Using newly matched U.S. defense contract and restricted administrative employment data, we show that the regional employment effects of defense procurement are costly, concentrated, and slow to diffuse. Employment gains are initially driven by large existing contractors and come at a high cost of approximately $290,000 per job-year, well above benchmark estimates in the fiscal policy literature. Non-contractors are crowded out on impact, but positive spillovers emerge gradually and account for more than half of regional employment gains by the third year. A newly identified set of unanticipated contracts reveals persistent employment gains at recipient establishments, but these account for only about 18% of contractor job creation within one year, with the remainder arising through indirect channels within contractor networks.