DoD Business Glossary Series
Programs of Record, FYDP
If you’re a founder or a VC supporting a founder that’s trying to do business with the Department of Defense, you’ve likely encountered a soup of acronyms and unfamiliar terms.
Periodically, we’ll cover some of these important terms in this glossary series
In today’s edition, we’ll take a look at the terms Program of Record and Future Years Defense Plan.
These two terms are very important for defense-focused startups, and really represent a key goal that establishes recurring revenue.
With that, let’s dive in.
Programs of Record
A program of record (PoR) is a formal acquisition program that has been approved and authorized by the appropriate level of authority within the DoD. Programs of record are the holy grail of contracting: stable, known, and recurring.
A program of record is typically a major acquisition effort, involving the development, procurement, and sustainment of a specific system, capability, or product that will be used by the DoD or services. These programs can include weapons systems, information technology systems, communications systems, and other types of systems and equipment.
Once a program of record has been established, it is subject to a range of regulatory and oversight requirements, including milestones, reviews, and reporting requirements, as well as budgetary constraints and performance metrics. The program is managed by a program manager and team, who are responsible for executing the program and meeting its objectives, within the scope of the authorized budget and timeline.
Programs of record are critical to establishing recurring revenues for defense-focused and dual-use companies, as their budgets are set in the Future Years Defense Program (FYDP, pronounced Fie-Dehp) and are typically stabilized and predictable.
Future Years Defense Program
The Future Years Defense Program or FYDP is a planning and budgeting tool used by the U.S. Department of Defense (DoD) to identify and allocate resources for the military over a period of five fiscal years. It captures the various programs of record that the DoD has approved.
The FYDP is updated annually and is used to guide the development of the DoD’s budget submission to the U.S. Congress. It includes estimates of funding requirements for various programs of record, including procurement, research and development, and operations and maintain employment. It also includes projections of personnel and once structure changes over the five-year period.
The FYDP serves as a strategic planning tool that helps the DoD prioritize its spending and make informed decisions about which programs to invest in and which ones to scale back or eliminate. It also helps ensure that the DoD has the necessary resources to execute its mission effectively and efficiently over the five-year period.
Summary
In this edition, we covered two important terms: Programs of Record and Future Years Defense Program (FYDP).
Most startups catering to the defense sector will want to work towards securing a PoR and need to have a plan that leads to one by their Series B raise.
While there’s plenty of money available to earlier-stage startups in the form of SBIR/STTRs (don’t worry, we’ll get to those terms soon), other transaction authorities, and other contract vehicles, securing a PoR ensures long-term recurring revenues for a company.
If you’re building a company (or if you’re a VC supporting one) that’s doing business with the DoD or wants to, reach out to me to discuss!
And, no matter what…
Keep building!
Andrew