https://crsreports.congress.gov
Updated January 5, 2023
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 Department of Defense
Appropriations Act.
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 Department of Defense Appropriations Act, 2023
(Division C of P.L. 117-328) provided $162.2 billion for
procurement accounts (see Table 1).
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 (e.g.,
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. Funding for DOD Procurement Accounts in
the Department of Defense Appropriations Act, 2023
