The Air Force and Army saw the biggest decreases in contract obligations between FY ‘12 and FY ‘13 while the decrease at the Navy was relatively minor, says a May 12 report by the Center for Strategic and International Studies (CSIS) that shows that overall the budget sequestration that was in effect part of last year and into early 2014 did have a large impact on defense spending. Pentagon_anddowntown_

“The impact of sequestration on DoD contract obligations has been as large as many observers had predicted, if not larger,” said the preliminary report by Jesse Ellman, a research associate with the CSIS National Security Program on Industry and Resources.

Air Force contract obligations fell 22 percent to $55 billion and Army obligations 21 percent to $87 million from 2012 to 2013, the CSIS report said. Navy contract obligations dipped just 2 percent to $94 billion, it added.

Overall, defense contract obligations declined by 16 percent to $314 billion, the steepest annual decline during the period beginning in 2000, Ellman said.

Ellman also examined obligations by product, research and development (R&D), and service categories, finding that R&D suffered the most in 2013, down 21 percent to $28 billion. Contract obligations for services were down 14 percent to $133 billion while products took at 17 percent hit, down to $147 billion.

“Unsurprisingly, the cuts have been particularly harsh for R&D, which analysts and policy makers predicted would shoulder a disproportionate share of the cuts under sequestration,” Ellman said, adding that the decline in services wasn’t as much as “some had predicted.”

Ellman’s analysis is a first look at the impact of sequestration on DoD contract obligations with additional analysis expected on the “root causes” of the highlighted trends.  The data for the research is drawn from the Federal Procurement Data System and Ellman said it allows for hard look at the impact of sequestration on defense spending.