Procurement: Why The Troops Get More Money

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April 8, 2007: While technology makes for sexy news stories, more of the U.S. defense budget has been going into the pockets of the soldiers, rather than defense contractors, over the last decade. This, despite big increases for new hardware and technology to support the fighting in Iraq and Afghanistan.

Procurement took a tumble when the Cold War ended in 1991. This was expected, although the decrease was not as sharp as many had wanted. In 1990, the U.S. Department of Defense was spending about $80 billion a year on procurement, about the same amount it was paying the troops. Although the head count in the armed forces declined by about a third during the 1990s, personnel spending declined only half as much. That's because the troops got raises. This was necessary to keep the ranks filled, because the all-volunteer force had to compete with civilian job offers. Money mattered, still does. The 1990s were particularly tough for recruiters, because the economy was booming.

At the same time, procurement spending tanked, falling by nearly fifty percent. It recovered a bit in the late 1990s, when it was realized that Cold War era equipment was eventually going to wear out. In 2001, procurement spending had recovered to about $60 billion a year, while personnel spending had gone back up to nearly $80 billion.

Then came September 11, 2001, and the war on terror. Although the armed forces remained the same size, personnel spending began go way up. This was because reservists were put on active duty, and a lot of troops were getting combat and hazardous duty pay. Another significant cost was health care for over 25,000 troops wounded or injured in the combat zone. Currently, personnel spending is about $130 billion a year, while procurement is about $105 billion a year.

The generals and admirals know, and understand, that it's the high quality, well trained troops that make all the difference. All the technology in the world won't help you much if the stuff is being used by a bunch of low-quality, poorly trained, troops. So far, the money has been going where it will do the most good.

 


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