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Muscular Defense Plan Buoys Contractors
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The demand for armored vehicles continues to benefit General Dynamics, which makes the Stryker and a version of the Mine Resistant Ambush Protected vehicle, or MRAP. The Stryker program got $1.2 billion and upgrades of the company's Abrams tank was funded at $727 million, though no funding was allocated for MRAPs, which are being built by several contractors.
The Navy reduced the number of littoral combat ships being developed to operate close to shore -- a reduction that is going to have "negative consequences" for Lockheed Martin and General Dynamics, which are involved in building the ships, said defense consultant Loren Thompson. The fiscal 2009 budget proposes spending $1.3 billion for two such ships, but the long-term future of the program is uncertain.
Bush's budget postpones decisions on some big-ticket items.
The Pentagon had been preparing to shut down the production lines of the F-22 Raptor fighter jet, analysts said, and the C-17 transport plane, made by Boeing. But no money was set aside in the fiscal 2009 budget to do so. Without funding, analysts said, it effectively defers the decision of whether to buy more planes or to shut down the lines to the next administration.
"These are politically contentious," said Finnegan. With elections coming up, he said, the White House "is saying, 'Why deal with them? Why take the pain for them of shutting down the lines? Let the next administration decide.' "
CACI's president and chief executive, Paul M. Cofoni, said that when the Pentagon shifts from wartime expenses to other programs that have been put on hold, he nevertheless sees opportunities for contractors. He expects that as the military draws down troops in Iraq, the "expenses necessary to house them, to feed them, to provide ammunition for them, all get reduced.
"Those funds can be redeployed to other needs of the Army, Navy, Air Force and Marines," he said. "So the money's going to go to things like intelligence and homeland security. That's where we're well positioned."
