Defense contractors generally upbeat on new Pentagon budget

June 3, 2021

By Marjorie Censer

The chief executives of some of the largest defense contractors said this week they are optimistic about the Pentagon budget request issued last week -- but cautioned the numbers are likely to change.

Speaking at a virtual conference hosted by Bernstein, Roger Krone, the CEO of Leidos, said that if the proposed budget "comes into law, we're in really good shape."

"We're happy with the messaging that the administration sent in this budget action, but we're also going to be a bit pessimistic that the [president's budget] that we saw on Friday -- it's never going to become law," he added, noting the company expects fiscal year 2022 to begin with a continuing resolution.

Mike Petters, the CEO of Huntington Ingalls Industries, told conference attendees the request is just the first step in a three-part process that also includes updating the National Defense Strategy and the FY-23 budget.

Krone noted that much of this budget was prepared by the prior administration.

"Using this budget to do a lot of policy shifts is probably not going to happen," he said. "We think the big policy shifts are going to be in the next budget."

Petters said most of HII's work is in the shipbuilding accounts, and "that has been well supported over the last three or four years."

"The first cut on this budget is that it's fairly well supported again," he added. "One week after the submission, we feel pretty good about how it came out, and we'll see how the process plays itself out."

Kathy Warden, Northrop Grumman's CEO, said at the same event that Northrop's space sector has been its fastest growing segment.

"The '22 budget was a reflection of that continued alignment of priorities," she said. "We see not just national security space but also civilian space as an increasing area of opportunity for us."

Speaking at the same conference, Ken Possenriede, Lockheed Martin's chief financial officer, said the budget was "in line with what we expected."

"On the whole, we feel pretty good with what we saw from a budget standpoint," he said.