Existing federal data can identify subcontractors in the defense supply base, their socioeconomic status, and the vulnerability of contractors and subcontractors to environmental risks and changes in their federal prime and subcontract revenue.

The presence of a technologically superior defense industrial base has been a foundation of U.S. strategy since 1945. While the implementation of the budget cuts in the Budget Control Act of 2011 has caused concerns for the industrial base, the resulting debate has been lacking in empirical analysis. The purpose of this research is to measure the impact of the current defense drawdown across all the tiers of the industrial base. This report analyzes prime and subprime Defense Department contract data to measures the impacts of the drawdown by sector to better understand how prime and subprime contractors have responded to this external market shock.

This report is the second in an annual series examining trends in what the U.S. Department of Defense (DoD) is buying, how DoD is buying it, and from whom DoD is buying. This year’s study looks in depth at issues in research and development, acquisition reform in the FY2017 National Defense Authorization Act (NDAA), performance of the defense acquisition system, the future of cooperative International Joint Development Programs, and major trends apparent in the activities of the major defense components. By combining detailed policy and data analysis, the study provides a comprehensive overview of the current and future outlook for defense acquisition.

"In the conference report accompanying the National Defense Authorization Act for Fiscal Year 2017, Congress expressed concern that the U.S. Department of Defense (DoD) "does not sufficiently incorporate data into its acquisition-related learning and decision-making" and asked six questions about "the use of data analysis, measurement, and other evaluation-related methods in DoD acquisition programs." In this report, the authors decompose and measure acquisition functions, data governance, and training to assess how data and associated analytics support DoD acquisition decision making. The authors found that the DoD is applying a breadth of data analytics to acquisition. Capabilities range from simple data archives and plotting to archives integrated with commercial analytic tools. The DoD has implemented an array of data governance and management practices, but major challenges remain, including a culture against data sharing and concerns about security and oversight burden. Some commercial breakthroughs in advanced analytics sound promising for DoD acquisition, but some might not be applicable; research is ongoing. Advancement should include developing a data analytics strategy across acquisition domains, expanding data governance and data sharing, and continuing to expand and mature data collection, access, and analytic layers. Also, mechanisms are needed to authorize and ensure protected access to data for both the DoD and external analysts. Improved incentives and understanding of data analytics could encourage decision makers to make better use of capabilities" -- Publisher's description.

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.

Traditional contracting is primarily transactional, rewarding contractors when deliveries are made or certain process milestones are met. Performance-Based Logistic (PBL) contracting seeks to base contractor incentives on ongoing performance measures to achieve reliability and cost savings. Key to the success of these arrangements are the incentives that align the interests of the customer and the vendor. This report describes the incentives used in PBL contracts, identifies best practices, and provides recommendations for effective incentives going forward. The study team interviewed PBL practitioners including defense-unique contractors, defense-commercial contractors, and experts who are knowledgeable in the government perspective in the United States and abroad. The team supplemented these interviews by analyzing a PBL dataset of U.S. Department of Defense contracts. Of the four identified categories of incentives—time-based, financial, scope, and other—interviews found that time-based incentives stood out for their reliable appeal and relative underuse in the United States.