	Introduction

The Department of Defense (DOD) has long relied on contractors to provide the U.S. military with a wide range of goods and services, including weapons, vehicles, food, uniforms, and operational support. Without contractor support, the United States would not be able to arm and field an effective fighting force. Costs and trends associated with contractor support provide Congress more information upon which to make budget decisions and weigh the relative costs and benefits of different force structures and different military operations—including contingency operations and maintaining bases around the world. Obligations occur when agencies enter into contracts, submit purchase orders, employ personnel, or otherwise legally commit to spending money. As noted in Figure 1 , in FY2017 DOD obligated more money on federal contracts ($320 billion) than all other federal agencies combined. DOD's obligations were equal to 8% of all federal spending. Trends in DOD Contract Obligations

From FY2000 to FY2017, adjusted for inflation (FY2017 dollars), DOD contract obligations increased from $189 billion to $320 billion. However, the increase in spending has not been steady. For example, DOD total obligation authority (including contracts as well as all other obligations) increased significantly from FY2000 to FY2008, and decreased from FY2008 to FY2015, and then increased again from FY2015-FY2017 (see Figure 3 ). What DOD Buys

In FY2017, 41% of total DOD contract obligations were for services, 51% for goods, and 8% for research and development (R&D). This is in contrast to the rest of the federal government (excluding DOD), which obligated a significantly larger portion of contracting dollars on services (71%) than on goods (21%) or research and development (8%). For almost 20 years, DOD has dedicated an ever-smaller share of contracting dollars to R&D, with such contracts dropping from 17% of total contract obligations in FY1999 to 8% in FY2017. Reliability of Data on Contract Obligations

The GAO, CRS, and other organizations have raised some concerns about the accuracy of procurement data retrieved from the Federal Procurement Data System (FPDS). Analysts and the public rely on the data in FPDS to conduct analysis and gain visibility into government operations. Data reliability is essential to the utility of FPDS. FPDS data are used by other federal-spending information resources, including USASpending.gov . Despite the limitations of FPDS, imperfect data may be better than no data. Some observers say that despite its shortcomings, FPDS is one of the world's leading systems for tracking government procurement data. FPDS data can be used to identify some broad trends and rough estimations, or to gather information about specific contracts. Understanding the limitations of data—knowing when, how, and to what extent to rely on data—could help policymakers incorporate FPDS data more effectively into their decisionmaking process.
The Department of Defense (DOD) has long relied on contractors to provide the U.S. military with a wide range of goods and services, including weapons, vehicles, food, uniforms, and operational support. Without contractor support, the United States would be currently unable to arm and field an effective fighting force. Costs and trends associated with contractor support provides Congress more information upon which to make budget decisions and weigh the relative costs and benefits of different military operations—including contingency operations and maintaining bases around the world.
Total DOD Contract Obligations
Obligations occur when agencies enter into contracts, employ personnel, or otherwise commit to spending money. The federal government tracks money obligated on federal contracts through a database called the Federal Procurement Data System-Next Generation (referred to as FPDS). There is no public database that tracks DOD contract outlays (money expended from the Treasury) as comprehensively as FPDS tracks obligations.
In FY2017, DOD obligated more money on federal contracts ($320 billion in current dollars) than all other government agencies combined. DOD's contract obligations were equal to 8% of all mandatory and discretionary federal spending. Services accounted for 41% of total DOD contract obligations, goods for 51%, and research and development (R&D) for 8%. This distribution is in contrast to the rest of the federal government, which obligated a larger portion of contracting dollars on services (71%), than on goods (21%) or research and development (8%).
According to FPDS data, from FY2000 to FY2017, DOD contract obligations increased from $189 billion to $320 billion (FY2017 dollars). The increase in spending, however, has not been steady. DOD contract obligations over the last 17 years were marked by an annualized increase of 11.5% between FY2000 and FY2008, followed by an annualized decrease of 6.5% from FY2008 to FY2015, and then increased again from FY2015 to FY2017 by 6.5% annually. Some say the steep rise, fall, and rise of DOD contract spending makes it difficult for DOD to pursue a strategic approach to budgeting.
For almost 20 years, DOD has dedicated an ever-smaller share of its contracting dollars to R&D, with such contracts dropping from 15% of total contract obligations in 2000, to 8% in 2017.
Understanding the Limitation of FPDS Data
Decisionmakers should be cautious when using obligation data from FPDS to develop policy or otherwise draw conclusions. In some cases, the data itself may not be reliable. In some instances, a query for particular data may return differing results, depending on the parameters and timing.
All data have imperfections and limitations. FPDS data can be used to identify broad trends and produce rough estimates, or to gather information about specific contracts. Some observers say that despite its shortcomings, FPDS data are substantially more comprehensive than what is available in most other countries in the world. Understanding the limitations of data—knowing when, how, and to what extent to rely on data—helps policymakers incorporate FPDS data more effectively into their decisionmaking process.
The General Services Administration (GSA) is undertaking a multi-year effort to improve the reliability, precision, retrieval, and utility of the information contained in FPDS and other federal government information systems. This effort, if successful, could significantly improve DOD's ability to engage in evidence- and data-based decisionmaking.