DoD Fixed-wing Aircraft Spending Shrinking

This article first appeared in Aerospace Daily & Defense Report.

While fixed-wing aircraft spending still remains perched at the top of the list of leading Pentagon expenses, it is shrinking as a percentage of overall military spending, an Aerospace DAILY analysis shows.

At the same time, fixed-wing aircraft contracts are becoming fewer and more expensive, according to the analysis of data gleaned from a federal contracting database released by the National Institute for Computer-Assisted Reporting.

Fixed-wing spending accounted for 14 percent of the top 21 Defense Department expenses, compared to 16 percent in 2007 and 22 percent in 2001. Healthcare costs, meanwhile, are taking a bigger bite of the pie.

For 2008, the Pentagon tallied about 1,841 fixed-wing aircraft contracts and modifications for a total of about $18.6 billion. That's a mere $200 million -- or about 1 percent -- more than the Pentagon rang up for those expenses in 2007, when the Defense Department reported 2,191 transactions, the analysis shows.

The mean, or average, cost per contract or modification in 2008 was about $10.1 million, compared to a mean 2007 cost per transaction of about $8.4 million, an estimated 20 percent increase. The average for all 1.5 million 2008 Pentagon transactions is about $236,000 per transaction.

For 2008, fixed-wing contracts or modifications worth about $617,000 or lower represented about 75 percent of the transaction base, while in 2007 transactions worth about $400,000 or lower represented the top three-quarters of the base -- a difference of about 54 percent.

Part of the reason for the overall increases is the maturity of major fixed-wing programs, such as Lockheed Martin's F-22 Raptor and F-35 Joint Strike Fighter, as well as the Boeing-Bell V-22 Osprey, which is included in this expense category.

Lockheed benefited from the $4.4 billion in multiyear fiscal year 2008 funding for the F-22, as well as the $6.4 billion during that time which the Defense Department put toward the F-35.

The contractor jockeyed itself into the top position of fixed-wing contractors in 2008, with 506 transactions for about $7.8 billion in deals, leapfrogging over Boeing, last year's leader. In 2008, Boeing tallied 543 transactions for $6.4 billion, landing the company in second place.

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-- Christian

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