Andrew P. Hunter

CSIS's The Future of Military Engines looks at the state of the U. S. military engine industrial base and the choices confronting policymakers at the Department of Defense (DoD). The military engine industrial base is closely tied to the industrial base for commercial engines. U. S. engine providers use many of the same facilities and largely the same supply chain for military and commercial engines. The ability to leverage commercial supply chains is critical because supply chain quality underlies the performance advantage of U. S. military engines, both for individual aircraft and military aircraft fleets. International competitors such as Russia and China are seeking to overtake the U. S. in engines. However, the current U. S. advantage is sustainable if it is treated as a national priority. Many military aircraft, especially fighters, require engines with important differences from commercial aircraft. They fly different flight profiles and perform different jobs. These differences mean that while DoD can leverage the commercial engine industrial base, it must also make investments to sustain the industrial base’s unique military components. In the next few years, DoD investment in military engines is projected to decrease significantly, particularly for R&D. This presents a challenge as military-unique engineering skills are highly perishable. Four major policy choices confront DoD as it formulates its investment approach to military engines going forward: 1) Priority, 2) Resources, 3) Business Model, and 4) Competition. The DoD is at an inflection point for engine investment, and the time for choosing on these four key policy questions will come in the next few years.

With the advent of the information age, both commercial industry and the Department of Defense are moving towards complex R&D-intensive systems over the simpler, mass-produced systems of the industrial age. This CSIS report analyzes the historical trends in the relationship of production costs to development costs in complex acquisition programs. To understand this phenomenon, the study team examines it at two different levels. The first is the macro investment level where portfolio management trade-offs are made between aggregate development and procurement and between programs. The second level is individual programs where the ambitions of the program and the underlying technology shape the resources required for a program to complete development.

Researching and manufacturing fighters, ships, and tanks are only part of the picture for defense contracts. Contracting for services accounts for over 41 percent of DoD contract obligations in 2018. Services include maintaining equipment, moving people and things, creating software, providing server space, and construction. Service contracting is challenging as services can be difficult to define and measure. But services are increasingly central to the U. S. economy. The Department of Defense seeks to attract new firms that will increase its speed and agility—many of these firms are service providers, e.g., data analytics or cloud computing. CSIS looked at a million contracts to evaluate how three factors influence performance: 1.service complexity 2.contract-management capacity 3.vendor’s history working with a DoD contracting office The existing data fails to explain large differences in contract office performance. More DoD transparency about contracting office capacity could help make a case for further investments. The report also found that when vendors and contracting offices have a longer history, they tend to have better results. That means DoD needs to think not only about recruiting new partners, but also about helping them succeed.

This report analyzes the current state of affairs in defense acquisition by combining detailed policy and data analysis to provide a comprehensive overview of the current and future outlook for defense acquisition. This analysis will provide critical insights into what DoD is buying, how DoD is buying it, from whom is DoD buying, and what are the defense components buying using data from the Federal Procurement Data System (FPDS). This analysis provides critical insights into understanding the current trends in the defense industrial base and the implications of those trends on acquisition policy.

This paper garners information crucial to understanding business growth for new entrants and small businesses who contract with the federal government by utilizing publicly available contracting data from the Federal Procurement Data System (FPDS) to track new entrants from 2001-2016. This information is then used to evaluate entrances, exits, and status changes among federal vendors with the purpose of comparing challenges faced by small businesses with those of larger ones. Measuring market trends over time and in multiple sectors shows how the challenges facing small businesses, such as market barriers to entry and imperfect competition, keep them from growing. The final results compare the survival rates between small and non-small new entrants contracting with the federal government and analyze the graduation rates for those small new entrants who grew in size during the observation period and survived after ten years. The study finds that around 40 percent of new entrants exit the market for federal contracts after three years, around 50-60 percent after five years, and only about one-fifth of new entrants remain in the federal contracting arena in the final year of observation. Across the six samples studied, thegraduation rates of small businesses consistently decrease.

This study examines contracting trends at the U. S. Department of Defense (DoD). It relies on empirical analysis of DoD contracting transaction data from the open-source Federal Procurement Data System (FPDS). The authors seek to identify and study emergent trends in the contracting data and marry that analysis with discussion of changing goals and methods for the larger acquisition system.