13 May

CURRENT DEFENSE SPENDING ON CONTRACTS

  • Posted by Clear Rock
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We’ve seen a lot of different outcomes / impacts on various government contractors when it comes to sequestration so far – ranging from “no impact” to “catastrophe.”

On that note a Washington Post article caught my eye this morning, screaming: “Defense spending down 52%!” Since that strikes me as a mighty big number I embarked on a little research down the rabbit hole.

The results were interesting, to say the least.

DOWN 52%… FROM WHAT?

Well it turns out the Post article was comparing month over month spending. Still, that’s a pretty big month over month drop, right? But check out the chart below. We plotted the monthly announced contracts for the last 17 months.

defense spending by month

While the chart makes clear that there was indeed a big drop from March to April, that drop is not exactly anomalous. In 2012, those 50% drops from the preceding month happened in Jan-Feb, Jul-Aug, Oct-Nov, and then again in Dec 12 to Jan 13. And it’s probably worth noting that March 2013 was the 3rd highest spending month in the period observed – and nearly double February 2013.

STILL FINDING OUR WAY

Clearly the above data can be misleading at best. It’s not unreasonable to think that March represented attempts to stuff in a bunch of contracts before the sequestration wall hit, and likewise April is a knee jerk reaction trying to limit spending. There’s no doubt that we are in a new world here, but jumping to conclusions on this data point is a bit reckless.

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