Every year, the Pentagon engages in thousands (maybe even millions) of contracts, from the smallest items (hardware, pens and pencils, rubber bands) to the largest (shipbuilding). We often hear the phrase “defense contractor” or “defense contracting” thrown around, but what is a defense contract?

The Pentagon is an important player in the government procurement sector and awards millions in government procurement annually. Understanding the DoD's procurement processes can prove useful, as contractors have many opportunities to secure lucrative DoD contracts. This article provides a comprehensive overview of all of the essential aspects of obtaining a defense contract.

Let’s take a look at government contracts and how federal agencies, namely the DoD, use them. 

What is the Department of Defense (DoD)?

First and foremost, what exactly is the Department of Defense, and how do they conduct defense contracts?

The DoD is an executive branch department of the federal government. Between active-duty military personnel, National Guard and reservists, and civilians, it numbers around three million total personnel. 

Every year, the DoD obligates more money than the rest of the federal government combined. In FY2020, that amounted to $420 billion, so almost half a trillion. 

Thousands of defense contractors are filling all kinds of roles in the DoD, and their hiring falls under the umbrella of military contracts. 

How Does the Pentagon Monitor Its Contracts and Contractors?

A study by the Congress Research Service says the Pentagon has started hiring contractors in recent years. This is probably the understatement of the century for those of us who have spent years around the DoD. In fact, as PBS reported a couple of years back, around $14 trillion has been spent on contractors since the beginning of the century.  

It is not clear whether that is good or bad news. In terms of benefits, hiring contractors allows the Department to hire personnel for specific military activities, bring experts into fields such as linguistics, and provide support staff quickly without a lot of the typical red tape associated with hiring civil servants. The negative side is that the unregulated use of contractors may result in weak military operations, unauthorized funding, and overspending. But like it or not, the Global War on Terror era proved that the age of the defense contractor is here and likely here to stay. 

How much does the Department of Defense spend on contracts?

Defense spends the most money on acquiring contracts. The Pentagon spent almost half a trillion dollars in Fiscal Year 2020, more than the rest of the federal government combined. While it is clear that the Department of Defense is a costly organization, and the armed forces definitely run on diesel and money, oversight is an extremely important part of the contract management process. 

Every branch of the Department of Defense is allocated budgets going into the fiscal year, and then they break down the budget to every tier of the organization. For an organization as large as the Army, this is tens of thousands, or maybe even hundreds of thousands, of different individual departmental budgets. 

There is an obligation to monitor every contract at all levels of military contracting for this exact reason: the Department of the Army level contracting cannot keep tabs on contracts at such minute levels of the organization (there are organizations in the Army with only a handful of members). Contract officers at all levels of the Department of Defense are tasked with monitoring every agreement.   

DoD Contracts for Small Business

While it seems like the huge mega-contractors such as Boeing, Lockheed-Martin, and Northrop-Grumman get the lion’s share of contracts (they do, at around 54%), that still leaves around $225 billion per year up for grabs. A lot of that money will end up going to local contracting, i.e., small businesses. There is especially money to be had in niches.

Small businesses need to know some key information about DoD contracts before they begin trying to win them. 

  1. DoD contracts are typically awarded through a competitive bidding process. This means that small businesses need to be prepared to compete against other businesses for DoD contracts.
  2. DoD contracts can be complex and require high compliance. Small businesses need to be aware of the specific requirements of DoD contracts to succeed in bidding on and fulfilling them.
  3. DoD contracts provide a lot of benefits to small businesses, including access to capital, new markets, and technical assistance. Small businesses that are interested in DoD contracts should contact the DoD Small Business Programs Office for more information. 

The DoD Small Business Programs Office can provide small businesses with information about DoD contracting opportunities and assistance with the bidding process and contract compliance. However, a faster and more direct method of acquiring federal contracts for the Department of Defense is working with Greenwood Aerospace. 

The Role of Contracting Officers in Awarding Contracts

The contractor's role consists of coordinating and performing DoD contracts. Contracting officers are required to be well-versed in all types of DoD contracting. The contractor negotiates pricing, conditions, and services to ensure the goods provided are economical and timely. The contractor also must verify that it meets the required requirements and regulations. 

A DoD Contracting Officer aims to ensure that both parties have interests in place and maintain national security.

Contracting officers have a few specific responsibilities:

  • Developing and issuing solicitations for bids or proposals
  • Evaluating bids and proposals and making recommendations for award
  • Negotiating contracts with successful bidders or offerors
  • Administering contracts and ensuring that they are performed in accordance with their terms and conditions
  • Terminating contracts for cause 

Process of Awarding a DoD Contract

A DoD contract can be awarded by soliciting bids from potential contractors. After considering the applications, the department will choose the best contractor from among all the applicants. 

The DoD also considers potential contractors to be disadvantaged businesses and prioritizes them when choosing the winner. Additionally, the DoD provides small business set-aside contract services to various disadvantaged groups. One of the equalizing factors is HUBZone, of which Greenwood Aerospace is proudly a member. 

DoD Contracts for Disadvantaged Businesses

Disadvantaged businesses make up a major part of DoD contracts. These companies run by minorities are often able to get more funding than traditional prime contractors. DoD assists disadvantaged companies by establishing special contracts, which helps to facilitate competitive bids. Disabled businesses can also be contacted for priority review to get a contract, ensuring they have all the necessary resources to complete the job effectively. Greenwood Aerospace is a HUBZone-certified company, allowing us to earn contracts that might otherwise not be available to a company of our size and location. 

Parting Thoughts

Government contracts are often hard to land, and a lot of red tape is involved. Greenwood Aerospace is here to help you navigate the maze of finding RFPs, making bids, and executing those when awarded. 

We are here to handle the administrative side of this, navigating the tangled web of government procurement. Want to know more? Call us, and one of our trusted agents will review our services with you. Or you can start an online quote right now!