DOD Fixed-wing Aircraft Spending Shrinking

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 (Aerospace DAILY, Feb. 23).

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. (See charts pp. 6-7.)

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.

Meanwhile, the Bell-Boeing joint project for Ospreys moved up two slots in 2008 to the third position, with 93 contacts or modifications worth $2.1 billion total – giving the contractor the highest average per-transaction cost, at about $22.6 million.

The contracting team benefited from the deployment and development of its Ospreys, for which the Pentagon targeted about $2.5 billion in funding for fiscal 2008.

Photo: USAF