Defense Acquisition Trends 2023: A Preliminary Look

Abstract

The past year of contracting has faced multiple external influences: ongoing Covid-19 responses and supply chain disruptions, increasing inflation, and large-scale U.S. support to Ukraine given the Russian invasion of Ukraine. Despite all this, FY 2022 defense contract spending shows marked continuity with contract spending growing 0.1 percent after accounting for inflation. OTA spending has fallen further as commercial contracts have taken over as the mechanism of choice for responding to Covid-19. There are signs of greater adoption contracts with economic price adjustments or shorter time periods, but as of FY 2022 these shifts remained small scale. More surprisingly, spending on ordnance & missiles fell, suggesting that the acquisition system is still ramping up to recapitalize drawdowns by the United States and allies.