The U.S. military has a reputation as a somewhat secretive organization. But in one respect, at least, the Pentagon is one of the most "open" of our government agencies. Every day of the week, rain or shine, the Department of Defense tells U.S. taxpayers what contracts it's issued, to whom, and for how much -- all right out in the open on its website.
DoD is budgeted to spend about $6.2 billion a week on military hardware, infrastructure projects, and supplies in fiscal 2013. (A further $5.6 billion a week goes to pay the salaries and benefits of U.S. servicemen and servicewomen). This past week, though, the Pentagon came in quite under budget, spending just $3.75 billion.
Much of the funds spent this week went to basic infrastructure and construction projects, monies largely doled out to privately held construction and engineering firms. Here's where some of the rest of the money went.
Northrop Grumman (NYSE:NOC) won a $617 million contract "definitizing" the amount it will be paid to produce the first "lot" (Lot 1) of five E-2D Advanced Hawkeye airborne early warning aircraft for the U.S. Navy. Featuring "true 360-degree radar coverage" in all weather situations, Hawkeyes are the Navy's "eyes in the sky," their mission being to expand the horizon around which a naval task force can see, and to manage a carrier's warplanes in the air during battle.
Even higher up than the Hawkeye are the military's satellite networks. Lockheed Martin (NYSE:LMT) has the contract for one of these, the Defense Meteorological Satellite Program, or DMSP. As part of America's longest-running satellite program, at 50 years and counting, two DSMP satellites are in polar orbit at any given time, tasked with keeping track of the weather, and oceanographic and ground conditions on Earth.
The next two satellites to be launched, designated Flights 19 and 20, have had their launch dates shifted, however, and this apparently necessitated a "re-phasing" of the work Lockheed will do to integrate and test equipment aboard the satellites. On Tuesday, Lockheed won a $101.6 million modification to its contract to perform this work.
And fixing ships
One of the week's biggest winners of U.S. government contracts was Britain's BAE Systems (NASDAQOTH:BAESY), which won several sizable contracts to perform ship refits on U.S. vessels in drydock. Among them:
- BAE Systems Hawaii will conduct maintenance and repairs on the Navy guided missile destroyer USS Chafee (DDG 90).
- The company's San Diego Ship Repair unit will perform work on the landing ship dock USS Rushmore (LSD 47).
- BAE's San Diego unit will also work on the guided missile destroyer USS Benfold (DDG-65).
In total, BAE won $62.1 million in contracts for ship repair projects.
Opportunities on the horizon
As far as real news goes, that was about it in a really slow week at the Pentagon. However, things could be heating up soon. On Thursday, we learned that the Pentagon has sought Congressional authorization to make not one, not two, but three separate multimillion-dollar arms sales to the government of Iraq.
Armaments destined for the Iraqi military include Textron (NYSE:TXT) Bell 412 EP transport helicopters -- a dozen of them. Also, 50 M1135 Stryker wheeled armored personnel carriers from General Dynamics (NYSE:GD), outfitted for survivability in a chemical warfare environment. And finally, a shipment of spare parts to be used in maintaining everything from Humvees to howitzers to heavy equipment for salvaging damaged tanks from the battlefield.
In total, the Pentagon is asking permission to sell $1.95 billion worth of military equipment to the Iraqis. Congress has 15 days to approve or disapprove the sale. If it does nothing at all, that acts as an assent, and the sale can go through as planned.
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Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of General Dynamics, Lockheed Martin, Northrop Grumman, and Textron. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.