Overseas Civilian Contractors

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Defense Company Sales Hit by U.S. Debt Deal

Bloomberg   Aug 16, 2011

Nine of the biggest names in the U.S. defense industry receive more than 70 percent of their revenue from the federal government and have the most to lose in the budget cuts approved by Congress this month, according to data compiled by Bloomberg.

For these defense contractors, it’s a replay of the 1990s, when the Cold War ended and the Pentagon slashed spending by a third. For government contractors in all industries, however, the stakes are significant.

“For some companies, the consequences are going to be large,” said Peter Morici, former chief economist at theInternational Trade Commission and a business professor at the University of Maryland. “They’re going to have to sell to the private sector, and that’s not going to be easy for them.”

When it raised the debt limit earlier this month, Congress cut $917 billion in spending over the next decade. A special congressional panel is expected to convene in September to try to identify another $1.5 trillion of cuts.

The hardest-hit group probably will be the defense industry, which received the biggest chunk of the $532 billion in federal contracts last fiscal year, a sum that exceeds the budgets of the five largest states combined.

Nine companies with a market capitalization of $1 billion or more receive at least 70 percent of their revenue from the U.S. government, according to data compiled by Bloomberg:ManTech International Corp. (MANT), Booz Allen Hamilton Holding Corp. (BAH),Northrop Grumman Corp. (NOC), Raytheon Co. (RTN), CACI International Inc.,Lockheed Martin Corp. (LMT), Oshkosh Corp. (OSK), Harris Corp. and General Dynamics Corp. (GD) Three of those — ManTech, Booz Allen and Northrop Grumman — count on the federal government for more than 90 percent of their revenue

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August 17, 2011 Posted by | Civilian Contractors, Department of Defense, Government Contractor | , , , , , , , | Leave a comment