Research Report | February 26, 2023

Average Prices at the DLA Increase More than 10%

Prices paid by the Defense Logistics Agency have been increasing steadily for the past decade, but have spiked over the last year with higher inflation

Prices Increasing with Inflation

High inflation has had a significant impact across the economy including at government contractors and federal agencies.  Since many government contracts and schedules have fixed prices over multiple years, inflation has had a more muted impact on prices than in the broader economy thus far (though it has been a significant challenge for many contractors struggling with rising costs and an inability to increase prices charged to the government).

However, one area where price increases have had an immediate impact are on products acquired through the Defense Logistics Agency’s Internet Bid Board System (DIBBS), where the agency purchases millions of standardized products every year. 

Using HigherGov's database of historical prices of products acquired through DIBBS, we analyzed the prices of 100,000 NATO Stock Numbers (NSNs).  As shown below, the average change in prices has been increasing gradually over the past decade, but increased significantly along with inflation in 2021 and 2022. 

Average Change in NSN Prices by Year

In addition, the percentage of NSNs experiencing price increases annually has gradually grown over the past decade with a further spike in 2022. 

Percentage of NSNs with Increasing / Decreasing / Unchanged Prices

However, there was substantial variation in which products saw the largest price increases.  The table below shows price increases in 2022 for select Federal Supply Groups / NATO Supply Groups.  Of course, individual NSNs saw even wider variation, and it was not uncommon to see prices increasing 200%-300% for some NSNs.

2022 Average Change in Price for Select NSG/FSGs

NSG/FSG	Description	% Increase
73	Food Preparation and Serving Equipment	20.7%
76	Books, Maps, and Other Publications	19.0%
80	Brushes, Paints, Sealers, and Adhesives	18.7%
81	Containers, Packaging, and Packing Supplies	18.0%
42	Fire Fighting, Rescue, and Safety Equipment; and Environmental Protection Equipment	16.5%
39	Materials Handling Equipment	15.8%
40	Rope, Cable, Chain, and Fittings	15.5%
12	Fire Control Equipment	15.2%
17	Aircraft Launching, Landing, and Ground Handling Equipment	14.2%
26	Tires and Tubes	14.0%
30	Mechanical Power Transmission Equipment	13.4%
84	Clothing, Individual Equipment, and Insignia	13.4%
10	Weapons	12.8%
25	Vehicular Equipment Components	12.8%
63	Alarm, Signal and Security Detection Systems	11.9%
44	Furnace, Steam Plant, and Drying Equipment; and Nuclear Reactors	11.9%
93	Nonmetallic Fabricated Materials	11.9%
20	Ship and Marine Equipment	11.7%
49	Maintenance and Repair Shop Equipment	11.6%
31	Bearings	11.1%
28	Engines, Turbines, and Components	11.0%
45	Plumbing, Heating, and Waste Disposal Equipment	10.8%
29	Engine Accessories	10.8%
62	Lighting Fixtures and Lamps	10.7%
61	Electric Wire, and Power and Distribution Equipment	10.3%
59	Electrical and Electronic Equipment Components	10.3%
48	Valves	10.2%
47	Pipe, Tubing, Hose, and Fittings	10.1%
41	Refrigeration, Air Conditioning, and Air Circulating Equipment	10.1%
34	Metalworking Machinery	10.0%
66	Instruments and Laboratory Equipment	9.5%
43	Pumps and Compressors	9.3%
14	Guided Missiles	9.3%
53	Hardware and Abrasives	8.9%
58	Communication, Detection, and Coherent Radiation Equipment	8.7%
70	Automatic Data Processing Equipment, Software, Supplies and Support Equipment	8.6%
16	Aircraft Components and Accessories	8.4%
51	Hand Tools	7.5%
15	Aircraft and Airframe Structural Components	6.5%
95	Metal Bars, Sheets, and Shapes	5.2%
65	Medical, Dental, and Veterinary Equipment and Supplies	4.7%
60	Fiber Optics Materials, Components, Assemblies, and Accessories	2.4%
83	Textiles, Leather, Furs, Apparel and Shoe Findings, Tents and Flags	1.8%

We anticipate that rate of price increases will decrease over the following year as the pressures driving inflation subside and higher interest rates begin to moderate inflation.  HigherGov will continue to monitor prices and provide a mid-year update.   

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Author

Justin Siken
Founder of HigherGov
justin.siken@highergov.com
LinkedIn

Notes on Methodology

Analysis includes 100,000 NSNs and over 1,000,000 price points. Excludes prices for any purchases made via an Automated Indefinite Delivery Contract (AIDC).  An average was calculated for all known prices for a given year and price changes were analyzed on a per-NSN basis for years where purchases were made in two consecutive years.  In calculating the average price change, the change in any individual NSNs was capped at 100%. 

Data Sources

HigherGov Analysis, DIBBS

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