TITLE: US defense firms showing signs of bounce-back from 2022 global dip in arms revenue
https://www.stripes.com/theaters/us/2023-12-04/weapons-revenue-decrease-sipri-12251232.html
EXCERPT: Major weapons manufacturers around the globe saw declines in overall revenue last year despite strong demand from the war in Ukraine and other conflicts, a watchdog group said Monday, but initial earnings data suggest major U.S. contractors have rebounded.
The top 100 global arms producers and military services companies generated $597 billion in 2022, a 3.5% drop in real terms from 2021, according to a report released Monday by the Stockholm International Peace Research Institute, or SIPRI.
Revenue drops among major U.S. companies were largely to blame for the worldwide dip, the report said, adding that labor shortages, rising costs and supply chain disruptions exacerbated by the Russia-Ukraine war hampered efforts by the U.S. and its allies to significantly increase production throughout the year.
“Many arms companies faced obstacles in adjusting to production for high-intensity warfare,” Lucie Béraud-Sudreau, director of SIPRI’s military expenditure and arms production program, said in a statement released with the report.
The revenues of the 42 U.S. companies in the top 100 fell by nearly 8% last year to just over $300 billion. All but 10 recorded a year-on-year fall in arms revenue, the data showed.
However, so far this year, major U.S. companies like Lockheed Martin, Northrop Grumman and Boeing all have posted sales increases each quarter.
While that alone doesn’t guarantee higher annual revenues, stock repurchases and shareholder dividends by Lockheed, the largest global contractor, are among some of the indicators that the industry’s global revenue is headed upward. General Dynamics, in earnings announcements, said their revenue increased each quarter this year.
TITLE: Members want $26 billion for programs the Pentagon didn’t seek
https://rollcall.com/2023/12/01/members-want-26-billion-for-programs-the-pentagon-didnt-seek/
EXCERPT: House and Senate appropriators have added into their two fiscal 2024 Defense spending bills a combined $25.7 billion the Pentagon did not formally seek for more than 1,200 research and procurement projects, according to a CQ Roll Call analysis of a watchdog group’s previously undisclosed database.
The House-passed Defense appropriations bill would add $10.7 billion into these weapons accounts for 580 different programs. The Senate’s companion measure contains nearly $15 billion inserted by senators for an almost completely different set of 636 weapons projects, according to the Taxpayers for Common Sense database.
If history is a guide, the two sets of increases will mostly just be added together in the final bill, which appropriators hope to finish writing by early February, when the Defense Department’s funding under the current stopgap spending bill expires.
On top of the proposed additions for military research and procurement, appropriators are poised to add as yet unreckoned billions of dollars in unrequested spending this fiscal year for other categories of defense spending — from facilities maintenance to medical research.
Members of Congress have a duty to write spending bills as they see fit. But the fiscal implications of all the congressional tweaking — for both the Pentagon budget and the wider federal discretionary budget — are not widely appreciated.
It is the equivalent of running another Cabinet department each year.
In fiscal year 2023 law, members of Congress inserted into the Defense spending bill a minimum of $61.4 billion for all categories of military spending, two-thirds of it for research and procurement of military equipment, according to a Pentagon report disclosed by CQ Roll Call in October.
That sum is the equivalent of the Department of Homeland Security budget for the same fiscal year.
Just the $26 billion that may be added to the defense research and procurement budget in fiscal 2024 is nearly as much as it would cost in the same time frame to fund a second Space Force or execute another Navy shipbuilding budget.
“The Pentagon spending bill has become an all-you-can-add buffet for lawmakers looking to fund military projects that benefit their districts or drive profits for their campaign contributors,” said Gabe Murphy, a policy analyst with Taxpayers for Common Sense. “Pentagon spending should reflect national security needs and strategy, not parochial political interests or corporate profits.”
TITLE: Pentagon can't account for 63% of nearly $4 trillion in assets
https://responsiblestatecraft.org/pentagon-audit-2666415734/
EXCERPT: [O]ne major reason the Pentagon keeps failing audits is because it can’t keep track of its property. Last year, the Pentagon couldn’t properly account for a whopping 61% of its $3.5 trillion in assets. That figure increased this year, with the department insufficiently documenting 63% of its now $3.8 trillion in assets. Military contractors possess many of these assets, but to an extent unbeknownst to the Pentagon.
The GAO has flagged this issue for the department since at least 1981 . Yet the latest audit states that the Pentagon’s target to correct insufficient accounting department-wide is fiscal year 2031 . In the meantime, contractors are producing weapon systems and spare parts that they may already possess — an incredible waste of taxpayer dollars.
The F-35 program is a great example. The Pentagon technically owns the global pool of spare parts for all variations of the F-35, but the program’s contractors — mainly Lockheed Martin and Pratt & Whitney — manage those parts. According to the GAO, the Pentagon relies on contractors to record the “cost, total quantity, and locations of [F-35] spare parts in the global spares pool.” The department has estimated that the value of F-35 parts in the possession of contractors is over $220 billion, but the GAO reports that this is “ likely significantly understated .”
The Pentagon doesn’t know what or how much government property contractors have because it doesn’t have access to contractor records. Lockheed Martin has even threatened to charge the Pentagon for reports on what and how many F-35 parts the government owns, but Lockheed possesses. A few years ago, the corporation estimated that it would take 450,000 labor hours to produce these reports — making them too expensive for even the Pentagon, which appears to have trusted this estimate. Congress authorized procurement funding for 90 F-35s that year, 11 more than the Pentagon requested.
Last year, the Department of Defense Office of the Inspector General noted that the Pentagon’s inability to keep track of its property could lead it to “understate its property held by contractors and potentially buy more than it needs.” In September, Inspector General Robert Storch reported that in 2021, the Army’s spare parts forecasting was only 20% accurate on average . As a result, the Army overstated how many spare parts it needed by $202 million , in addition to spending another $148 million on spare parts it didn’t anticipate needing at all. The other military services didn’t do any better, overshooting their spare parts needs by $767 million and spending $355 million on parts they didn’t know they needed. All in all, the military overshot its spare parts needs by nearly $1 billion. It spent over half a billion on spare parts it didn’t forecast.