As the U.S. moves closer to the so-called "Fiscal Cliff",big ticket government spending areas like defense and entitlement programs are likely to be at the center of the debate. If the White House and Congress can't agree on a compromise, the Federal Government is threatened with automatic across-the-board cutsthat will come into effect in January 2013.
According to Department of Defense documents,since 2001 contracts for services have increased 137%, compared to a 1% increase for payrolls of active duty military personel over the same time period (in 2011 dollars), and is labeled as "increasingly unaffordable." However, among the largest government contractors are some of the largest companies in the country, some that employ more than 100,000 workers and draw a majority of their revenue from government sources.
To understand the spending involved, CNBC.com analyzed data from USASpending.gov,which was established in 2006 by the U.S. Office of Budget Management to make federal awards publicly available. According to the site, in FY2011 there were $536.8 billion in government contracts awarded to approximately 170,000 contractors. The data presented here are based solely on U.S. government contracts and do not include assistance, insurance, grants, loans or other forms of payment.
So, who are the biggest U.S. government contractors? Click ahead to find out.
By Paul Toscano& Jill Weinberger
Updated 13 June 2012
All contract values were drawn from USASpending.gov during the week of June 11, 2012 and are from this source unless otherwise noted. 2011 revenues are from the individual firms’ annual reports, unless otherwise noted.
Contracted in 2011: $4.7 billion
Total 2011 revenue: $112 billion
Contracted in 2012, so far: $2.38 billion
McKesson Corporation, headquartered in San Francisco, Calif., describes itself as a pharmaceutical distributor and health care information technology company.
A majority of the government contracts ($3.8 billion) with the company arose from the department of Veteran Affairs and its top 10 contracts have all been awarded for drugs and biologicals, according to USASpending.gov.
In its 2011 annual report, it notes the significance of government contracts as a key risk factor: “The loss of such contracts could have a material adverse impact on our results of operations.”
Contracted in 2011: $4.94 billion
Total 2011 revenue: $7.6 billion
Contracted in 2012, so far: $430 million
Oshkosh, headquartered in Oshkosh, Wisc., is primarily concerned with the design and manufacture of vehicles and vehicle bodies and has been a contractor of the U.S. Department of Defense for over 80 years, becoming its leading supplier of heavy and medium payload tactical trucks.
The Department of Defense is responsible for Oshkosh’s top 10 contracts from 2011, which ranged from $125 million to just over $900 million. The biggest contracts for Oshkosh in 2011 were for ground effect vehicles.A majority of the contracts, $4.93 billion, arose from the U.S. Army, according to USASpending.gov. However, compared to a year earlier, contracts won by Oshkosh have dropped significantly, from $7.2 billion in 2010 to $4.94 billion in 2011.
Pictured: US military personnel prepare to load Oshkosh armored vehicles onto a plane bound for Afghanistan at the the Manas Transit Center 30km from Bishkek.
Contracted in 2011: $6.92 billion
Total 2011 revenue: $30.1 billion
Contracted in 2012, so far: $2.15 billion
BAE Systems, the 8th-largest recipient of U.S. government contracts, is a British multinational defense, security and aerospace company headquartered in Farnborough, UK. According to USASpending.gov, the company was awarded $6.9 billion in U.S. government contracts in 2011 and has already been awarded $2.15 billion so far in 2012.
The Department of Defense is responsible for BAE’s top 10 contracts from 2011, which ranged between $56 million and $276 million. $2.9 billion arose from the U.S. Navy and $2.6 million from the U.S. Army. Its largest contract was for a combat assault and tactical vehicle.
Pictured: The Lemur weapons system from BAE Systems is displayed at the International defense exhibition of military technologies (IDEB) 2010 in Bratislava, Slovakia.
Contracted in 2011: $7.38 billion
Total 2011 revenue: $15.17 billion
Contracted in 2012, so far: $2.79 billion
L-3 describes itself as a “prime contractor in command, control, communications, intelligence surveillance and reconnaissance systems; aircraft modernization; and maintenance and government services.”
According to USASpending, The Department of the Air Force accounted for $3.4 billion in contracts with the company. L-3's highest contracts in 2011 were awarded for miscellaneous aircraft accessories and maintenance repair for aircraft.
According to its 2011 annual report, the company derived 75% of its 2011 revenues from the Department of Defense, while the remainder came from foreign governments. Compared to a year earlier, contracts won by L-3 Communications have dropped significantly, from $14.9 billion in 2010 to $7.83 billion in 2011.
Pictured: L3 Communications' Mobius, Optionally piloted Aircraft System, flies by during the Association for Unmanned Vehicle Systems International (AUVSI) demonstration day at Naval Air Station Pax River Webster Field Annex in St. Inigoes, Maryland.
Contracted in 2011: $7.43 billion
Total 2011 revenue: $11.12
Contracted in 2012, so far: $2.60 billion
Science Applications International Corporation (SAIC), headquartered in McLean, Va., is the 6th-largest recipient of U.S. government contracts. SAIC is involved in everything from robotics to cancer research and tsunami warning systems.
SAIC’s largest contract in 2011 was with the Department of Health and Human Services to the tune of $228 million. Many of its other large contracts are for the Department of Defense and range between $65 million and $125 million.
Contracted in 2011: $7.90 billion
Total 2011 revenue: $58.2 billion
Contracted in 2012, so far: $2.41 billion
United Technologies, headquartered in Hartford, Conn., is a multinational conglomerate that manufactures a wide range of products, from aircraft engines and helicopters to fuel cells, elevators and building systems.
The biggest contract for United Technologies in 2011 was for $910 million to manufacture a gas turbine and jet engine aircraft. Other large projects include the maintenance and repair of gas turbines, jet engines and other aircraft, several of which cost the government between $200 million and $600 million.
Pictured: A Sikorsky CH-53 Super Stallion taking off from the USS Saipan.
Contracted in 2011: $14.76 billion
Total 2011 revenue: $24.86 billion
Contracted in 2012, so far: $5.72 billion
Headquartered in Waltham, Mass., Raytheon’s primary businesses are defense-oriented, with major contracts including several air defense systems, marine combat systems, missile systems and other military products, sold primarily to governments around the world. Perhaps Raytheon’s most recognizable product in the general public is its Tomahawk cruise missiles, which are supplied to the U.S. Navy.
Raytheon’s highest contracts in 2011 were for guided missiles, with two contracts for over $1 billion each. Additional contracts for guided missiles ranged between $130 million and $400 million, with other top contracts including ammunition and bombs.
Pictured: Raytheon missiles on display at the Paris Air Show in 2005.
Contracted in 2011: $19.47 billion
Total 2011 revenue: $32.67
Contracted in 2012, so far: $8.79 billion
In 2011, General Dynamics of Fairfield, Conn., engaged in more than 18,000 contracted transactions with the U.S. government, totaling approximately $19.47 billion, with a majority of the contracts awarded by the Navy ($12.9 billion) and the Army ($4.6 billion). Many of its large contracts include the manufacturing of submarines and destroyers, with its largest contract for a submarine worth over $2 billion. General Dynamics saw an increase in government spending from $14.8 billion in 2010 to $19.47 billion in 2011.
In General Dynamics’ 2011 annual report, the company’s first three risk factors highlight dependency on the U.S. government for “a significant portion” of revenues, with more than two-thirds of the company’s sales coming from the U.S. government in each of the past three years. The company says that “A decrease in U.S. government defense spending or changes in spending allocation could result in one or more of our programs being reduced, delayed or terminated. Reductions in our existing programs could adversely affect our future revenues and earnings."
Pictured: General Dynamics Armament and Technical Products's Reactive Armor for application on the Bradley Fighting Vehicle.
Contracted in 2011: $21.45 billion
Total 2011 revenue: $68.73 billion
Contracted in 2012, so far: $16.03 billion
Although Boeing’s main sources of revenue are commercial airlines, the Chicago-based company’s Defense, Space & Security segment deals primarily with the U.S. government. That segment accounts for approximately $21 billion of the company’s $68 billion in 2011 revenue.
Boeing’s largest contracts in 2011 were for fixed-wing aircraft and airframe structural components. Its top five contracts were worth over $500 million each and the highest individual contract came in at $1.5 billion. Aside from traditional aircraft, Boeing was also contracted for over $1 billion by NASA, according to USASpending.gov.
Pictured: A Boeing-made United States Navy F/A-18F Super Hornet takes off from Nellis Air Force Base in Nevada.
Contracted in 2011: $39.98 billion
Total 2011 revenue: $46.30 billion
Contracted in 2012, so far: $18.97 billion
Headquartered in Bethesda, Md., Lockheed’s dependence on contracts from the U.S. government is no secret. The company researches, designs, develops and manufactures satellites, space vehicles, combat aircraft, missile defense systems, aeronautics and intelligence systems, which are essentially out of the scope of non-government consumers.
Lockheed’s biggest contract 2012 was for $3.48 billion with the Department of Defense for a fixed-wing aircraft.
In Lockheed’s 2011 annual report, the company notes that it derives 82% of sales from U.S. Government customers, including 61% from the Department of Defense and 17% of sales to foreign governments. The first entry in the report’s “Risk Factors” section states that “a decline or reprioritization of funding in the U.S. defense budget, that of other customers, or delays in the budget process could adversely affect our ability to grow or maintain our sales, earnings and cash flow.” For the full annual report from Lockheed, click here.
Pictured: Lockheed Martin's USS Freedom (LCS 1), the first of the U.S. Navy's next-generation littoral combat ships, those that can operate close to shore.
*Number includes contracts listed for “Lockheed Martin Corporation” and “Lockheed Martin” on USASpending.gov.