The new $842bn budget request made by The Pentagon a few weeks ago is ‘first and foremost about procurement’, Deputy Defense Secretary Kathleen H. Hicks said.
It marks a shift from the Biden administration’s first two budget requests, which prioritized R&D. This time, however, weapons purchases make up a little over 19% of Department of Defense’s 2024 budget request, the highest share so far since President Biden was elected.
What Weapons Does The Pentagon Want to Buy?
The Pentagon is asking Congress for $30.6 billion in fiscal 2024 for munitions, an increase of $5.8 billion from the fiscal 2023 request, including billions of dollars for ammunition, tactical and strategic missiles, along with technology development.
Additionally, $29.8 billion have been requested for “missile defeat and defense”; $11 billion for hypersonic and long-range subsonic missiles; the largest space budget ever at $33.3 billion; $13.5 billion in cyberspace activities; and $9.1 billion for the Pacific Deterrence Initiative.
How Does DoD’s New Approach to Procurement Benefit Weapons Manufacturers?
The Department of Defense is looking to expand its capacity to signal the industry that the Pentagon is in this for the long term. The suppliers want predictability, they need to see what a five-year plan will look like, and they want contracts in place.
Speaking of contracts, this is the first time that the DoD is asking Congress to fund multi-year purchases of missiles and ammunition, instead of placing orders annually.
The Pentagon uses multiyear contracts for aircraft and ship programs to ensure a steady flow of production. Applying such best practice to munitions would give industry a better idea of how much DoD plans to buy. This will enable defense suppliers to make more accurate predictions for their pipeline and supply chain needs.
As we know, defense suppliers such as Lockheed Martin, Boeing, and Raytheon - for which 12+ years of historical contract awards data is available by TenderAlpha - tend to supply governments for long periods of time, thus enjoying a relatively high cash flow predictability, which, in turn, facilitates their internal planning with regards to supply chain expenditures.
This is just one reason why it is worth tracking prominent defense suppliers’ performance and using this information as an indicator of their future operations’ success.
Why Does Monitoring Public Procurement of Weapons Matter?
Weapons makers have said it would take years to build new missiles to replace those given to Ukraine because of supply chain constraints or production line limitations. Therefore, it becomes ever more important to keep a close eye on the public procurement of weapons as it is likely to involve high-value contracts.
The detailed information for these contracts will benefit various stakeholders. For example, investors could get timely information of new contract awards to some of the largest publicly-listed defense suppliers as it has been proved that contract awards have an impact on stock price.
Subcontractors can also find new business opportunities as they get access to valuable intelligence about specific contract awardees and the nature of products and services they will deliver.
How Can Defense Contracts Data Help You Achieve Your Business Goals?
Having in mind that many of the top defense contractors are heavily dependent on public procurement awards, with 50% to 99% of their revenue coming from government contracts, it becomes ever more necessary to monitor public procurement spending data, as it gives a good idea of the financial health of the largest government suppliers in the defense sector.
TenderAlpha’s government contracts data adds value as it enables powerful analytics shedding light on companies’ public procurement performance and how it has reflected their financial results and stock price in the past 12+ years.
In addition, our Defense News Feed complements the public procurement data with timely news articles about recently awarded defense and military contracts that are often reported in the media before they appear in official government documents.
To learn more about the opportunities TenderAlpha’s data can open up for you, get in touch now.