Department of Defense Contracting Trends

The Department of Defense is the largest federal contracting organization, accounting for approximately 60% of all federal contract spending. With an annual budget exceeding $800 billion and contract spending over $400 billion, DoD offers unparalleled opportunities for contractors.

DoD Structure: - Military Departments: Army, Navy, Air Force - Defense Agencies: DISA, DLA, DARPA, MDA, etc. - Combatant Commands: Geographic and functional commands - Fourth Estate: Support organizations

Acquisition Workforce: DoD employs over 180,000 acquisition professionals responsible for: - Requirements development - Contract management - Program management - Quality assurance

DoD contract spending breaks down across several major categories:

By Service: - Army: ~$150 billion annually - Navy/Marine Corps: ~$130 billion annually - Air Force: ~$80 billion annually - Defense Agencies: ~$60 billion annually

By Category: - Products (supplies, equipment): ~55% - Services (R&D, professional): ~45%

Top NAICS Codes: 1. 541512 - Computer Systems Design 2. 541330 - Engineering Services 3. 541715 - R&D Physical Sciences 4. 561210 - Facilities Support 5. 336411 - Aircraft Manufacturing

Small Business Performance: DoD awards approximately 25% of contract dollars to small business, exceeding the 23% goal in most years.

DoD priorities for the current budget cycle include:

JADC2 - Joint All-Domain Command and Control Connecting sensors to shooters across all domains: - Data integration and sharing - Artificial intelligence for decision support - Secure communications - Cloud and edge computing

Cybersecurity Protecting the defense industrial base: - CMMC implementation - Zero trust architecture - Supply chain security - Threat hunting and response

Modernization Updating legacy systems and capabilities: - IT infrastructure modernization - Weapon system sustainment - Business systems transformation - Cloud migration

Emerging Technologies Investment in next-generation capabilities: - Hypersonic systems - Space capabilities - Autonomous systems - Quantum computing

DoD utilizes numerous contract vehicles for procurement:

Government-Wide: - GSA Schedules - Commercial products and services - Alliant 2/3 - IT services ($50B ceiling) - OASIS+ - Professional services - SEWP V - IT products (NASA-hosted)

DoD-Specific: - NETCENTS-2/3 - Air Force networking - SeaPort-NxG - Navy services - RS3 - Army IT services - ITES-3H/3S - Army IT hardware/services

Small Business: - 8(a) STARS III - SBA 8(a) IT GWAC - VETS 2 - Veteran-owned IT GWAC - Mentor-Protégé Joint Ventures

Getting on Contract: Most vehicles require competitive on-ramping. Success factors: - Strong past performance - Technical capabilities - Competitive pricing - Relevant certifications

The Cybersecurity Maturity Model Certification (CMMC) is transforming DoD contracting requirements.

CMMC 2.0 Levels: - Level 1: Basic safeguarding (17 practices) - Level 2: Advanced (110 practices, aligned to NIST 800-171) - Level 3: Expert (130+ practices)

Implementation Timeline: - Phased implementation beginning 2024-2025 - All covered contracts requiring CMMC by 2028 - Third-party assessments required for Level 2+

Compliance Requirements: - Self-attestation for Level 1 - Third-party certification for Level 2 (most contracts) - Government assessment for Level 3

Business Impact: - Estimated $5K-$50K for small business compliance - 6-12 month preparation timeline typical - Ongoing maintenance and reassessment required

Getting Started: 1. Identify your likely CMMC level requirement 2. Conduct gap assessment against NIST 800-171 3. Develop Plan of Action & Milestones (POA&M) 4. Implement controls and document compliance 5. Engage certified assessor when ready

Key opportunity areas for DoD contractors:

High-Growth Areas: - Cybersecurity services and solutions - Cloud migration and management - AI/ML development and integration - Data analytics and management - Software development (DevSecOps)

Small Business Focus: - 8(a) and SDVOSB set-asides - Subcontracting with large primes - Mentor-protégé programs - Small business innovation research (SBIR/STTR)

Geographic Hotspots: - National Capital Region (DC/VA/MD) - San Diego (Navy) - Huntsville, AL (Army, MDA) - Colorado Springs (Space, NORTHCOM) - San Antonio (Air Force, NSA)

Winning Strategies: 1. Build cleared workforce capacity 2. Invest in CMMC compliance early 3. Develop relationships with Program Offices 4. Position on relevant contract vehicles 5. Build past performance methodically