In the weeks leading up to the “fiscal cliff,” the U.S. military doled out numerous defense contracts before the scheduled automatic spending cuts, with the Central Florida region receiving a majority of them.
In December, the military issued nearly $6.6 billion in contracts to be performed partly or totally in Central Florida, as reported by the Orlando Sentinel. Nearly all the contracts went to Lockheed Martin Corp., the region’s biggest defense contractor, for a series of deals worth a combined $5.4 billion to build the next round of F-35 jets.
The $6.6 billion award was three times the amount of Central Florida-related contracts issued last September, which is often the busiest month for military spending since the government’s fiscal year ends Sept. 30.
"The last-minute rush usually comes at the end of the fiscal year, because military agencies want to get that money obligated so it won’t get cut," said Michael Blades, senior defense analyst for the global consulting firm Frost & Sullivan, in the Orlando Sentinel. "So it is not surprising to also see this big spike of contracts as we approached the so-called fiscal cliff. Once that money is out there, it’s generally insulated from budget cuts."
The F-35 program consists of numerous contracts dispersed throughout central Florida, providing hundreds of jobs. Lockheed’s Orlando training-simulation unit provides the F-35’s flight- and maintenance-training systems, while its Orlando missiles unit produces a weapons-targeting system. The Melbourne-based Harris Corp., the region’s biggest locally based tech company, will provide the F-35’s high-speed avionics, cockpit communications and data-processing technology.
Lockheed also gained another series of deals in December worth a combined $1 billion for a wide range of work in Orlando, including the weapons-targeting systems for the Apache helicopter, Hellfire missiles to C-130 flight-deck simulators and tank-gunnery training systems. Plus, it received a $592 million to continue producing the Navy’s Trident missile, which is primarily built by Lockheed operations in Brevard County.
Three other central Florida companies benefited from the Pentagon’s rush list:
- Boeing was awarded $50.5 million for rocket-launch and satellite-support services at Cape Canaveral and in Colorado Springs, Colorado.
- IAP World Services Inc. of Cape Canaveral, $14 million for naval base operations.
- ERAPSO Inc., $18 million to build sonobuoys at a plant in DeLeon Springs.
While the federal government avoided the fiscal cliff, the lack of a complete resolution has created a feeling of uncertainty amongst among contractors – primarily defense contractors, said Stan Soloway of the Professional Services Council.
"For the most part, I think what we’re seeing are companies being very, very conservative and very, very disciplined in terms of their investments in people and in technology and so forth," he said.
What these companies want is for policymakers to proceed with the second step in the fiscal cliff, cutting government spending, so they are more sure how to deal with limited spending.
