The Defense Department spent nearly $80 billion on supply chain technology from fiscal years 2014 to 2017 and most of the spending, $57.8 billion, went toward sustaining information technology (IT), according to a recent report by the strategic research and advisory firm Govini.
Annually, DoD is spending about $23 billion on supply chain technology with spending growing at an annual rate of 5.6 percent between FY ’14 and FY ’17, Govini says in DoD Supply Chain and The Fourth Industrial Revolution. 
In FY ’17, the largest sub-segments of supply chain technology spending were enterprise services, strategy and architecture, and software, accounting for $11.8 billion in total, with enterprise services making up $5.3 billion of the total followed by strategy and architecture with $3.9 billion. Yet these sub-segments are growing at lower rates than other areas, including modeling and simulation, which grew 42 percent annually during the three-year period, natural language processing (32 percent), supply chain enterprise resource planning (22 percent), and cloud deployment models (21 percent).
Although modeling and simulation is the fastest growing area, it accounted for just $421.1 million in obligations in FY ’17. Obligations for natural language processing amounted to $16.7 million.
“DoD is transitioning away from siloed logistics management solutions and toward software-based sensor-enabled supply chain ERP technology,” the report says. “These ERP solutions create connected systems that bring greater asset visibility and tracking capabilities to DoD.”
Spending on traditional logistics management solutions declined nearly 10 percent annually over the three-year period but still accounted for $602.7 million in obligations in FY ’17.
The largest vendor in the DoD supply chain technology market is Perspecta [PRSP], with most of its work in IT sustainment. Other key vendors in the market include Leidos [LDOS], Northrop Grumman [NOC], and General Dynamics [GD].
“These companies’ ability to work in the defense space in addition to their past performance has worked to their advantage in providing new solutions to the DoD,” Govini says. “They should not be complacent, however, as the significant size of the DoD supply chain technology segments and their relative fragmentation within the segments leaves ample opportunity for disruption and the entrance of new solutions providers.”
Other key players include CACI International [CACI], Science Applications International Corp. [SAIC], Insight Enterprises [NSIT], Accenture [ACN], Peraton, and more.
The report breaks down the supply chain technology space into five segments. Next to sustainment, the next largest segment is informatics with $3.1 billion obligated in FY ’17. Configurable systems, the third largest segment, tallied nearly $1.3 billion spent in FY ’17, followed by supply chain monitoring with $965 million and cognitive engineering, $664 million.