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Small number of states dominate DoD spending

A huge portion of U.S. defense spending is going to contractors and military personnel based in just a handful of states, according to data recently released by the Pentagon.

Defense Department contract obligations and payroll spending in the 50 states and the District of Columbia totaled $550.9 billion in fiscal year 2019. Of those outlays, 73 percent was spent on contracts for products and services, while the remaining 27 percent paid the salaries of department personnel, according to the Office of Local Defense Community Cooperation’s latest report on defense spending by state.

“California, Virginia and Texas topped the list of recipients for overall defense spending,” said a press release accompanying the study. They received $181.3 billion, about one-third of the total allotted to all 50 states plus D.C.

The top five, which also included Florida and Maryland, received about 43 percent of the total, while the top 10 received approximately 59 percent, according to the data.

The top 10 states were: California, $66.2 billion; Virginia, $60.3 billion; Texas, $54.8 billion; Florida, $29.8 billion; Maryland, $26.1 billion; Connecticut, $19.7 billion; Pennsylvania, $18.1 billion; Washington, $17.8 billion; Alabama, $16 billion; and Massachusetts, $15.8 billion.

That adds up to a whopping $324.7 billion.

Keep reading this article at: https://www.nationaldefensemagazine.org/articles/2021/2/25/small-number-of-states-dominate-defense-spending

To read the Office of Local Defense Community Cooperation’s full report go to: https://oldcc.gov/sites/default/files/defense-spending-rpts/OLDCC_DSBS_FY2019_FINAL_WEB.pdf

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Projections on contract spending for 2021 are murky

Though the Defense Department’s actual numbers won’t come out until January, federal contract spending for fiscal 2020 is projected to land somewhere upwards of $600 billion — an $89 billion increase over 2019.  Around $30 billion of that increase was COVID-related spending.

With a vaccine still on the horizon, and a presidential transition now underway, projections on contract spending for 2021 are murkier than usual.  That said, Kevin Plexico, senior vice president for Information Solutions at Deltek, said there are a few things that can be expected.

First, the topline budget caps are already set for next year due to the Bipartisan Budget Act of 2019.  They provide for modest increases in discretionary spending, which tends to lead to increases in contract spending.  It’s worth noting as well that 2021 is the final year subject to the restrictions of the Budget Control Act.

Second, President-elect Joe Biden has presented a seven-point pandemic response plan, which includes testing and tracing, as well as potentially $25 billion for vaccine development and distribution.  It’s likely to include significant spending on personal protective equipment as well, and it’s possible he could invoke the Defense Production Act toward this end.

Keep reading this article at: https://federalnewsnetwork.com/contracting/2020/11/what-contractors-can-expect-in-2021/

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What a Biden administration will mean for contractors

For federal contractors, much will change under a Biden administration.

Some changes will return the familiar.  Some wags are already calling the next presidency a third Obama term.  That may or may not be accurate, much less fair to Biden.

One thing is certain, the government won’t retreat one dollar from its $500 billion-a-year contracting appetite.  Beyond that, the pH of the procurement waters will change.

The agency to watch, if you’re a contractor, and by extension a contracting officer, is the Office of Federal Contract Compliance Programs.  This Labor Department unit is the source of many policies that apply to contractors, starting with ensuring contractors follow what used to be called employment standards.  Mainly that contractors don’t, in their own employment practices, violate equal opportunity laws and regulations.

Administrations use it as one of the levers of power the general public doesn’t see, unlike, say, the Environmental Protection Agency or Justice Department.  Its policies apply to contracts and contractors.

Keep reading this article at: https://federalnewsnetwork.com/tom-temin-commentary/2020/11/what-a-biden-administration-will-mean-for-contractors/

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Civilian agency contract spending reaches record high in FY20

The novel coronavirus pandemic largely contributed to the increase, Bloomberg Government reports.

Civilian agencies’ contract spending hit a record high of $228 billion in fiscal 2020, an increase of 17% ($33.5 billion) from 2019. The surge in spending is mainly due to the novel coronavirus pandemic.

The Health and Human Services, Veterans Affairs and Energy departments drove the increase in spending, Bloomberg Government said in a report.  Of the $228 billion, 26% or $59.4 billion went to small businesses, a $6.5 billion increase from fiscal 2019.

“In previous years there’s been single digit jumps, so this is a huge jump compared to previous years,” Robert Levinson, senior defense analyst at Bloomberg Government, told Government Executive.  He noted that there is a 90-day delay for the Defense Department’s contract spending for security purposes and there is also classified spending that will never be released.

HHS, which spent $41.2 billion in fiscal 2020 in contract obligations, accounted for 44% of the $33.5 billion in overall increased civilian contract spending.  The majority of HHS’ spending was for vaccines, research, ventilators and other pandemic-related efforts.  Some of these contracts, such as for a public relations campaign to “inspire hope” about the pandemic and new data reporting system, have drawn concern from Democratic lawmakers.

Keep reading this article at: https://www.govexec.com/management/2020/10/civilian-agency-contract-spending-reaches-record-high-fiscal-2020/169127/

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DoD is not getting what it wants from subsidized industry research

R&D spending doesn’t match DoD’s priorities, report says.

Most of the $4 billion to $5 billion the Department of Defense (DoD) gives to corporations each year to subsidize their research is not used in ways that work toward the Pentagon’s goals, a report from the Government Accountability Office (GAO) found.

The study may be further ammo for DoD’s previous effort to have more control over the way corporations use their independent research and development (IRAD) money; something the companies have strongly fought against.

“DoD does not know how contractors’ IRAD projects fit into the department’s technology goals,” the authors of the report wrote. “As a result, DoD risks making decisions about its multi-billion dollar science and tech investments that could duplicate work or miss opportunities to fill in gaps that the contributions of private industry do not cover.”

In 2018, only 38% of corporations’ IRAD money went to the 10 topics DoD has outlined as its most important modernization priorities like cyber, artificial intelligence, microelectronics and biotechnology.

Corporations spent about 80% of their IRAD month on short-term investments intended to maintain near-term profitability, according to the report.  Only 20% went to long-range research investments meant to disrupt current technologies.  Those longer-term investments are the ones DoD has been telegraphing a need for since the middle of the Obama administration when the Pentagon shifted its focus to near-peer competitors like China and Russia.  One of the first big pushes for renewed radical innovation came from the Third Offset Strategy, headed by former Deputy Defense Secretary Bob Work, which sought to keep the United States technologically superior to its adversaries.

Keep reading this article at: https://federalnewsnetwork.com/dod-reporters-notebook-jared-serbu/2020/09/most-of-industrys-rd-spending-doesnt-match-dods-priorities-report-says/

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