While sectors such as space-based assets have had to make do with reduced funds, other areas including medical services, armored ground vehicles, and command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) are expanding, thereby improving the overall defense spending.
New analysis from Frost & Sullivan (aerospace.frost.com), U.S. DoD 2011 Budget, finds that the 2011 Department of Defense (DoD) budget is estimated at $708.2 billion, including $548.9 billion in base funds and $159.3 billion in overseas contingency operations (OCO) funds. This is a 3.4 percent increase over the 2010-enacted level. The DoD's spending remains at nearly 4.7 percent of the gross domestic product (GDP).
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The DoD's spending is also likely to get a boost with the continuing combat operations, nation building exercises, and beefing up of the Army, Marines and special operations forces (SOF). In addition, worn-out equipment, expanded ground force tables of organization/equipment (TO/TE), and renewed emphasis on building foreign partnerships encourage DoD spending.
"Medical, logistic, and administrative services, ground vehicles, unmanned vehicles, missile defense, and C4ISR assets are the most attractive segments for the U.S. DoD till 2015," says Frost & Sullivan Research Analyst Brad Curran. "They offer the best combination of program funding and market accessibility by partnering with the large primes."
While equipment acquisition and services are likely to receive top priority, the DoD is expected to reduce its air and naval platforms. Furthermore, the operational borders between the DoD and other Federal Agency assets and missions are likely to blur.
The increasing use of commercial off-the-shelf (COTS) systems in all segments and the increasing presence of European and Asia Pacific competitors could go a long way in prompting the U.S. Government to allocate higher funds to the DoD.
Equipment of all types in the U.S. DoD need to be reset, upgraded, or replaced. For instance, the Army alone intends to buy nearly 40,000 trucks by 2013, creating a plethora of opportunities for suppliers. Companies involved with engineering, maintenance, repair, and sustainment services of all types are likely to experience a windfall.
"Continued emphasis on irregular warfare will require many more contractors and trainers with language and cultural expertise," notes Curran. "Commercially mature social networking, web search, as well as analysis and dissemination tools will experience higher demand."
U.S. DoD 2011 Budget is part of the Defense Growth Partnership Services program, which also includes research in the following markets: commercial and military aviation, homeland security, and C4ISR. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
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U.S. DoD 2011 Budget / N787