U.S. DoD: Get to know the U.S. Department of Defense
The definitive guide to need-to-know facts, figures and strategies for Canadian-based U.S. DoD Contractors.
U.S. DoD contracts are awarded regularly to Canadian companies that take the time to learn about the Department, how to work with the U.S. military, and how to use the help available to them to navigate the U.S. government procurement process.
This article will guide you through everything you need to know about the size and scale of the opportunities available to Canadian-based U.S. DoD contractors. You’ll also learn how the public procurement process works and how you can leverage it to help grow your business.
U.S. DoD Structure
The Department of Defense (DoD) is the United States’ largest government agency and the largest employer in the world, with a current annual budget of $740.5 billion, supporting 2.91 million service members and civilians spread across 4,800 sites in over 160 countries. In essence, the U.S. DoD is the world’s largest “company”, representing a huge opportunity for both domestic and international contractors of all types.
U.S. DoD Leadership
The Secretary of the Department of Defense (DoD) reports directly to the President (Commander in Chief) and heads up the military and each of its branches. Along with the Department of Homeland Security, the Department of Defense is an executive department of the United States Armed Forces.
Within the U.S. DoD, there are three military departments—the Department of the Army, the Department of the Navy, and the Department of the Air Force—each of which have their own military service branches. There are also four national intelligence agencies that report to the U.S. DoD: the Defense Intelligence Agency (DIA), the National Security Agency (NSA), the National Geospatial-Intelligence Agency (NGA), and the National Reconnaissance Office (NRO).
The U.S. DoD organizational structure also consists of a Joint Chiefs of Staff (JCS), which is a group of senior uniformed leaders who advise the Secretary of Defense, the Homeland Security Council, the National Security Council, and the President on military matters. The JCS is composed of a Chairman, Vice Chairman, Senior Enlisted Advisor to the Chairman, and the Chief of National Guard Bureau as well as Military Service Chiefs from the Army, Marine Corps, Navy, Air Force, and Space Force.
Branches of the U.S. Military
The U.S. DoD controls five of the six branches of the military—Air Force, Army, Marine Corps, Navy and Space Force—with the Coast Guard reporting into the Department of Homeland Security.
Together, the Army, Marine Corps, Navy, Air Force, Space Force, and Coast Guard make up the United States Armed Forces. There are also reserve components—the Army National Guard and the Air National Guard—that operate in part under state authority. Here’s a brief description of the six U.S. military branches:
U.S. Army
The oldest service in the military, the Army is the land service branch of the United States Armed Forces, providing ground forces to protect the United States and its global allies. It also protects U.S. installations and properties around the world. Additionally, each U.S. state has its own Army National Guard, which is in fact a requirement of the U.S. Constitution (making it unique in this regard).
U.S. Marine Corps
The Marine Corps or U.S. Marines is the maritime land force service branch of the United States Armed Forces, and is often the first branch deployed on the ground in combat. They are trained for both land and sea combat, with their own infantry, armor, artillery, aerial, and special operations forces.
U.S. Navy
The maritime services branch of the United States Armed Forces, the U.S. Navy conducts missions primarily by sea but also by air and land. By far the most powerful navy in the world, its core mission is to secure and protect the world’s oceans to foster safety for travel and trade.
U.S. Air Force
The United States Air Force (USAF) is the air service branch of the United States Armed Forces, operating planes, helicopters, and satellites. Its mission is to defend the United States in the air, space, and cyberspace. In addition, the Air National Guard acts as a separate reserve component of the USAF.
U.S. Space Force
The newest branch of the military and sister-branch to the U.S. Air Force, the U.S. Space Force organizes, trains, and equips space forces with a view to protecting the interests of the U.S. and its allies in space.
U.S. Coast Guard
The United States Coast Guard (USCG) is the maritime security, search and rescue, and law enforcement service branch of the U.S. Armed Forces. Unlike the other five military branches, USCG operates under the Department of Homeland Security. Both a humanitarian and a security service, the Coast Guard has jurisdiction in both domestic and international waters to conduct rescue operations, law enforcement, and drug prevention as well as clear waterways.
Unified Combatant Commands
Lastly, the U.S. DoD has 11 Unified Combatant Commands that include units from two or more service branches of the U.S. Armed Forces. These joint military commands conduct broad and continuous missions and are organized either geographically or functionally:
- Africa Command
- Central Command
- Cyber Command
- European Command
- Indo-Pacific Command
- Northern Command
- Southern Command
- Space Command
- Special Operations Command
- Strategic Command
- Transportation Command
U.S. Defense Budget
U.S. Military Budget Per Year
U.S. military spending grew 4.4% in 2020 to an estimated $778 billion USD, according to data published by the Stockholm International Peace Research Institute (SIPRI). For context, this accounted for a remarkable 39% of the almost $2 trillion USD in global military spending in 2020. In fact, the U.S. spent more on the military in 2020 than the next 11 top spending countries combined. To further put U.S. military spending into context, there were only 17 other countries in the world whose total Gross Domestic Product (GDP) surpassed U.S. military spending in 2020.
Total Defence Spending by Country, 2020, $USD:
- United States: $778.2B
- China: $252.3B
- India: $72.9B
- Russia: $61.7B
- United Kingdom: $59.2B
- Saudi Arabia: $57.5B
- Germany: $52.8B
- France: $52.7B
- Japan: $49.1B
- South Korea: $45.7B
- Italy: $28.9B
- Australia: $27.5B
- Canada: $22.8B
- Israel: $21.7B
Source: https://sipri.org/sites/default/files/SIPRI-Milex-data-1949-2020_0.xlsx
U.S. Military Spending as a Percentage of GDP
When it comes to military spending as a percentage of GDP, no other G7 country came close to the United States, who in 2020, spent an eye-popping 3.7% of their ~$21 trillion GDP on defence, according to SIPRI. Having said that, total U.S. defence spending is currently below its historical average as a share of GDP and, as a percentage, is projected to decline further:
- United States: $3.7%
- United Kingdom: $2.2%
- France: 2.1%
- Italy: 1.6%
- Canada: 1.4%
- Germany: 1.4%
- Japan: 1.0%
(U.S. Defense Budget by Year as a % of GDP)
Source: https://www.pgpf.org/budget-basics/budget-explainer-national-defense
U.S. Military Spending Facts
In summary, here are 10 key U.S. military spending statistics demonstrating the scale of the opportunity available to domestic and foreign contractors selling into the U.S. DoD:
- The U.S. spent an estimated $778 billion USD on defence in 2020
- Defence accounts for more than 10% of all federal spending in the U.S.
- Defence is the single largest category of discretionary spending in the U.S., dwarfing healthcare which is in second place
- In 2020, the U.S. accounted for 39% of the almost $2 trillion USD in military expenditures worldwide
- The U.S. spends more on defense than the next 11 countries combined
- In 2020, the U.S. spent more than 12 times what Russia did on the military
- As a percentage of GDP, the U.S. consistently spends significantly more on defence than its G7 allies
- U.S. military spending equaled more than the entire estimated GDP of Saudi Arabia in 2020
- U.S. military spending has grown consistently over the last four years, despite significant troop withdrawals and the financial pressures of a global pandemic
- U.S. DoD contract obligations grew to $421.3 billion in 2020 (more on that below)
Source: https://www.pgpf.org/infographic/infographic-the-facts-about-us-defense-spending
U.S. DoD Contract Obligations
The U.S. DoD spends billions of dollars on contracts with domestic and foreign suppliers every year. There is a common misconception that the department only issues contracts to large companies in defence and closely adjacent sectors, but nothing could be further from the truth.
Before getting into the breadth of what the U.S. military is acquiring through contractors, let’s have a look at the sheer scale of the opportunity available to savvy businesses seeking to grow exports via U.S. DoD contracts.
The annual amount spent on U.S. DoD contacts has steadily increased since 2015 and, in 2020, skyrocketed to $421.3 billion—a dramatic 41% increase over the previous year. This increase coincided with a surge in product spending and traditional contracts being partially displaced by a spike in Other Transaction Authority (OTA) agreements as a means of conducting research and development. Also of note in 2020, U.S. DoD contracting obligations rose to nearly 58% of the total defence budget—the highest share devoted to contracts in two decades.
U.S. DoD Contract Opportunities for Non-Defence Companies
Having established how much the U.S. DoD is spending annually on contract obligations, it is important for would-be contractors to understand where that money is being spent and where the greatest opportunities exist.
While the top spending categories are in defence-adjacent areas such as armored vehicle, tank, and aircraft manufacturing as well as navigation and nautical systems, there are billions of dollars spent every year on a wide variety of non-military goods:
- Food
- Medical/Pharmaceutical Equipment
- Clothing and Footwear
- Construction Supplies and Heavy Equipment
- Office Furniture
- Software Technology
- Artificial Intelligence and Biotechnology
- Telecommunications and Internet of Things (IoT) Solutions
- Environmental Consulting Services
- …and much more
You Don’t Have to Be a Defence Company to Sell to the U.S. DoD
Even if your business isn’t directly involved in the defence sector, there is still a huge opportunity to grow your exports by selling to the U.S. DoD. Read our recent article to learn how the world’s largest ‘company’ is a buyer of virtually everything, from construction to surgical equipment and everything in between.
U.S. DoD Contract Opportunities for Canadian Firms
Just as the U.S. DoD contracts extensively with non-defence companies, so too does it award contracts to non-U.S. suppliers, including those based in Canada. Existing agreements give Canadian companies almost full access to U.S. military procurement opportunities. In fact, defence export sales to the U.S. from Canada reach $2.6 billion in 2018.
Again, while the top-spending areas were the usual defence-specific categories one might expect, a significant percentage of contracts awarded to Canadian companies spanned the gamut of non-military supplies, from medical and wireless communications equipment to computer-related services and monorail systems.
The future looks just as bright for Canadian companies looking to sell into the U.S. DoD, with spending likely to increase in the coming years in both traditional and non-traditional categories. Constantly looking to broaden its North American supply base, the U.S DoD is always looking for reliable Canadian companies with which to contract. Many Canadian companies may not even know that the product or service they offer is sought-after by the U.S. DoD—think shoe stores, vehicle part manufacturers, software publishers, office furniture manufacturers, and more. But how do you know whom to sell to, what they’re looking for, and how to give your firm the best chance of winning the bid? …
U.S. DoD Public Procurement Process
Because U.S. DoD procurement is complex and decentralized (for starters, there are 22 different procurement organizations), it can be daunting for companies new to the process to get started. Understanding the basics is a good first step to help ensure that your interactions with the U.S. military go as smoothly as possible.
U.S. procurement authority for the military is managed by the Department of Defense. The Defense Logistics Agency (DLA) manages the global supply chain—from raw materials to end user to disposition—for the Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard, 11 combatant commands, other federal agencies, and partner and allied nations.
From there, each individual armed service executes its own defence procurement and is supported by distinct procurement offices. In turn, each of these offices has a number of sub organizations that handle specific types of procurement.
Here are some of the key offices Canadian contractors should be aware of, including links to each U.S procurement website:
- U.S. Army Procurement
The Office of the Assistant Secretary of the Army for Acquisition, Logistics and Technology - U.S. Navy Procurement
The Office of the Assistant Secretary of the Navy for Research, Development and Acquisition (including the U.S. Marine Corps) - U.S. Air Force Procurement
The Office of the Assistant Secretary of the Air Force - U.S. Coast Guard Procurement
United States Coast Guard Acquisition Directorate
Would-be contractors not directly involved in defence should also get acquainted with DLA Troop Support, the disposition service responsible for providing non-military supplies and services including food, clothing, fuel, medical supplies, construction supplies, repair parts, and more.
U.S. Military Procurement Regulations
Broadly speaking, the Federal Acquisition Regulations (FAR) govern U.S. Government purchases. The U.S. DoD also has supplemental regulations known as the Defense Federal Acquisition Regulation Supplement (DFARS). These specific regulations are based upon U.S. DoD policy and/or U.S. law. To gain a better understanding of the DFARS, it’s a good idea to familiarize yourself with the complementary Procedures, Guidance, and Information (PGI).
U.S. Military Procurement: Untangling DFARS and Other Secrets of Selling to the U.S. DoD from Canada
Need to get up to speed on the basic mechanisms of the Canada-U.S. Defense Production Sharing Agreement (DPSA) and the laws and regulations governing U.S. DoD purchases in the Defense Federal Acquisition Regulation Supplement (DFARS)? Read our recent article to demystify the different elements of the procurement ecosystems as well as other secrets to selling to the U.S. DoD.
U.S. Military Procurement Advantages for Canadian Firms
There are a number of factors that make Canadian businesses especially well-positioned to sell to the U.S DoD, not least of which is the Canada-U.S. Defence Production Sharing Agreement (DPSA), which gives Canadian companies almost full access to U.S. military procurement opportunities.
In effect, the DPSA levels the playing field by waiving the Buy America Act and putting Canadian firms on equal footing with those based in the U.S. In addition, Canadian firms enjoy duty-free entry of their supplies and do not normally require export permits, which can quicken the process significantly.
Selling to the U.S. DoD is a powerful way for Canadian companies of all types and sizes to elevate their business. Learn how to take advantage of this huge opportunity with CCC’s step-by-step guide.
U.S. DoD Contracts: How CCC Can Help You Win the Bid
For over 65 years, the Canadian Commercial Corporation (CCC) has worked closely with the U.S. DoD to strengthen the North American defence industrial base and to meet the needs of the U.S. military. CCC is embedded in the U.S. DFARS regulations 225.870 to act as the prime contractor for all contracts awarded over USD $250,000. This gives Canadian firms almost unlimited access to the world’s largest military procurement market.
Of course the first step and half the battle is finding the right opportunity to bid on, and the CCC covers that as well: The Global Bid Opportunity Finder (GBOF) gives instant access to hundreds of thousands of opportunities on a single web platform.
Once the right opportunity to bid on is found, the CCC can serve as an ally in levelling the playing field by:
- Helping to navigate the procurement process and solicitation documents
- Endorsing proposals to the U.S. DoD
- Certifying prices to the U.S. DoD as fair and reasonable
- Advocating on Canadian companies’ behalf with U.S. government officials
- Providing contract administration and oversight
U.S. Defence Procurement: How Canadian Businesses Can Get “Bid-Ready”
When it comes to making Canadian contractor interactions with the U.S. DoD as smooth as possible, it’s all about the details. Read our recent article to discover the 6 key steps Canadian businesses need to take to get “bid-ready” for U.S. DoD procurements.
Resources
The CCA’s U.S. DoD Prime Contractor Program makes it easier for small businesses to do business with the U.S. DoD, by helping Canadian suppliers to navigate the procurement process and leverage the unique advantages afforded to Canadian firms under the DPSA and DFARS. Learn more about CCC.
For guidance on preparing a bid or proposal, download our eBook Seizing Opportunity: Developing a Winning Proposal for practical guidance.
If you’re ready to submit a bid or you’re preparing a proposal, you can book a 30-minute consultation via email with a CCC contract manager to ensure your proposal meets the criteria.
This post was last updated on April 30, 2022.
If you’re looking to grow your exports to the United States, the U.S. Department of Defense (DoD) could be a big source of opportunity — even if your business isn’t directly involved in the defence sector.
Find out how to go about seizing US DoD defence opportunities. The first step is to get up to speed on some of the basic mechanisms of the Canada-U.S. Defense Production Sharing Agreement (DPSA).
Let us help you explore ways that the Government of Canada can help you win more international deals.
