McDonnell Is Top Contractor With Pentagon : California First Among States in Defense Dollars

From Associated Press

McDonnell Douglas Corp. cemented its position as America’s largest military contractor last year, and California easily retained first place as the state receiving the most defense payroll and pension dollars, Pentagon officials said Thursday.

Releasing two annual reports that chart the flow of military dollars, the officials said St. Louis-based McDonnell Douglas widened its lead over No. 2 General Dynamics Corp. and No. 3 General Electric Co. by bucking a national trend and increasing its military business in fiscal 1988.

General Dynamics and GE both saw their defense business drop last year, the Pentagon reported.

On the geographic front, California easily maintained its top ranking, receiving almost $13 billion in Defense Department payrolls and pensions. That figure does not include the $23.5 billion in contracts won by California companies in fiscal 1988 for future business.


Nationally, the Pentagon paid $85.4 billion in payroll and pensions during the year to people working or retired inside the United States, up $1 billion from the previous year.

Individual Breakdown

Of that total, $27.3 billion went to pay civilian employees, $34.5 billion went to active-duty military personnel, $5 billion went to pay reservists and National Guard members, and $18.6 billion went to retirees.

The new figures are contained in two statistical reports--"100 Companies Receiving the Largest Dollar Volume of Prime Contract Awards” and the “Department of Defense Atlas.” Both cover the fiscal year that ended last Sept. 30.


Last month, the Pentagon released a report that provided a breakdown of military contracts by state.

The list released Thursday, however, is the first to show how individual companies fared during the year.

The atlas, meantime, shows how the Pentagon’s payroll and military pensions are being disbursed around the nation.

According to the corporate rankings, McDonnell Douglas received contracts worth $8 billion in fiscal 1988, up from $7.7 billion in fiscal 1987 and far ahead of General Dynamics.

General Dynamics saw its business decline to $6.52 billion last year from $7.04 billion in fiscal 1987, while GE’s business declined to $5.7 billion from $5.8 billion.

The remainder of the top 10 included Tenneco Inc. with $5.05 billion, Raytheon Co. with $4.05 billion, Martin Marietta Corp. with $3.71 billion, General Motors Corp. with $3.55 billion, Lockheed Corp. with $3.53 billion, United Technologies Corp. with $3.50 billion and Boeing Co. with $3.01 billion.

The report shows that the Pentagon’s contractors were fighting over a smaller pie in fiscal 1988, with prime contracts totaling $137 billion being parceled out. That is $5.5 billion less than the total awarded in fiscal 1987.

Moreover, the top 100 companies, as a group, saw their share of those contracts decline last year. The 100 firms received $90.1 billion of the contracts, or 65.8% of the total, compared to $95.4 billion and 66.9% in fiscal 1987.


The biggest change in the fiscal 1988 rankings was the rise of Tenneco, a company that ranked 13th in fiscal 1987. Tenneco’s jump to fourth place was based on a Navy order for two nuclear-powered aircraft carriers received by the Newport News Shipbuilding & Drydock Co., a wholly owned subsidiary.

As for the Pentagon’s payroll and pension payments, California was followed in the rankings by Virginia with $9.2 billion in total compensation, Texas with $6.5 billion, Florida with $5 billion and North Carolina with $3.2 billion.

The remainder of the top 10 included Georgia with $3.1 billion, Washington state with $2.9 billion, Maryland with $2.7 billion, Pennsylvania with $2.5 billion and South Carolina with $2.4 billion.

Breaking out those figures to focus on pension payments, military retirees most favor California, Florida, Texas, Virginia and Washington state, in that order.


The top 20 U.S. defense contractors and their prime contract award totals in fiscal 1988 and the previous year. In billions of dollars.

1988 Value (bill.) 1987 Value (bill.) 1. McDonnell Douglas $8.00 1. McDonnell Douglas $7.72 2. General Dynamics 6.52 2. General Dynamics 7.04 3. General Electric 5.70 3. General Electric 5.80 4. Tenneco 5.05 4. Lockheed 5.57 5. Raytheon 4.05 5. General Motors 4.08 6. Martin Marietta 3.71 6. Raytheon 3.81 7. General Motors 3.55 7. Martin Marietta 3.72 8. Lockheed 3.53 8. United Tech. 3.58 9. United Tech. 3.50 9. Boeing 3.54 10. Boeing 3.01 10. Grumman 3.39 11. Grumman 2.84 11. Unisys 2.26 12. Litton 2.56 12. Rockwell 2.23 13. Westinghouse 2.18 13. Tenneco 2.05 14. Rockwell Int. 2.18 14. Litton 2.03 15. Unisys 1.37 15. Honeywell 2.00 16. Honeywell 1.36 16. IBM 1.82 17. Textron 1.27 17. Westinghouse 1.68 18. TRW 1.25 18. Textron 1.54 19. Texas Instruments 1.23 19. GTE 1.47 20. IBM 1.06 20. LTV 1.30

Source: Reuters