Cutting Costs to Maintain Profits on Government Contracts (NOC, BAH, NCI)
Large federal contractors have been resorting to cost containment to maintain their profits as federal spending is reduced. The situation is likely to undergo more strain as planned cuts in military spending are enacted and imposed. The Washington Post reports…
Large federal contractors have been resorting to cost containment to maintain their profits as federal spending is reduced. The situation is likely to undergo more strain as planned cuts in military spending are enacted and imposed.
The Washington Post reports that “[c]ontractors have been reducing their head count, consolidating facilities and slimming their executive ranks,” and questions how long the companies can continue cutting costs to maintain profits. The report cites cuts at Northrup Grumman Corp. (NYSE: NOC), Booz Allen Hamilton Inc. (NYSE: BAH), and NCI Inc. (NYSE: NCI).
The contractors are trying to position themselves early for the impending cuts in federal spending, and have reduced their workforces by about 2% in the cases of NCI and Booz.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
