The U.S. military has a reputation as a somewhat secretive organization. But in one respect at least, the Pentagon is one of the most “open” of our government agencies. Every day of the week, rain or shine, the Department of Defense tells U.S. taxpayers what contracts it’s issued, to whom, and for how much — all right out in the open on its website.
So what has the Pentagon been up to this week?
DoD is budgeted to spend about $6.2 billion a week on military hardware, infrastructure projects, and supplies in fiscal 2013. (A further $5.6 billion a week goes to pay the salaries and benefits of U.S. servicemen and servicewomen). Last week, though, the generals maxed out their credit cards with abandon, awarding closer to $8.5 billion in new contracts — and expanding the scope of a massive $7 billion alternative energy production contractto boot.
The big news of the past week was that the scope of the Pentagon’s recent purchases of green energy has finally been made clear. Over the past month, the Pentagon announced a pair of apparently independent, $7 billion-each Power Purchase Agreements to diversify the military’s energy supply into solar and wind power. Early last week, though, the Pentagon added a third category of alt-energy to its shopping list — geothermal — and clarified that “all awarded technologies will share a total estimated value of $7,000,000,000.”
Why is this important? Well for one thing, because it makes clear that all of the companies named in these three alt-energy contracts will be competing against each other for the $7 billion pot of prize money. This will tend to favor major power players Siemens and Dominion Resources, Inc. (NYSE:D), the only two companies that were named “winners” in at least two of the three awards for green-power production. While any of the 40 separate companies named can win task orders under the contracts in theory, these two have twice the chances of their rivals to win in practice.
Another big winner in this week’s defense contracting contest is General Dynamics Corporation (NYSE:GD). On Wednesday, General D nabbed a monster $188 million contract to upgrade Abrams main battle tanks for the Saudi Arabian Army. The “foreign military sales contract” was awarded to General Dynamics without competition from other bidders, and will give the company plenty of work, as it converts 84 M1A1 and M1A2 tanks to the Saudis’ preferred “M1A2S” configuration.
Nearly as big was the $180 million contact that defense contractor SAIC, Inc. (NYSE:SAI) won, to help defeat the threat of roadside bombs in Afghanistan. SAIC has been hired to help the U.S. Army improve the effectiveness of its “Saturn Arch” anti-improvised explosive device initiative, which uses aircraft and drone-based sensors to track the deployment and installation of IEDs throughout the Afghan theater, with the aim of neutralizing the threat.