Defense Primer: Procurement

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Updated January 7, 2021
Defense Primer: Procurement
Background
necessary to acquire a useable end-item is approved by
While the common use of the word procurement implies a
Congress in a single fiscal year, even though related work
process of obtaining goods or services, national security
may span many years. In a handful of cases, programs are
practitioners generally use the word to refer to a specific
procured using incremental funding. Under incremental
title within the annual National Defense Authorization Act
funding, a system’s cost is divided into two or more annual
(NDAA) and defense 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, FY2021
class submarine. (Investment costs are distinguished from
expenses—the costs of resources consumed in operating the
$
department, such as food and fuel.) DOD uses procurement
Procurement Subtitle (Acronym)
(billions)
appropriations to obtain various categories of materiel,
Aircraft Procurement, Army (APA)
$3.5
including:
Missile Procurement, Army (MIPA)
$3.2
 new military hardware (e.g., aircraft, ships, armored
Procurement of Weapons and Tracked Combat
$3.6
vehicles, radios, and satellites);
Vehicles, Army (WTCV)
 upgrades to existing equipment, including service life
extension or remanufacturing programs;
Procurement of Ammunition, Army (PAA)
$2.8
 weapons and ammunition (e.g., air-to-air missiles and
Other Procurement, Army (OPA)
$8.6
rifle rounds); and
Aircraft Procurement, Navy (APN)
$19.5
 spares and repair parts.
Weapons Procurement, Navy (WPN)
$4.5
Procurement funding provided to the department in a given
fiscal year can usually be obligated over a period of three
Procurement of Ammunition, Navy and Marine
$0.8
years. The most prominent exception is Navy Shipbuilding
Corps (PANMC)
and Conversion funding, which is available for five years.
Shipbuilding and Conversion, Navy (SCN)
$23.3
The Department of Defense Appropriations Act, 2021
(Division C of P.L. 116-260) provided $136.5 billion in
Other Procurement, Navy (OPN)
$10.5
procurement funding for DOD in the regular, or base,
Procurement, Marine Corps (PMC)
$2.6
budget (see Table 1), in addition to $6.4 billion in
procurement funding designated for Overseas Contingency
Aircraft Procurement, Air Force (APAF)
$19.2
Operations (OCO).
Missile Procurement, Air Force (MPAF)
$2.1
Procurement of Ammunition, Air Force (PAAF)
$0.6
NDAA and Defense Appropriations
Other Procurement, Air Force (OPAF)
$23.4
CRS In Focus IF10515, Defense Primer: The NDAA Process, by
Procurement, Space Force (PSF)
$2.3
Valerie Heitshusen and Brendan W. McGarry, and CRS In
Focus IF10514, Defense Primer: Defense Appropriations
Procurement, Defense-Wide (PDW)
$5.8
Process, by James V. Saturno and Brendan W. McGarry.
Defense Production Act Purchases
$0.2
How is DOD Procurement Funded?
TOTAL
$136.5
In general, Congress appropriates money for defense
Source: CRS analysis of the joint explanatory statement to
procurement under a policy of full funding, which requires
accompany the Department of Defense Appropriations Act, 2021
Congress to fund the entire procurement cost of end-items
(Division C of P.L. 116-260).
(such as AIM-9 Sidewinder missiles or KC-46A refueling
Note: Amounts exclude OCO funding.
tankers) 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.
level of obligations. Obligation is the term used when
Multiyear Procurement
agencies enter into contracts, employ personnel, or
Under 10 U.S.C. §2306b, Congress sometimes authorizes
otherwise commit to spending money.
multiyear procurement (MYP) for programs. MYP can
achieve savings by committing to buy items from a
Relevant Statutes
contractor over multiple years for a reduced price per unit.
Qualifying for MYP requires a program to achieve savings
Title 10, U.S. Code, Part IV—Service, Supply, and
in estimated costs, receive sufficient funding, and procure
Procurement.
items unlikely to substantially change over the multiyear
period. Recent examples include Virginia-class submarines,

DDG-51 Arleigh Burke class destroyers, UH-60 Black
Hawk helicopters, MV-22 Osprey tilt-rotor aircraft, and C-
CRS Products
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 produce a major capability (e.g., an aircraft
Congress, by Ronald O'Rourke.
carrier or armored fighting vehicle) officially enter
procurement after they receive Milestone C approval in the
For information on RDT&E funding see CRS In Focus IF10553,
Defense Acquisition System. Prior to moving to
Defense Primer: RDT&E, by John F. Sargent Jr.
procurement, programs are considered to be in development
For general information on defense procurement and contract
and generally funded through the Research, Development,
acquisition, see CRS In Focus IF10600, Defense Primer:
Test and Evaluation (RDT&E) appropriation title. Some
Department of Defense Contractors, by Heidi M. Peters and CRS
programs will receive procurement funds before a formal
Report R44010, Defense Acquisitions: How and Where DOD
Milestone C approval. See Figure 1 for a high-level
Spends Its Contracting Dollars, by John F. Sargent Jr., and
overview of milestones associated with major capability
Christopher T. Mann.
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
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Defense Primer: Procurement


Disclaimer
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