOD) procurement
to the contractor as the system is built. Incremental funding
appropriations title provides funds for non-construction-
has principally been used to procure certain ships and
related investment costs—the costs to acquire capital assets,
submarines.
such as an F-35 Joint Strike Fighter aircraft or a Virginia-
class submarine. Investment costs are distinguished from
Table 1. FY2022 President’s Budget Request for DOD
expenses—the costs of resources consumed in operating the
Procurement Appropriations Accounts
department, such as food and fuel. DOD uses procurement
appropriations to obtain various categories of materiel,
$
including
Account (Acronym)
(billions)
Aircraft Procurement, Army (APA)
$2.8
new military hardware (e.g., aircraft, ships,
armored vehicles, radios, and satellites);
Missile Procurement, Army (MIPA)
$3.6
upgrades to existing equipment, including service
Procurement of Weapons and Tracked Combat
$3.9
life extension or remanufacturing programs;
Vehicles, Army (WTCV)
weapons and ammunition (e.g., air-to-air missiles
Procurement of Ammunition, Army (PAA)
$2.2
and rifle rounds); and
Other Procurement, Army (OPA)
$8.9
spares and repair parts.
Aircraft Procurement, Navy (APN)
$16.5
Procurement funding provided to the department in a given
Weapons Procurement, Navy (WPN)
$4.2
fiscal year can usually be obligated over a period of three
years. The most prominent exception is Navy Shipbuilding
Procurement of Ammunition, Navy and Marine
$1.0
and Conversion funding, which is available for five years.
Corps (PANMC)
The FY2022 President’s budget request included $132.5
Shipbuilding and Conversion, Navy (SCN)
$22.6
billion in procurement funding for DOD (see Table 1). The
budget submission discontinued requests for Overseas
Other Procurement, Navy (OPN)
$10.9
Contingency Operations (OCO) as a separate funding
Procurement, Marine Corps (PMC)
$3.0
category for various appropriations accounts, including
procurement-related accounts. As of the date of publication,
Aircraft Procurement, Air Force (APAF)
$15.7
Congress has not passed an FY2022 defense appropriations
Missile Procurement, Air Force (MPAF)
$2.7
act.
Procurement of Ammunition, Air Force (PAAF)
$0.8
Other Procurement, Air Force (OPAF)
$25.3
NDAA and Defense Appropriations
CRS In Focus IF10515, Defense Primer: The NDAA Process, by
Procurement, Space Force (PSF)
$2.8
Valerie Heitshusen and Brendan W. McGarry, and CRS In
Procurement, Defense-Wide (PDW)
$5.5
Focus IF10514, Defense Primer: Defense Appropriations
Process, by James V. Saturno and Brendan W. McGarry.
Defense Production Act Purchases
$0.3
TOTAL
$132.5
How is DOD Procurement Funded?
Source: CRS analysis of FY2022 Department of Defense budget
In general, Congress appropriates money for defense
justification documentation; H.Rept. 117-88; and explanatory
procurement under a policy of full funding, which requires
statement accompanying Senate Appropriations Committee-released
funding the entire procurement cost of end-items (such as
Department of Defense Appropriations Bill, 2022.
AIM-9 Sidewinder missiles or KC-46A refueling tankers)
Note: Total may not sum due to rounding.
in one fiscal year. In other words, the total funding
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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.
Exceptions to Full Funding
These individual activities—most of which are too granular
to be captured in appropriations data—are tracked at the
Multiyear Procurement. Under 10 U.S.C. §2306b,
level of obligations. Obligation is the term used when
Congress sometimes authorizes multiyear procurement
agencies enter into contracts, employ personnel, or
(MYP) for programs. MYP can achieve savings by
otherwise commit to spending money.
committing to buy items from a contractor over multiple
years for a reduced price per unit. Qualifying for MYP
Relevant Statutes
requires a program to achieve savings in estimated costs,
receive sufficient funding, and procure items unlikely to
Title 10, U.S. Code, Part IV—Service, Supply, and
substantially change over the multiyear period. Recent
Procurement.
examples include Virginia-class submarines, DDG-51
Arleigh Burke-class destroyers, UH-60 Black Hawk
helicopters, MV-22 Osprey tilt-rotor aircraft, and
CRS Products
C-130J Super Hercules cargo planes.
For information on the Defense Acquisition System, see CRS
Advance Procurement. More commonly, programs
Report RL34026, Defense Acquisitions: How DOD Acquires
receive advance procurement funds for components of a
Weapon Systems and Recent Efforts to Reform the Process.
unit that need to be purchased long before the unit itself
For information on the full funding policy in DOD
is purchased. For programs using MYP, advance
procurement, see CRS Report RL31404, Defense Procurement:
procurement may also be used to achieve economic
Full Funding Policy—Background, Issues, and Options for Congress.
order quantity, which is defined as buying enough of an
For information on special cases of procurement, see CRS
item to minimize the total cost.
Report R41909, Multiyear Procurement (MYP) and Block Buy
When Does a Program Enter
Contracting in Defense Acquisition: Background and Issues for
Procurement?
Congress.
Programs that produce a major capability (e.g., an aircraft
For information on RDT&E funding see CRS In Focus IF10553,
carrier or armored fighting vehicle) officially enter
Defense Primer: RDT&E.
procurement after they receive Milestone C approval in the
For general information on defense procurement and contract
Defense Acquisition System. Prior to moving to
acquisition, see CRS In Focus IF10600, Defense Primer:
procurement, programs are considered to be in development
Department of Defense Contractors and CRS Report R44010,
and generally funded through the Research, Development,
Defense Acquisitions: How and Where DOD Spends Its Contracting
Test and Evaluation (RDT&E) appropriation title. Some
Dollars.
programs will receive procurement funds before a formal
Milestone C approval. See Figure 1 for a high-level
overview of milestones associated with major capability
acquisition, one pathway within DOD’s adaptive
Other Resources
acquisition framework.
Department of Defense Comptroller, Defense Budget
How Else Does DOD Purchase Goods
Materials, http://comptroller.defense.gov/Budget-Materials.
and Services? How Does DOD
DOD 7000.14-R, “Financial Management Regulation,” Budget
Procurement Relate to Defense
Formulation and Presentation: Procurement Appropriations, vol. 2B,
Contracting?
ch. 4, November 2017, at https://comptroller.defense.gov/
DOD is authorized and appropriated procurement funding
Portals/45/documents/fmr/Volume_02b.pdf.
for non-construction investments. DOD uses funding other
than procurement to purchase services (e.g., research,
architectural design, or cleaning services) and smaller
Heidi M. Peters, Analyst in U.S. Defense Acquisition
goods (e.g., gauze or light bulbs) because such purchases
Policy
are considered to be expenses rather than investments and
are funded in other parts of DOD’s budget.
Brendan W. McGarry, Analyst in U.S. Defense Budget
IF10599
Goods and services from the private sector are purchased
through contracts and accounted for as contract obligations.
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Defense Primer: Procurement
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
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