Mass. firms snaring more US work
Defense awards lead way as pacts reach $11.8b in '07
The Massachusetts economy has become increasingly reliant on Uncle Sam in recent years.
According to the most recent available figures, the federal government awarded $11.8 billion in contracts to Bay State companies in fiscal 2007, more than double the haul in 2000, mostly for defense work.
"It's huge," said retired Air Force Brigadier General Donald J. Quenneville, the executive director of the Defense Technology Initiative, a group that tries to nurture the region's defense industry. "Any time you can provide billions of dollars to the economy, it certainly has a very positive effect - not only for our economy in Massachusetts, but also for our neighboring states."
The state's defense sector employs roughly 32,000 workers, according to Quenneville.
Quenneville said there might be lower demand for new fighters, tanks, and warships if President-elect Barack Obama can wind down the war in Iraq. But he said the state's defense sector could remain vital because it does cutting-edge work on developing new technologies, which Obama has cited as a priority. "There might be some downturn in the defense sector," said Quenneville, "but I think we will fare better than other parts of the country."
Lawrence J. Korb, an assistant defense secretary under former President Reagan, said that without even counting additional spending on the war, the defense budget has risen by roughly 35 percent after inflation under President Bush - something that can't continue. But Korb also doesn't expect dramatic cuts in defense spending. "We're not talking about the end of the Cold War," said Korb, now a senior fellow at the American Progress think tank. "It will still grow, but not at the same rate."
Because of its role in developing new weapons systems, Massachusetts receives a disproportionate share of federal contracting dollars. The state garnered 2.7 percent of federal contract dollars in 2007, even though it has just 2 percent of the nation's population, according to www.usaspending.gov, a government clearinghouse for information on federal contracts. The fiscal year 2008 figures won't be available until early next year, but preliminary numbers indicate Massachusetts companies maintained their proportional share of federal money, despite competition from other states.
About 89 percent of the funding awarded to Massachusetts companies was from the Defense Department, according to www.fedspending.org, a website set up by a nonprofit watchdog group to track federal contracts. Contracts were inked by the Navy, Army, and Air Force to produce guided missiles, defense electronics, jet engines, and research and development on military systems, among other items.
The biggest beneficiary was Waltham defense giant Raytheon Co., which received $3.2 billion for work in Massachusetts. The company, which makes radar systems, missiles, and other products, has roughly 12,000 employees in the state.
Raytheon spokesman Jonathan Kasle said the company's employment in Massachusetts is stable and the company is continuing to try to hire "top technical talent."
In a research report this month, JPMorgan & Co. analyst Joseph Nadoll predicted US defense spending will continue in the near term, with "Raytheon leading the way with expected growth of 8 percent in 2009."
But in the long term, Nadoll said, the Defense Department will have to make hard choices about which programs to fund, and "all should feel some pain."
Second to Raytheon is General Dynamics Corp., which received $1.2 billion for work in Massachusetts in 2007. The company has 3,000 employees in the state, largely in Needham, Pittsfield, Taunton, Quincy, and Westfield. In Taunton, the company builds rugged computers and communications systems; in Pittsfield, it makes guidance controls for submarines and ballistic missiles. Despite the cloudy forecasts for defense spending, General Dynamics executives said they remain optimistic.
"Across the corporation, the prospects are good for growth," said company spokesman Rob Doolittle. "The defense sector is generally strong, and the programs supported through our operations in Massachusetts are strong."
Other major recipients of US contracts last year include General Electric Co., which builds jet engines in Lynn; Massachusetts Institute of Technology, which does key defense research at the MIT Lincoln Laboratory; and The Charles Stark Draper Laboratory Inc. in Cambridge, which also handles defense research.
Not all the government contracts were for weapons. Partners Healthcare of Boston received $15.7 million, mostly for biomedical research done for the National Institutes of Health. And Harvard University received $11 million, mostly for research done for the National Aeronautics and Space Administration.
In all, more than 6,000 contractors in Massachusetts received federal contract work last year.
Todd Wallack can be reached at twallack@globe.com. 