top of page

Defense Contractor Profits Rise as Sector Prepares for Midterm House Flip

Defense contractors continue to reap in significant profits despite industry-wide concern that government defense spending will decrease in future congressional bill cycles.  The Washington Post reported yesterday that Northrop Grumman, who dropped out of the KC-X tanker bidding process last spring but remains a defense contracting powerhouse, took in nearly $500M in third quarter profit this year.  Chief Executive Wes Bush said that although the company expects “U.S. defense spending to be flat-to-low-single-digit growth” in the near future, Northrop has remained able to generate such profits by reducing its overhead and increasing productivity.

Northrop also plans to relocate its headquarters to Falls Church, VA, ostensibly to build up its local lobbying presence in Washington, and defense contractor lobbyists across the board have been otherwise preparing for the seemingly-inevitable House flip in the midterms next week by reaching out to certain Republican offices.  The New York Times reported on Tuesday that as lobbyists prepare for the election aftermath, “Representative Howard P. McKeon, Republican of California, who is slated to take over the Armed Services Committee, has been a particular focus of attention, as military contractors fret over spending cuts proposed by the Obama administration.”  While Mr. McKeon only received $86,000 from defense contractors for his 2008 election effort, he has so far received over $400,000 from the sector for his midterm campaign.  One lobbyist, referring to the possibility of McKeon claiming the Committee Chair, said that he didn’t “want to count the chickens before they hatch,” but that “business should be very good.”

To read more, please go to the New York Times.


bottom of page