Defense Business Brief: No extra cash for inflation; Earnings recap; Aerojet for sale again; and more. – Defense One

by | Oct 28, 2022 | Business

The U.S. Defense Department has no plans to pay more for existing contracts despite industry complaints about inflation, a detail that seemed to get lost this week as the Pentagon released three major strategy reviews.“DoD does not intend to enact a policy to increase contract prices due to inflation,” Bill LaPlante, the Pentagon’s top weapons buyer, wrote in an Oct. 19 letter to Sen. Elizabeth Warren, D-Mass.Warren’s office released the letter as the the CEOs of the six largest U.S. defense firms said inflation is driving up their costs. But it’s tough to know exactly how much that’s affecting business. Overall U.S. corporate profits rose to an all-time high in 2022 after two years of decline, even as companies grappled with supply-chain hiccups and workforce shortages.“We were not anticipating the level of supply-chain disruption nor the duration of supply-chain disruption that we’ve experienced,” Northrop Grumman CEO Kathy Warden said Thursday.Boeing said it would lose $2.8 billion on a handful of key defense and space programs — the new Air Force One, KC-46 tanker, MQ-25 refueling drone, T-7 pilot training jet, and Starliner space capsule — due in part to inflation and supply-chain problems.Lockheed Martin CFO Jay Malave told analysts on the company’s third-quarter earnings call last week that higher labor and supply chain costs would be factored into future bids.“We are seeing different changes both on the labor side and in supply chain,” Malave said. “It does have an impact, really, going forward on bid and proposals as something that we have to keep in front of us, and we’re having dialogues with the customer.”Raytheon Technologies CEO Greg Hayes summ …

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