To help U.S. defense contractors navigate the ever-shifting global defense landscape, Forecast International Senior North America Analyst Shaun McDougall broke down the top three buying trends shaping the future of the defense market.
- Russia-Ukraine Conflict
The U.S. has provided over $18.2 billion in aid to Ukraine since the start of the Russia-Ukraine conflict. U.S. assistance to Ukraine has taken the form of weapon systems such as Javelins, Howitzers, and Stinger missiles as well as counter-artillery radars. This Ukraine assistance spending has driven new procurement programs over the last few months, specifically for artillery munitions. Additionally, to help Ukraine secure its airspace, the U.S. is expanding the scope of weapons going to Ukraine to include air missile systems.
Military leaders are also discussing the possibility of new multiyear contracts for missiles. Typically reserved for larger systems like aircraft and ships, these contracts could provide supply chain stability and reduce costs for high-demand systems that need to be replenished after providing aid to Ukraine.
- Defense Budget Proposals
The latest defense budget recommendations from congressional authorizations and appropriations committees will have a noticeable impact on upcoming procurement programs, with a sizable increase to the defense budget of up to $45 billion recommended for FY23. Three out of four committees are seeking big increases in both procurement and RDT&E programs. The funding recommendations from both defense committees (HASC and SASC) most notably favor aircraft and shipbuilding across the U.S. armed services, army vehicles, and defense-wide research and development programs.
For more, see our latest breakdown on how FY23 defense legislation will impact DoD acquisition programs here.
- Electric Vehicle Procurement
As electric vehicles take up more space in federal, state, and local contracting markets, it’s no surprise to see them on the rise in the U.S. defense contracting space as well. Multiple military branches are currently interested in electric vehicle technology for use on bases as well as in tactical vehicles.
Combat vehicle manufacturers are looking at adding EV technology to heavier vehicles as well, which would provide benefits like silent operation and a shortened logistics tail, with no need to get fuel to the battlefield for vehicle operation.
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