After decade of decline, defense spending escalates with billions in new contracts

By Thomas Wilson

   The nation's "War on Terror" has boosted national defense spending to its highest levels since the Reagan administration with billions in defense contracts awarded for everything from combat aircraft and missile defense shield technology to zinc batteries.
   U.S. Secretary of Defense Donald Rumsfeld outlined six "transformational goals" for U.S. defense strategy and force structure: Protect the U.S. homeland and critical bases of operations; project and sustain power in distant theaters; deny our enemies sanctuary; leverage information technology; improve and protect information operations; and enhance space operations.
   The U.S. Department of Defense (DOD) spent a total of $255 billion, up 7.2 percent over 2000. This amount included procurement contracts, payroll, military pensions and grants.
   The DOD's 2003 fiscal year budget requests $396 billion for defense spending. The DOD projects national defense spending to rise to $469 billion by 2007 based on current prices for military purchases.
   The top five states in Defense Department spending in 2001 were California ($31.3 billion), Virginia ($30.0 billion), Texas ($18.1 billion), Florida ($13.7 billion) and Georgia ($11.0 billion).
   In 1975, federal spending on national defense comprised 26 percent of the entire federal budget and 5.5 percent of the gross domestic product. The DOD employed 34 percent of federal civilian personnel.
   Those numbers hit 27-year highs in 1987 when national defense took up 28 percent of federal spending, 6.1 percent of the GDP, and employed 34 percent of civilian and 61 percent of all federal employees, according to DOD figures.
   In 2002, national defense totaled 17 percent of the federal budget, 3.4 percent of the GOP, and accounted for 23 percent of civilian federal employees.
   The National Defense Function (function 050) includes: DOD military activities (subfunction 051); the atomic energy defense activities of the Department of Energy (subfunction 053); and defense related activities of other federal agencies (subfunction 054).
   Data are provided in three standard budget categories: Budget authority (BA), total obligation authority (TOA), and outlays, according to DOD budget information.
   TRW won a contract worth up to $600 million to develop battle-management aspects of President Bush's push for an anti-missile shield, the Pentagon reported on Sept. 4.
   The initial contract -- awarded through the Pentagon's Missile Defense Agency -- is for up to $200 million through January 2003. Two one-year options valued at $200 million each may follow, for a total value up to $600 million through Jan. 31 2005, the Pentagon said.
   The Missile Defense National Team was created by Missile Defense Agency Director Lt. Gen. Ronald Kadish in January 2002 to bring together the best engineers and scientists in America. The team is focused on enabling the U.S. military services to field missile defense elements of the overall Ballistic Missile Defense System as soon as practical; developing and testing technologies; and improving the effectiveness of deployed capabilities by inserting new technologies as they become available.
   Under the deal, TRW Systems of Colorado Springs will support and maintain facilities for the Joint National Integration Center, the Space Warfare Center and the Cheyenne Mountain Training System among other outfits involved in missile-defense research and development, the Agency said.
   TRW will also develop and operate the Battle Management Command and Control system for ballistic missile defense and carry out related modeling and simulation work, the agency said. The TRW contract is the third worth more than $100 million to be awarded by the Missile Defense Agency in the past week for its speeded-up work on the planned ballistic missile shield.
   The Northrop Grumman Corp. currently has a proposed $7.8 billion takeover of TRW on the table.
   On Sept. 5, the MDA said it would pay Boeing Co. another $125 million and Lockheed Martin Corp. another $108.7 million for anti-missile projects.
   In August, corporations historically reliant on defense contracts were awarded multimillion dollar contracts to provide the armed forces with a variety of munitions and supplies.
   The McDonnell Douglas Corp. was awarded a $9.7 billion firm-fixed-price contract to provide for 60 C-17 aircraft to be completed by July 2008.
   Northrop Grumman Corp.'s Integrated Systems sector was awarded a $49 million, nine-year contract in August by the U.S. Air Force to provide Precision Guided Munitions Planning Software (PGMPS).
   Alliant Techsystems Inc., Janesville, Wis., was awarded a $30 million firm-fixed-price contract for M782 Multi-Option Fuze for Artillery Production. Work will be performed in four locations including McEwen, Tenn., and is to be completed by August 2007.
   The Raytheon Co. of El Segundo, Calif., was awarded a $14 million firm-fixed-price supply contract to provide for 41 line items of F-15 APG-70 radar spares for the Israeli Air Force.
   Smaller corporations have also picked up defense contracts.
   Electric Fuel Corp. received new U.S. Army contracts totaling just over $500,000 in May. The follow-on contract from U.S. Army's Communications Electronics Command (CECOM) at Fort Monmouth will allow provision of additional advanced zinc-air battery packs and for enhancements to the company's pilot production line in Auburn, Ala.
   CECOM has partially funded the development and evaluation of Electric Fuel's advanced zinc-air batteries for high-power military applications since 1998, and to date more than 300 batteries have been field-tested by various units of the U.S. Armed Forces.
   The company also received an initial CECOM subcontract to develop and supply prototype batteries for the Land Warrior program, the Army's integrated soldier fighting system for the dismounted infantryman.
   Fiscal Year 2000
   (In thousands of dollars) *Res./Dev. Other
   Company Test/Eval. Services Supplies Total
   LOCKHEED MARTIN CORP. 4,074,408 2,627,683 8,423,755 15,125,846
   BOEING COMPANY 2,772,670 1,246,417 8,022,334 12,041,420
   RAYTHEON COMPANY 642,016 1,685,412 4,003,184 6,330,613
   GENERAL DYNAMICS CORP. 263,992 1,025,508 2,906,423 4,195,923
   NORTHROP GRUMMAN CORP. 844,336 924,097 1,311,182 3,079,615
   LITTON INDUSTRIES, INC. 148,184 363,455 2,225,646 2,737,284
   UNITED TECHNOLOGIES CORP. 367,049 71,957 1,632,530 2,071,536
   TRW, INC. 566,970 1,244,152 193,736 2,004,857
   GENERAL ELECTRIC, INC. 67,096 79,633 1,462,601 1,609,329
   SCIENCE APPLICATIONS INT. 361,194 1,118,823 42,061 1,522,077
   Listed according to net value of prime contract awards and category of procurement.
   *Spending on Research, Development, Testing and Evaluation.

   Source: U.S. Department of Defense, Defense Almanac