State ranks 21st in defense contract spending; SAIC, ManTech in top 10 among contractors

By Carol Johnson, Southern Indiana Business Report A new report from the Department of Defense shows Indiana ranked 21st in contract spending, with the DoD spending $5.7 billion for goods and services provided by defense contractors in fiscal year 2021. Defense spending with Indiana companies in 2021 surpassed 2020 by $2.1 billion, due in large part to COVID. The DoD spent $1.9 billion with Eli Lilly and Co. for antigen testing supplies. Christine Jeffers, vice president of Indiana Economic Development Corporation (IEDC) Defense Business Development, said annual spending with contractors is usually around $4 billion. Unless the need for COVID supplies continues, it’s unlikely Lilly will lead the state in defense contracts again. “Nobody wants another pandemic but we’re proud and thankful Lilly came to the table,” Jeffers said. “They are a great asset to the state of Indiana and our country.” Defense spending in the state has been steadily increasing the past several years. In FY 2014, contractors were awarded $2.3 billion. In 2019, the state broke $4 billion. Rolls-Royce in Indianapolis was No. 2 on the list; it was awarded $1 billion by the DoD in 2021 and continues to be a leader in defense work. The company was awarded a contract to build engines for the US Air Force B-52 strategic bomber fleet. Rolls-Royce employs 5,000 in the US and 3,300 are employed in Indiana. “That’s beyond critical,” Jeffers said. “They’re not just retaining jobs but they’re growing and adding jobs for decades to come and providing the war fighter with efficient, reliable and technically advanced engines.”

Top contractors in Radius region

Listed among the top contractors in Indiana is SAIC, a defense contractor to NSA Crane. The DoD’s contracts with SAIC totaled $144.8 million, sixth highest in the state. ManTech TSG-2,JV, which also contracts with NSA Crane, ranked eighth with $85.2 million. The report also ranked defense spending by location. In that category, Martin County, which is home to NSA Crane, the third largest US Naval installation in the world, ranks second in the state for contract spending ($503.7 million). Marion County is No. 1 with $3.5 billion in defense contract spending. Lawrence County is ranked ninth with $37.2 million in defense work. Martin County also holds the No.2 ranking for top defense personnel spending – $435.7 million. Loogootee Mayor Noel Harty estimated about two-thirds of Martin County residents work at Crane or one of its contractors. “It is incredible having those career opportunities at our back door,” he said. According to the report, just under 5,000 civilians are employed in defense work in Martin County. The report was released Oct. 20 by the Office of Local Defense Community Cooperation and serves as a starting place for public and private leaders to assess how defense investments across installations and the private sector can be optimized by supporting regional innovation, industrial capability and capacity, supply chain resilience, and cultivating a skilled workforce. Harty cited examples of how the community seeks to optimize having Crane as its neighbor. To meet the workforce needs of the military base, Loogootee schools place an added emphasis on STEM learning. Programs like Lion Manufacturing, which started out as a class at Loogootee High School, is now a student-run business focusing on skill development and leadership. The city of Loogootee is also in the planning stages of a land annexation to add housing. Harty said the driver of the project is anticipated job growth at Crane. If approved, the property will accommodate up to 40 homes. “Crane is a huge asset to Martin County,” said Jessica Potts, executive director of the Martin County Alliance for Economic Development. “Both school corporations in Martin County have wonderful Robotics and STEM-based programs that are preparing students for career pathways that fit Crane’s workforce curriculum.” The Crane footprint is immense and it continues to create opportunities in the region. According to a 2020 analysis of defense spending in the Indiana Uplands/Radius Indiana region, there were at least 951 active defense contracts – potentially worth $3.9 billion – in the region. Those contracts were spread across 271 recipients, with SAIC the largest. SAIC accounted for 30% of the awards. When a payroll of $1.5 billion is included in the tally, total spending by the DoD in Indiana reached $7.2 billion, ranking 23rd among the 50 states.

“I think sometimes we forget to thank the entity of Crane. They provide great paying jobs and it’s great to have them in our economy and they do a great thing for our country as well,” Harty said.

More takeaways

Another bright spot in the report, Jeffers said, was the ability of the contractors to work through the pandemic. “The fact that we maintained when the economy was hit with something like COVID shows the grit of Indiana companies,” Jeffers said. “Our companies still delivered. Indiana companies didn’t close shop, we answered the call.” Jeffers said 2022 should be another strong year for defense spending in the state. “We’re very proud of our numbers and very excited. Right now, we’re above where we were last year when you take Eli Lilly out of the picture,” she said. The states receiving the highest amount of overall defense spending in fiscal year 2021 were Virginia, California, Texas, New York and Florida. “Understanding the depth and reach of our contract spending is essential as we strive to strengthen our defense industrial base,” said William LaPlante, Under Secretary of Defense for Acquisition & Sustainment, in a press release. “The Department of Defense requires resilient, diverse, and secure supply chains to limit vulnerabilities and ensure the development and sustainment of critical capabilities.  This report is a great tool our state and local partners should use to better understand and strengthen supply chains in their regions, which are essential to national security, economic security, and our technological competitiveness and innovation.”