Increased Spending in C4ISR Offsets Budget Cuts in RDT&E, Stabilizing the DoD Budget, Finds Frost & Sullivan

News provided by

Apr 09, 2010, 08:30 ET

MOUNTAIN VIEW, Calif., April 9 /PRNewswire/ -- The U.S. defense budget has remained stable, despite the cuts in research, development, testing, and evaluation (RDT&E) programs for immature technologies that do not have direct relevance to the existing ground forces operations. 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.

(Logo: http://www.newscom.com/cgi-bin/prnh/20081117/FSLOGO )

New analysis from Frost & Sullivan (http://www.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).

If you are interested in a virtual brochure for this study, please send an e-mail to Sarah Saatzer, Corporate Communications, at [email protected], with your full name, company name, title, telephone number, company e-mail address, company web site, city, state, and country.

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.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 40 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com.

U.S. DoD 2011 Budget

N787