Tax bill would crack down on errant defense firms

Filed under: Aerospace/Defense,Daily News |

Legislation under consideration by the House Armed Forces Committee would end the common practice of awarding defense contracts to companies who owe more than $3,000 in back taxes.

The bill’s sponsor, Rep. Brad Ellsworth (D-Indiana) said the government could earn $1 billion a year by withholding some contracts from business. Companies that have a role in certain critical defense programs would be exempt from the law.

The bill also authorizes the Treasury Department to disclose bidders’ tax information to contracting agencies.

The proposal follows on the heels of a Jan. 20 executive order from President Obama that prohibits “deadbeat” firms from getting new contracts. Obama estimated that tens of thousands of companies owe the government more than $5 billion.

In April 2007, the Government Accountability Office reported more than 60,000 federal contractors owed the federal treasury a total of $7.7 billion in unpaid taxes. Of that number, 27,000 are Defense department contractors who owe $3 billion.

The draft legislation is part of a package of bills that would make the Defense Department financial management system more accurate.

The Defense Department started reviewing and reforming its acquisitions processes earlier this year, creating more single-fee contracts for products and streamlining the system for government contractors.

Satellites major driver for space industry

The commercial satellite sector continues to be the primary driver for the global space economy, with that sector accounting for 67 percent of the industry’s 2009 worldwide revenue.

Despite fears about NASA’s 2011 budget, the government agency provides just 7.2 percent of the action, according to a report from the Colorado Springs-based Space Foundation.

Total revenue for space-related work was $261.6 billion for 2009, and spending on commercial space infrastructure was $83.6 billion, while revenues increased 8 percent to $90.5 billion.

There are reasons for hope — at least globally, said foundation director Elliot Pulham.

Around the world, other countries are increasing their space budgets. In Germany, by 26 percent, India by 21 percent and Russia by 95 percent. China has constructed a new launch center and announced firm flight plans.

And worldwide, satellite technology is providing that push. The increasing demand for telecommunications satellites, combined with the need to replace aging fleets, will mean more growth in the sector.

India is investing in private industry with its SpaceX program, while South America will benefit from plans by a company called 03B to bring space capabilities to underserved regions of the southern hemisphere. A start-up, O3B is backed by Google investments.

Nearly 80 satellites were launched in 2009, nearly matching the record 85 launches that took place in 2000.

And the U.S. hasn’t been left behind in the new space race. The Ares I-X test vehicle was launched in 2009, and Virgin Galactic’s White Knight 2 began successful test flights. United Launch Alliance had its 40th successful launch since its formation.

The U.S. Senate is responding to those successes. It recently approved a $726 million budget to continue to test the Ares I rocket, increasing NASA’s budget to $19.7 billion.

Harris reports strong 3rd Q

Harris Corp., which has offices in Colorado Springs, reported its earnings were up 25 percent in its third quarter of fiscal 2010.

The software, IT and defense company reported revenue of $1.33 billion, compared with $1.21 billion for the same period a year ago. Orders increased to $1.45 billion, compared with $1.03 billion in the prior-year quarter.

Revenue was boosted by a three-year $72 million contract awarded by the Department of Veterans Affairs to improve its billing and collection activities. The company also was awarded a $25 million contract to provide high-band networking radios for the Army’s Integrated Air and Missile Defense Battle Command System.

The increased earnings came from communications and government communications systems, said Howard Lance, chairman, president and CEO of Harris.

“Revenue increased 10 percent for the company, and higher orders across all our segments should continue to drive double-digit revenue growth in the fourth quarter,” he said. “Our strategy of investing in new technology …. is working.”

Amy Gillentine can be reached at (719) 329-5205 or at amy.gillentine@csbj.com.