The national defense ecosystem: context, challenges and opportunities

Abstract

The US Defense sector is a behemoth. It comprises a variety of stakeholders: from the large, publicly traded defense contractors and their suppliers, to numerous firms involved in providing business services, governmental committees and regulatory agencies engaged in guidance, supervision and oversight, and various entities in between. The Defense Acquisition Handbook classifies the entities involved in the acquisition process as follows: end users or operators, depots, acquisition commands, test communities, manpower, personnel and training communities, maintainers and suppliers. At the center of this intricate web is the US Department of Defense (henceforth referred to as DOD), which sets the agenda for defense spending and growth. The DOD conducts its business from over half a million facilities at approximately 4800 sites encompassing close to 25 million acres. It is the nation’s largest employer and largest healthcare provider, with over 1.4 million active duty personnel and 1.1 million reservists, and has a budget of over half a trillion dollars for fiscal 2018 (Amadeo, 2018). The scope and involvement of private sector companies in the defense sector is equally profound. In 2016, for example, the top 100 aerospace & defense (A&D) companies accounted for $709 billion in revenue, resulting in $69 billion in profits. In 2018, industry revenues reached $729 billion, with an operating profit of $81 billion, surpassing previous records set in 2014 and 2017 respectively (PriceWaterhouseCoopers, 2017, 2018). The United States spends more on its defense budget than China, Saudi Arabia, Russia, the United Kingdom, India, France and Japan combined (Peterson Foundation, 2017). Since 2013, the DOD has accounted for nearly 20 percent of total federal spending. For 2019, Congress allocated $693 billion to the DOD. This budget pays for the salaries, training and healthcare of uniformed and civilian personnel, development and procurement of material and facilities, operations and maintenance of the full spectrum of military activi-