https://crsreports.congress.gov
Updated December 9, 2021
Defense Primer: Procurement
Background
While procurement implies a process of obtaining goods or
services, the word also refers to a specific title and
associated accounts within the annual National Defense
Authorization Act (NDAA) and defense appropriations
legislation.
Appropriations for Procurement
The Department of Defense (DOD) procurement
appropriations title provides funds for non-construction-
related investment costs—the costs to acquire capital assets,
such as an F-35 Joint Strike Fighter aircraft or a Virginia-
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
appropriations to obtain various categories of materiel,
including
new military hardware (e.g., aircraft, ships,
armored vehicles, radios, and satellites);
upgrades to existing equipment, including service
life extension or remanufacturing programs;
weapons and ammunition (e.g., air-to-air missiles
and rifle rounds); and
spares and repair parts.
Procurement funding provided to the department in a given
fiscal year can usually be obligated over a period of three
years. The most prominent exception is Navy Shipbuilding
and Conversion funding, which is available for five years.
The FY2022 President’s budget request included $132.5
billion in procurement funding for DOD (see Table 1). The
budget submission discontinued requests for Overseas
Contingency Operations (OCO) as a separate funding
category for various appropriations accounts, including
procurement-related accounts. As of the date of publication,
Congress has not passed an FY2022 defense appropriations
act.
How is DOD Procurement Funded?
In general, Congress appropriates money for defense
procurement under a policy of full funding, which requires
funding the entire procurement cost of end-items (such as
AIM-9 Sidewinder missiles or KC-46A refueling tankers)
in one fiscal year. In other words, the total funding
necessary to acquire a useable end-item is approved by
Congress in a single fiscal year, even though related work
may span many years. In some cases, programs have been
procured using incremental funding, a funding policy
typically associated with research and development
activities. Under incremental funding, a system’s cost is
divided into two or more annual portions, or increments,
that can reflect the need to make annual progress payments
to the contractor as the system is built. Incremental funding
has principally been used to procure certain ships and
submarines.
Table 1. FY2022 President’s Budget Request for DOD
Procurement Appropriations Accounts
