Bloomberg Government Study: DEFENSE CONTRACT SPENDING · 2016. 6. 2. · 6 Bloomberg Government...

Bloomberg Government Study:

DEFENSE CONTRACT SPENDING A STATE-BY-STATE ANALYSIS

THE FUTURE OF INFLUENCE

Delivering news, analytics and data-driven decision tools, Bloomberg Government’s digital workspace gives an intelligent edge to government affairs, federal and contracting professionals influencing government action.

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BY KEVIN BRANCATO [email protected] Director of Government Contracts Research ROBERT LEVINSON [email protected] Defense Analyst

CAMERON LEUTHY [email protected] Budget Analyst

PAUL MURPHY [email protected] Data Analyst

JODIE MORRIS Editor

CONTENTS

Introduction 3Executive Summary 5Alabama 12Alaska 13Arizona 14Arkansas 15California 16Colorado 17Connecticut 18Delaware 19District of Columbia 20Florida 21Georgia 22Hawaii 23Idaho 24Illinois 25Indiana 26Iowa 27Kansas 28Kentucky 29Louisiana 30Maine 31Maryland 32Massachusetts 33Michigan 34Minnesota 35Mississippi 36Missouri 37

Montana 38Nebraska 39Nevada 40New Hampshire 41New Jersey 42New Mexico 43New York 44North Carolina 45North Dakota 46Ohio 47Oklahoma 48Oregon 49Pennsylvania 50Rhode Island 51South Carolina 52South Dakota 53Tennessee 54Texas 55Utah 56Vermont 57Virginia 58Washington 59West Virginia 60Wisconsin 61Wyoming 62About the authors 63 Bloomberg Government 64 Notes 66

November, 2015

A STATE-BY-STATE ANALYSIS

ALL SPENDING IS LOCAL

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In the world of government spending, decisions made in Washington never stay in Washington. What Congress decides one year has lasting reverberations — crisscrossing the country, with impact at the state, local and individual level. Whether you work in Congress, lobby on behalf of industry or work at a business supplying the military, these decisions matter to you.

And they matter to us too.

Bloomberg Government’s job is to help you influence government outcomes. To maximize your opportunities, to help you understand the implications of decisions and to provide the data-driven tools you need to proactively gain an edge.

In the following pages, Bloomberg Government brings you detailed analysis of defense contract spending across all 50 states and the District of Columbia.

Defense spending, despite a period of constrained budgets, remains crucial to thousands of soldiers in the field and millions of jobs across the country. Inside you will see each state’s overall defense spending ranking, top defense contractors, largest military bases and historic contract spending.

This work is part of Bloomberg Government’s commitment to:

• Empower you to find information faster—to separate signal from noise • Bring you new business opportunities—so you can act, empowered by an intelligent edge • Enhance the way you work—to provide a service that helps you work faster and smarter

Bloomberg Government’s detailed state-by-state analysis is designed to strip away the abstraction that accompanies budget conversations and pull up the grassroots impact. Here, you will see—down to the district—where spending has occurred. Keep it as a guidebook for your decisions in the year ahead and as a roadmap for how national decisions manifest at the local level.

Learn more about us at bgov.com.

Introduction

6 Bloomberg Government Study: Defense Contract Spending - A State-by-State Analysis

Defense contract spending varies enormously by state.1 In fiscal 2014,2 the Defense Department spent $266 billion on unclassified defense contracts in the 50 states and the District of Columbia.3 The five highest-ranking states, Virginia, California, Texas, Maryland and Connecticut, have both major defense industrial centers and large military bases. Yet the impact of defense spending also depends on a state’s size and its economic diversification. In Virginia, the state with the most defense contract spending in fiscal 2014, defense contract spending was about 7.6 percent of the state’s Gross Domestic Product (GDP). California was second in defense contract spending at $31.6 billion, yet defense contracting accounts for only 1.4 percent of its economy.

That ratio means California’s $2.3 trillion economy would be far more resilient in the face of planned reductions in defense spending—and less responsive to increases. Since the passage of the Budget Control Act of 2011, which reduced and capped defense spending, each year the president and Congress have struggled to find ways to spend more on their priorities, including defense. Every year, they have increased the spending caps, and the Pentagon’s budget, by billions of dollars, yet budgets remain flat, receiving tens of billions of dollars less than requested.

Chart 1: Ranking of Total Defense Contract Spending by State (in billions)

In fiscal 2014, defense spending in the top five states accounted for $117.9 billion, or 44 percent of the $266 billion in defense contract spending in the 50 states and the District of Columbia. The top 25 states accounted for almost 90 percent of all defense contracting. Yet those states are geographically diverse, stretching across the entire country.

EXECUTIVESUMMARY

1 For this study, defense contract spending is defined as money obligated to contracts by the Defense Department, as reported to the Federal Procurement Data System. The data are cleaned by Bloomberg and put into a proprietary contracts database accessible through tools on bgov.com. 2 The federal fiscal year 2014 ran from Oct. 1, 2013, through Sept. 30, 2014. 3 Figures don’t include defense contract dollars spent outside the 50 states and the District of Columbia.

Rank State Defense contract spending

1 Virginia $35.2

2 California $31.6

3 Texas $24.1

4 Maryland $13.7

5 Connecticut $13.2

6 Pennsylvania $10.3

7 Florida $10.0

8 Massachusetts $9.4

9 Alabama $8.8

10 Arizona $8.7

Executive Summary

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Chart 1: Ranking of Total Defense Contract Spending by State (in billions)

The Washington, D.C., metro area, including Virginia, Maryland and the District of Columbia, is one locus of defense spending. Fiscal 2014 defense contract spending in the District itself was $4.3 billion, or 1.6 percent of all fiscal 2014 defense contract spending.

Table 2: Top 10 States by Defense Contract Spending as a Percentage of GDP

Rank State Percentage of state GDP

1 Virginia 7.6%

2 Connecticut 5.2%

3 Alabama 4.4%

4 Maryland 3.9%

5 District of Columbia 3.8%

6 Kentucky 3.3%

7 Arizona 3.1%

8 Hawaii 2.9%

9 Alaska 2.6%

10 Missouri 2.6% Just as defense contract spending is distributed unevenly nationwide, it is also unevenly distributed within states, with some congressional districts receiving far more defense dollars than others. Not surprisingly, three of the top 10 congressional districts are in Virginia.

Executive Summary


Chart 2: Ranking of Defense Contract Spending as a Share of State GDP

Virginia’s 8th congressional district, represented by Democrat Don Beyer, garnered a whopping $9.6 billion in defense contract dollars in fiscal 2014. That makes VA-8, which includes the Pentagon, the top defense contracting district in the country. Hewlett-Packard Co. was the top defense vendor in the 8th district, with more than half a billion dollars in contracted work in in fiscal 2014. In the state maps that follow, not all congressional districts are labeled when districts are small and close together. Table 3: Ranking by Defense Contract Spending by Congressional District (Dollars in billions)

Rank District Defense contracting

1 VA-08 $9.6

2 VA-11 $8.0

3 CT-02 $7.1

4 TX-12 $6.7

5 Al-05 $6.1

6 VA-03 $6.0

7 MO-01 $5.8

8 MD-02 $5.3

9 WA-09 $5.2

10 CA-17 $4.4

Executive Summary

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This Bloomberg Government study updates a report released on Nov. 17, 2011. That report looked at all defense spending—contracting and spending on military and civilian personnel for fiscal 2009.

Unfortunately, the Department of Defense no longer releases payroll information broken out by state. The current study examines only defense contract spending in the 50 states and the District of Columbia. The figures come from Bloomberg Government’s proprietary contracts database. They are consistent with the BGOV200 list of top contractors for fiscal 2014.1

The location of the spending is based upon place of performance as reported to the U.S. government. For goods, the place of performance is where the good is produced. For services, the place of performance is where the service is performed.

The figures for state population and state GDP come from the U.S. Census Bureau. The figures on personnel for the top military installations in each state come from the Department of Defense’s 2015 Base Structure Report. Bloomberg has corrected the names of the bases where appropriate.

1 The BGOV200 shows spending by contracting agency. This study shows spending by funding agency. The differences occur when an agency (the funding agency) uses another agency’s contract (the contracting agency) to make purchases.

Executive Summary

http://www.acq.osd.mil/ie/download/bsr/CompletedBSR2015-Final.pdf


Appendix 1: States Ranked by defense Contracting as a percentage of their GDP

Rank State Percentage of state GDP1 Virginia 7.59%2 Connecticut 5.23%3 Alabama 4.41%4 Maryland 3.93%5 District of Columbia 3.76%6 Kentucky 3.29%7 Arizona 3.05%8 Hawaii 2.87%9 Alaska 2.65%10 Missouri 2.57%11 Maine 2.56%12 New Mexico 2.43%13 Mississippi 2.19%14 Massachusetts 2.05%15 Colorado 1.91%16 Washington 1.78%17 South Carolina 1.73%18 New Hampshire 1.65%19 Pennsylvania 1.55%20 Rhode Island 1.50%21 Texas 1.47%22 California 1.37%23 Georgia 1.36%24 Minnesota 1.22%25 Florida 1.19%26 Utah 1.13%27 Kansas 1.07%28 Nevada 1.01%29 Oklahoma 1.01%30 New Jersey 0.99%31 Louisiana 0.84%32 Ohio 0.81%33 Indiana 0.78%34 South Dakota 0.76%35 Iowa 0.66%36 Delaware 0.65%37 Illinois 0.59%38 Nebraska 0.58%39 Michigan 0.55%40 North Carolina 0.53%41 Vermont 0.51%42 Arkansas 0.50%43 Tennessee 0.45%44 New York 0.45%45 Montana 0.45%46 Wisconsin 0.44%47 North Dakota 0.41%48 Oregon 0.27%49 Idaho 0.26%50 West Virginia 0.26%51 Wyoming 0.21%

Appendix 2: Dollar amounts of Contract defense spending in each state (Dollars in billions)

Rank State Defense spending in state 1 Virginia $35.2 2 California $31.6 3 Texas $24.1 4 Maryland $13.7 5 Connecticut $13.2 6 Pennsylvania $10.3 7 Florida $10.0 8 Massachusetts $9.4 9 Alabama $8.8 10 Arizona $8.7 11 Washington $7.6 12 Missouri $7.3 13 Georgia $6.5 14 New York $6.3 15 Kentucky $6.2 16 Colorado $5.9 17 New Jersey $5.4 18 Ohio $4.7 19 Illinois $4.4 20 District of Columbia $4.3 21 Minnesota $3.9 22 South Carolina $3.3 23 North Carolina $2.6 24 Michigan $2.5 25 Indiana $2.5 26 Mississippi $2.3 27 New Mexico $2.3 28 Hawaii $2.2 29 Louisiana $2.1 30 Oklahoma $1.9 31 Utah $1.6 32 Kansas $1.6 33 Alaska $1.5 34 Maine $1.4 35 Tennessee $1.4 36 Nevada $1.3 37 Wisconsin $1.3 38 New Hampshire $1.2 39 Iowa $1.1 40 Rhode Island $0.8 41 Nebraska $0.6 42 Arkansas $0.6 43 Oregon $0.6 44 Delaware $0.4 45 South Dakota $0.3 46 North Dakota $0.2 47 Montana $0.2 48 West Virginia $0.2 49 Idaho $0.2 50 Vermont $0.2 51 Wyoming $0.1

APPENDIX

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ALABAMAEvery state’s defense contract spending is broken out this way.

Alabama had $8.8 billion in defense contract spending in fiscal 2014, the ninth most in the nation.

That $8.8 billion was 4.4 percent of Alabama’s 2014 gross domestic product (GDP), the third-highest percentage of any state in the nation.

Top defense contractors include aerospace giants, technology products- and services-focused companies and logistics suppliers.

Contracts are rolled up to parent companies using Blooomberg L.P.’s company database.

The largest military bases, including Coast Guard facilities, are listed by the number of military and civilian personnel as of Sept. 30, 2014.

BGOV corrected the names of many military bases to better indicate their current use.

Alabama’s $8.8 billion in defense contract dollars were 3.3 percent of all unclassified defense contract dollars in the 50 states and the District of Columbia, and represent $1,814 per state resident.

On the map, defense contract dollars are shown by current congressional district. Districts with more spending are shaded a darker color. The range of the color scale changes for each state. Not all congressional districts are shown for every state.

The green bar chart shows spending by appropriation title.

The blue bar chart shows spending by military department. Spending for the Army Corps of Engineers is included in Army figures. Defense- wide includes spending by all other defense agencies.

The orange time- series bar chart shows how defense contract spending has changed in the state every fiscal year since 2007.

HOW TO READ THIS STUDY


ALABAMA

13

ALASKA


ARIZONA

15

ARKANSAS


CALIFORNIA

17

COLORADO


CONNECTICUT

19

DELAWARE


DISTRICT OF COLUMBIA

21

FLORIDA


GEORGIA

23

HAWAII


IDAHO

25

ILLINOIS


INDIANA

27

IOWA


KANSAS

29

KENTUCKY


LOUISIANA

31

MAINE


MARYLAND

33

MASSACHUSETTS


MICHIGAN

35

MINNESOTA


MISSISSIPPI

37

MISSOURI


MONTANA

39

NEBRASKA


NEVADA

41

NEW HAMPSHIRE


NEW JERSEY

43

NEW MEXICO


NEW YORK

45

NORTH CAROLINA


NORTH DAKOTA

47

OHIO


OKLAHOMA

49

OREGON


PENNSYLVANIA

51

RHODE ISLAND


SOUTH CAROLINA

53

SOUTH DAKOTA


TENNESSEE

55

TEXAS


UTAH

57

VERMONT


VIRGINIA

59

WASHINGTON


WEST VIRGINIA

61

WISCONSIN


WYOMING

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ABOUT THE ANALYSTS

The authors would like to offer special thanks to editorial intern Meredith Berger and quantitative analyst Nicholas RisCassi for their superb and tireless fact checking.

ROBERT LEVINSON Senior defense analyst with Bloomberg Government. He is a retired lieutenant colonel in the United States Air Force. Prior to joining Bloomberg Government, Levinson worked for Booz Allen Hamilton as a strategic communications consultant. He has a bachelor’s degree from the U.S. Air Force Academy and a master’s from the University of California, San Diego. He is also a graduate of Harvard’s program for Senior Executives in National and International Security.

KEVIN BRANCATO Bloomberg Government’s director of government contracts research, specializing in defense procurement and spending. Before joining Bloomberg, he was a management scientist at the RAND Corporation, where he analyzed weapon system costs and defense manpower policies. He received a B.A. in math from Columbia University and a Ph.D. in economics from George Mason University.

PAUL MURPHY Senior data analyst with Bloomberg Government. He has 30+ years of experience analyzing contract spend data for his former company, Eagle Eye Publishers, and since 2010 for Bloomberg Government. He brought the first desktop contracts database to market and authored analyses for the U.S. Small Business Administration that led to billions of dollars in increased awards to small businesses. He continues to pioneer new lines of research, creating hundreds of custom reports annually for Bloomberg Government clients and colleagues.

CAMERON LEUTHY Senior budget analyst with Bloomberg Government. He has more than 20 years of experience in analyzing budgets and legislation at the Office of Management and Budget, the Department of Defense, and at Booz Allen Hamilton. His expertise includes the federal budget and the nexus of national security policy, operational requirements and funding. He has a bachelor’s degree from Western Washington University and an MPA from the University of Washington.


BLOOMBERG GOVERNMENTANALYTICS, INSIGHTS, ADVANTAGE.

INFLUENCE ENHANCED.You know the bad news: Defense spending is on the decline and there are fewer chances than ever to influence legislation that brings more business to the states and districts that matter most to you.

But here’s the good news: Bloomberg Government is the only service designed to help you influence federal government outcomes. If it’s your business to influence the future, you need the future of influence.

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NOTES

THE FUTURE OF INFLUENCE.

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