Rapid Fire Jan. 31, 2013: Feds Uncertain Why They’re Spending Less

Jan 31, 2013 10:20 UTC by Defense Industry Daily staff

Alan Krueger, Chairman of the Council of Economic Advisers (to the White House), on the reason why US GDP contracted by 0.1% in Q4 2012:

“Federal defense purchases declined at an annual rate of 22.2 percent in the fourth quarter of 2012, the largest quarterly decline in 40 years. A likely explanation for the sharp decline in Federal defense spending is uncertainty concerning the automatic spending cuts that were scheduled to take effect in January.”

Emphasis on “likely” is ours: you would think advisers to the executive branch of the federal government would know for sure why it is spending less in response to a budget situation that it co-authored with Congress.

Senator Hagel’s confirmation hearing with the Senate’s Armed Services Committee is unfolding today, 9:30am-noon ET. In his opening statement, new Ranking Member Jim Inhofe (R-OK) confirmed that he thought Hagel was “the wrong person” for what Inhofe characterized as a record of appeasement of the United States’ enemies. C-Span video.

The UK’s Ministry of Defence published its 10-year Equipment Plan [PDF]. It reflects an intent to ramp up spending on equipment to 45% of the budget from today’s 40%, a ratio that most Western countries are already struggling to meet because of personnel costs. Future nuclear submarines are by far the biggest recipient of future extra spending, while the spending profile varies widely between categories. Weapons procurement is already almost fully committed while land equipment is meant to wane then bounce back in a few years with new vehicles. See also the National Audit Office’s take [PDF] on this plan.

Richard Ginman, the Pentagon’s director of acquisition policy, released a memo [PDF] tracking to what extent the services and agencies are complying with their obligation to report past contractor performance in the PPIRS database. The Army only filed 62% of its 18,106 contracts as of the end of Q1 FY13, with barely perceptible improvement. The Navy and Air Force fared better, at 71% and 83% compliance respectively. Ginman says a policy recommendation of 100% compliance is coming their way. Which sounds about as likely to be enforced as the “auditable by FY17” legislation.

Boeing’s revenue in 2012 jumped by 19% to a record $81.7B, boosted by 36% growth in commercial airplane sales. Their defense, space and security (BDS) arm grew by 2% to $32.6B, or 39.9% of the total vs. 46.5% in 2011. Total backlog at BDS is $71B, with $29.7B contractually committed (a rather low 41.8% of the total, but funded backlog grew by 23%). In any case the military backlog is dwarfed by orders from airlines which took the company-wide backlog to a massive $390B.

L-3 reported net 2012 sales of $13.1B, down by 0.1% Y/Y mostly because National Security Solutions (NSS) revenue was down by 14%. Their funded backlog on the other hand grew by almost 10% to $10.9B.

Pakistan and Malaysia are considering the joint development of UAVs, according to the New Staits Times.

DID is conducting its annual reader survey and seeking honest feedback. We haven’t heard back from Col. Nathan Jessep yet.

Categories: Asia - Other, Boeing, Britain/U.K., Contracts - Awards, Corporate Financials, Daily Rapid Fire, Issues - Political, Leadership & People, UAVs, USA

Rapid Fire Jan. 31, 2013: Feds Uncertain Why They’re Spending Less

Stay Up-to-Date on Defense Programs Developments with Free Newsletter

Archives

White Papers & Events

Stay Up-to-Date on Defense Programs Developments with Free Newsletter

One-stop tracking

Catch up with new events

Table of contents

Exec summary

Media gallery

Clean printouts

Save as PDF

Subscribe for more