$190 Billion Request for the War Effort
During September, the month Defense Secretary Robert Gates asked Congress for nearly $190 billion to pay for the war effort in Iraq and Afghanistan. This adds an additional $42 billion to the administration’s initial request of $141.7 billion earlier this year. Of this amount, $11 billion would be used to pay for additional armored vehicles to protect troops from roadside bombs.
Executive Comments from the Morgan Stanley Investor Conference
Raytheon (NYSE:RTN) said it expects more sales to Middle East and Asia countries in the next three years due to a stronger petrodollar and the perception of a more intimidating China. According to CEO William Swanson, the firm receives between 18% to 19% of its revenue from overseas sales but this could climb to as much as 25% over the next 5 years. Swanson also said that the upcoming U.S. military reset* will be a big number for the company.
Northrop Grumman’s (NYSE:NOC) COO Wesley Bush says that they see “very, very strong support for a solid defense budget" in both the Republican and Democrat parties. This is driven by the perception that there is a growing number of external threats and a need by DoD to improve the military's information technology.
Are Rules for Export Restrictions Lightening?
The U.S. and Australia have agreed to loosen restrictions on sales of U.S. armaments to Australia. Once finalized, the treaty will allow prescreened firms to export approved defense technology to Australia without going through the current licensing process. Instead, the firms will notify the State Department that the sale has taken place. The treaty must still be approved by the Senate.
Defense News in a recent article stated that defense contractors have long chafed at the lengthy licensing process required to secure the right to export military hardware and technology. According to Jeremiah Gertler, vice president for defense and international affairs at the Aerospace Industries Association, "the administration has welcomed suggestions for change [and] there is openness to reform. The reality is that companies in other countries are offering defense technologies to interested parties around the world. The U.S. sees an advantage to arming its allies and any efforts to reduce the cumbersome burden of export licensing of military technology would be a boon to defense companies