[Bloomberg Government has launched the tenth annual BGOV200, a ranking of the top federal contractors. See the list and download the report.]
In fiscal 2020, defense contract spending hit a record high of $447 billion – representing nearly two thirds of overall federal contract spending. It’s an impressive growth trajectory that we’ve been tracking for years. Pentagon spending surged by $140.6 billion between fiscal 2016 and 2020, with a $42 billion increase in the last year alone. Both the Navy and Army increased spending in fiscal 2020, by 23 and 9 percent respectively, while the Air Force remained flat.
Now let’s look at the biggest defense contractors on the BGOV200. It’s a lot of familiar faces, but there’s been notable movement year-over-year. Raytheon’s merger with United Technologies Inc. pushed the company to the number two slot, while Analytic Services Inc. jumped 8 spots from the previous year, thanks in part to the Army’s $7.1 billion Covid-19 expenditure.
This study covers only prime contracts – those in which companies have direct relationships with the government – and not subcontracts. The spending totals for the Defense Department comprise contracts at the Army, Air Force, Navy, and 20 other defense agencies
What’s next for defense contracting? All eyes are on President Biden’s budget request for fiscal 2022. Defense agencies would receive $753 billion under the request – $12.3 billion more than the fiscal 2021 level. It’s worth noting that this will be the first budget in a decade in which defense and nondefense spending aren’t constrained by budget caps. This means Congress has an opening to shift money between defense and nondefense programs or increase funding without using contingency or emergency accounts.