How to structure this contract
- Classify the sub-sector. Split the contract into aircraft, naval systems, land systems, missiles, or small arms/ordnance.
- Check for a real government index. Confirm directly against the BLS series API whether a published PPI exists, rather than assuming one does.
- Index directly where one exists. Aircraft, naval systems, and small arms/ordnance all have real, live series.
- Build a composite where none exists. Land systems and missiles have no published index: price those from weighted cost inputs instead.
Why defence pricing splits so unevenly
A government price index only works where many producers sell a similar product in a real, repeated market. Commercial aircraft and ships are built and sold that way, even when the buyer is a military. Tanks, missiles, and small arms mostly are not: a handful of contractors sell almost entirely to one government buyer, at negotiated prices that never surface in a public survey.
That is the whole story behind why defence pricing splits so unevenly. Three sub-sectors have real indices. Two do not.
Military aircraft: indexed
Use the BLS Aircraft Manufacturing PPI, series PCU336411336411. This covers civilian and military aircraft combined, so do not label it a military-only number in a contract.
Weight the composite toward aerospace-grade metals, jet engines, avionics, and skilled aerospace labor, roughly in that order of cost share. See the aircraft escalation clause guide for the full breakdown with codes.
Naval systems: indexed
Use the BLS Ship Building and Repairing PPI, series PCU336611336611. It covers ships, not boats. Boat building is a separate series, PCU336612336612. Do not conflate the two if the contract is specifically for larger naval vessels.
Weight the composite toward shipbuilding steel (PCU331110331110), propulsion systems such as turbines (PCU333611333611), and shipyard labor.
Small arms: indexed
Use the BLS industry PPI for PCU33299T33299T, "Small arms, ordnance, and ordnance accessories manufacturing." This is a live series and it is broader than weapons alone: it blends small arms with ordnance accessories, which in practice pulls ammunition-adjacent output into the same number. Do not assume a narrower "small arms weapons only" or "ammunition only" series exists alongside it; checks against candidate codes like PCU332994332994 and the commodity family WPU1513 turned up nothing live at BLS. PCU33299T33299T is the only real index in this space, so a clause needs to price against it as-is, not a split that doesn't exist.
Land systems and missiles: not indexed
Armoured vehicles and guided missiles have no published US government price index. This was checked directly against the BLS series API for the most likely candidate codes, including PCU336992336992 (military armoured vehicles) and PCU336414336414 (guided missiles). Neither returned live data. This is not a missing proxy, it reflects a real absence of the kind of competitive, multi-producer market a PPI survey needs.
Build these two categories entirely from an input composite instead: armour steel or specialty alloys, engines or propulsion systems, electronics and guidance systems, and skilled manufacturing or engineering labor. Weight each by its actual share of contract cost, not a default split, since these platforms vary too much for a generic ratio to hold.
Check before you name a code
Do not assume a defence category has a government price index just because aircraft, ships, and small arms do. Citing a specific series code for armoured vehicles or missiles, when no such series exists, produces a clause neither side can actually execute. Check bls.gov/ppi directly before naming any series in contract text, not just for these two categories but for every index a defence clause relies on.
Live index data
- US PPI: Turbine and Turbine Generator Set Manufacturing: current value, year-over-year change, and a free calculator
- US PPI: Aircraft Manufacturing: current value, year-over-year change, and a free calculator
- US PPI: Ship Building and Repairing: current value, year-over-year change, and a free calculator
- US PPI: Small Arms, Ordnance, and Ordnance Accessories Manufacturing: current value, year-over-year change, and a free calculator