Firms manage through supply chain, cash flow disruptions

We review how the large defense companies are working to protect their supply chain as the market works through the COVID-19 pandemic.

Disruptions to supply chains and cash flow for supply chain firms have been top concerns that the Defense Department and contractors have spoken of since the coronavirus pandemic froze society.

DOD has raised the progress payment rates contractors receive and worked to speed up many award decisions, while at least some of the large hardware firms we reached out to or heard in recent earnings calls specifically said they are passing those added funds down to their partners.

Here is a roundup of what that group of companies is doing and we will update this page as new information is announced.

BAE Systems Inc.

“From the outset, we’ve recognized that our supply chain would play a vital role in our ability to operate through this global pandemic. As we receive accelerated cash payments from our customers, we are directly flowing that cash to our suppliers,” a spokeswoman for the British defense giant’s U.S. subsidiary told us via email.

“Based on the actions we’ve taken so far, approximately $100 million of incremental cash is reaching our supply chain. We will continue engaging with our suppliers to understand their situation and how we can help to minimize any disruption."

Boeing

Boeing is continuing payments to its more than 12,000 suppliers during the COVID-19 crisis, including about $130 million in accelerated payments and support to suppliers to our defense and space business,” a company spokesman told us via email.

“Additionally, Boeing has adjusted certain supplier contracts to facilitate earlier deliveries and enable cash flow through the supply base; aligned subcontracts to prime contract progress payment adjustments resulting in expedited payment processing to support lower-tier suppliers; helping suppliers locate alternate sources of key materials; and providing Boeing-owned materials to help resolve any sub-tier shortages.

“Pentagon leadership deserves tremendous credit for the actions they have taken to keep liquidity flowing to the national security industrial base and we thank them for their support as we do our part to keep cash flowing to our suppliers.”

General Dynamics

Chief Financial Officer Jason Aiken said in an April 29 earnings call that as of that week, GD “received approximately $65 million in accelerated payments from our customers and advanced almost $300 million to our suppliers on an accelerated basis.”

“We’ve seen accelerated payments coming from some of our customers starting in the month of April in the form of increased progress payment rates and other contract mechanisms, but we've passed those monies onto our suppliers to help sustain our supply base,” Aiken added.

Huntington Ingalls Industries

The shipbuilding and government services company has flowed more than $50 million to suppliers across all three of its segments, a Huntington Ingalls spokeswoman told us via email.

“Our ability to help our suppliers, especially those small businesses, will reap benefits as we come through this pandemic,” CEO Mike Petters said in a May 7 earnings call. “This not only helps them, but it also helps their communities, as our supply base resides in nearly every state in the union.”

L3Harris Technologies (This section was updated July 15)

In a May 5 earnings call, CEO Bill Brown said L3Harris had “advanced approximately $80 million and (expected) to exceed $100 million” as of that week. The company first announced that effort in April and said those payments will go to its small business partners are in 47 states.

As of July 15, L3Harris has since more than doubled its accelerated payments to more than $230 million far.

Lockheed Martin (This section was updated July 15)

Lockheed said May 8 that it “ahead of schedule… reached our pledged goal of delivering $450 million in accelerated progress payments from the Department of Defense to our supply chain, including small and distressed businesses.”

On May 15, Lockheed announced it sped up an additional $300 million to "small and vulnerable businesses as we remain focused on the essential national security work our industry supports."

Then for the week ending May 22, Lockheed accelerated $307 million to 1,900 supply chain partners.

Since June 26, Lockheed has sped up more than $600 million. The company touts its small business partners as covering 46 states. 

Northrop Grumman

In an April 29 earnings call, CEO Kathy Warden said the company is “advancing approximately $30 million of payments per week to critical small and midsized suppliers, and we expect these payment advances will exceed $200 million.”

Then there is what its main customer is doing to try and keep the cash flowing for companies of all sizes. A two-fold approach is how Northrop is going about it.

“In addition, with the actions taken by the Department of Defense to increase progress payments, we are flowing that full supplier benefit to our suppliers in a timely fashion,” Warden added.

Raytheon Technologies

“We spend about $6.8 billion annually with small business suppliers and have been in touch with many of them throughout this crisis to better understand how we can support them. We have already dispersed over $350 million in accelerated payments, which is the full amount that we’ve received to-date from the recent progress payment increase from our DOD customers,” an RTC spokesman told us via email.

“We have also partnered with the Small Business Administration to help suppliers to better understand how to access government stimulus programs, and we continue to evaluate on a case-by-case basis other support mechanisms to help our suppliers.”

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.