Defense contractors in wait and see mode

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Changes to the Defense Department budget proposed this week by Secretary Robert Gates could affect the 100 or so contractors with a Colorado Springs presence. 

Budget reallocatoin also might impact the city’s largest defense contractor landlord, Maryland-based Corporate Office Properties Trust, which controls more than 1 million square feet of office space.
A report published in the Washington Post said Gates’ budget “would reverse a contracting boom, beginning after the 2001 terrorist attacks, in which the proportion of private contractors grew to 39 percent of the Pentagon’s work force. Gates said he wants to reduce that percentage to a pre-Sept. 11 level of 26 percent.”
About 7.5 percent of that city’s labor force is tied to Pentagon contracting, so the effect on the defense industry would be significant.
While the news primarily affects the Pentagon’s contractor work force, it could have repercussions for a number of contractors in cities around the country as resources are reallocated.

Some of the hardest-hit employees work for the largest companies: SAIC, Lockheed Martin, Boeing, BAE Systems and General Dynamics — all of which have offices in Colorado Springs.

One of Lockheed Martin’s six business divisions is hubbed here, said company spokeswoman Cheryl Amerine.
Lockheed Martin produces the VH-71 helicopter, which would be used to transport the President. However, Gates recommended that program, along with the F-22 be scrapped, and wants the company to focus instead on its F-35 Joint Strike Fighter plane.
“We’re assessing the impact of SECDEF’s decisions on all affected programs. As we move forward with the budget process, Lockheed Martin will continue to support our customers and work to deliver affordable solutions that meet their strategic and operational needs,” the company said in a statement.

Another industry spokesman said that despite the news that some programs would be abandoned, others will be moved up in priority – a net positive.

“It’s actually kind of stabilizing,” he said, adding that defense contractors have been waiting for specifics on changes that will come with the Obama administration,” he said. “There will be some shifting and re-prioritizing – and the budget still has to go to the Defense Authorization Committee for approval before submission to the president and Congress. For at least the next 12 months we see business as usual. After that, we’ll have to wait and see – but mostly it appears to be a change in priorities that each company will adjust to as we learn more.”

One Response to Defense contractors in wait and see mode

  1. Just wanted to add a small tip on creating a recession proof career. It would be a good idea to plan out your career or business by considering government contracting. This is a very lucrative financial opportunity that can help you stabilize financially and increase your income flow if it is done the right way.

    If this is something that you are interested in to put an end to your financial worries, get yourself registered with the Central Contractor Registry which is a federal clearing house for vendors and small businesses too. Also identify a product or service that you can supply to the government and which the government needs in order to get a contract.

    You can win such billion dollar contracts and secure your career or business better even during this phase of recession.

    Defense Contractors
    June 10, 2009 at 8:46 am