5 Things Your Taxes Bought for the Pentagon in July
How do we know this? Let's give credit where credit is due. The Pentagon may be a big spender (of your money), but it's a whole lot more open about how it spends that money, and on what, than many other government agencies are. Every day of the week, almost in real time, the Department of Defense reports to U.S. taxpayers on what contracts it's issued, to whom, and for how much -- all right out in the open on its website.
Today, we're going to give you a glimpse at those, as we review the top five most interesting Pentagon contracts awarded last month.
"Military intelligence" is more than just a well-worn joke about a "contradiction in terms." It's also big business. In July, the Defense Intelligence Agency hired a team of 50 companies -- including both IT specialists such as CACI (CACI) and Computer Sciences Corp. (CSC) as well as more traditional defense contractors like Boeing (BA) and Northrop Grumman (NOC) -- to support the U.S. Defense Intelligence Agency's Enhanced Solutions for the Information Technology Enterprise program over the next five years.
Total value of the contract: A whopping $6 billion.
Obamacare for the Military
In another of the month's big contracts, government contractor Leidos (LDOS) was awarded a $4.3 billion contract to modernize the Pentagon's Defense Healthcare Management System. Leidos will provide the Pentagon with an off-the-shelf electronic health records "solution" and integrate and deploy said solution "across the Military Health System" over the course of a project that may last 10 years.
Additionally, in a separate award later in the month, Leidos was given a piece of a $501 million contract to conduct unspecified "medical research" for the U.S. Army.
Robots for the Navy
Almost as big a deal was a U.S. Navy contract awarded earlier in the month to expand the use of unmanned underwater vehicles and unmanned surface vehicles in dangerous minesweeping operations.
Seven defense contractors, including big names such as Harris Corp. (HRS), Science Applications International Corp. (SAIC), and Lockheed Martin (LMT), were all granted $100 million-plus awards totaling at least $846 million -- and potentially as much as $1.4 billion -- to design, test, and build equipment and software for the new robotic warships.
Missiles for Peace?
In another award -- and this is one that Lockheed Martin will get to keep all for itself -- the Pentagon brokered a deal in which Lockheed will sell $1.6 billion worth of Patriot surface-to-air missiles (600 in total) to Chinese neighbors Taiwan and South Korea, and also to buyers in the Persian Gulf region -- Qatar, the United Arab Emirates and Saudi Arabia.
The next day, the Pentagon served as intermediary on a separate contract that will see Raytheon (RTN) supply 355 Joint Stand-Off Weapon smart-bombs to Saudi Arabia (and a further 200 JSOWs to the U.S. Navy). In total, this smart-bomb contract will be worth $180 million to Raytheon.
Uh-Oh! Better Get Maaco!
Not all Pentagon contracts are about blowing things up. Some are just about holding things together. In our final featured contract for the month of July, privately held Q.E.D. Systems and International Marine and Industrial Applicators -- a distant subsidiary of defense giant General Dynamics (GD), were hired to perform "preservation" work on U.S. Navy submarines.
Los Angeles-, Virginia- and Ohio-class nuclear submarines will get the full Maaco treatment, as they're sand-blasted and repainted to ward off rust and such. Q.E.D. will get $149 million for its work, and Industrial Marine $141 million.
These awards represent only a small sampling of the hundreds of contracts your tax dollars funded last month, of course. To see the rest, check out the Department of Defense contracts website.
$290 million for paint and body work?! Motley Fool contributor Rich Smith wonders if the Pentagon might be better off contracting with that other repair shop -- the one that declares "You're not going to pay a lot for this muffler." Rich owns shares of Raytheon. Follow him on Facebook for all the latest in defense news.
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