Monday’s Washington Post provides some good context around the economic conditions faced by large government contractors. The article’s subhead — “After Eight Boom Years for Spending on Military Equipment, Contractors Expect a Slowdown” — points to looming uncertainty in the defense sector, but also outlines alternative strategies being pursued by Raytheon, Lockheed Martin, Northrop Grumman and others:
With nearly 60 percent of its $42 billion in annual sales coming from the Defense Department, Lockheed Martin is pursuing other areas of business to compensate for any slowdown in defense spending. For the past eight years, the Bethesda company has tried to expand its information technology services business. Already, it expects double-digit sales growth in that unit this year compared with last year. [..]
Bob Trice, senior vice president of Lockheed’s business development unit, said the defense industry is likely to see fewer new weapons programs. For Lockheed, “we’re already laser-focused on [information technology] and we will continue to be and we’ll do the same with logistics and maintenance.”
Raytheon of Waltham, Mass., has begun to diversify by making several acquisitions to bolster its cyber-security capabilities. It also has landed two lucrative training deals: One is a contract worth as much as $11 billion with Falls Church-based CSC and General Dynamics to do training for the Army; another is a 10-year contract to provide training support to the Federal Aviation Administration’s air traffic controllers for $437 million.
One mildly ironic sidenote: earlier this year, the Post ran this article entitled “Little Trace of Slowdown for Defense Contractors.”
