Defense Acquisition Trends 2023: Meeting the Challenge of Production?

Abstract

The industrial-scale conflict of the war in Ukraine and the burgeoning production capacity of the People’s Republic of China are reshaping the objectives of the defense acquisition system. This paper considers how acquisition trends have evolved in this environment, with special attention to the nation’s first National Defense Industrial Strategy. After accounting, for inflation contract obligations rose 5.3% in Fiscal Year (FY) 2023, including increases in aircraft and shipbuilding, and a striking 58% 1-year rise in ordnance and missile obligations. A groundbreaking look at the number of defense vendors and the market share going to nontraditional defense contractors finds, skipping over the COVID-19 response in the past 2 years, that the $94.7 billion spent in FY2023 was 9.3% above FY2020 levels. Other Transaction Authority usage has also increased with a diversifying group of customers and a near doubling of spending on production.