General Dynamics sub award boosts Pentagon contracts in April

A $17.8 billion submarine contract, the biggest weapons deal announced by the U.S. military in more than a dozen years, kept Pentagon awards from sinking last month. More

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defense industry

General Dynamics sub award boosts Pentagon contracts in April

COURTESY GENERAL DYNAMICS ELECTRIC BOAT
THE U.S. NAVY'S $17.6 billion contract to General Dynamics Corp. helped boost Pentagon contracts in April, which would otherwise have trailed the $19 billion in contracts announced in the same month last year.
Posted 5/8/14

WASHINGTON – A $17.8 billion submarine contract, the biggest weapons deal announced by the U.S. military in more than a dozen years, kept Pentagon awards from sinking last month.

The contract to General Dynamics Corp. and partner Huntington Ingalls Industries Inc. had been stuck in limbo during Congress’s budget squabbles last year. It was freed up when the president signed a $1.1 trillion spending bill in January, letting the Defense Department begin funding new projects again.

April’s awards rose 84 percent to $35 billion from $19 billion a year earlier, according to data compiled by Bloomberg. Contracting specialists said the boost was an anomaly rather than an indication that military spending is rebounding.

“This is more of a one-shot deal,” said Mark Amtower, a partner at Amtower & Co., a Clarksville, Md.-based consulting firm specializing in government contracting.

The five-year agreement for 10 Virginia-class submarines, announced April 28, is the Navy’s biggest-ever shipbuilding contract, according to Rear Admiral David Johnson, program executive officer for submarines.

It’s also the biggest weapons contract announced by the military since the Navy in October 2001 awarded a $19 billion, 11-year contract to Bethesda, Md.-based Lockheed Martin Corp. for F-35 jets, according to data compiled by Bloomberg Industries analyst Brian Friel. The aircraft is the Pentagon’s most expensive weapons system.

Budget cuts

Last month’s contracts dropped less than 1 percent from $35.1 billion announced in March, according to Defense Department data. The Pentagon is required to announce contracts of at least $6.5 million.

Without the submarine agreement, the value of April’s Pentagon contracts would have trailed the $19 billion announced in the same month last year and would have been less than half the amount awarded in March. On a year-to-year basis, the value of announced contracts has fallen in each of the four months before April.

Awards in April 2013 were affected by the start of automatic federal spending cuts under the process known as sequestration. Some of those planned reductions were eased for fiscal 2014 and 2015.

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