New Deloitte Aerospace & Defense Study Finds U.S. Department Of Defense Spending On Performance Based Logistics Could Grow 50 Percent In Next Five Years

Based on new analysis by Deloitte on Performance Based Logistics (PBL) contracts, Deloitte believes PBL is now a preferred strategy for weapon system support and sustainment. Since 2001, the role of PBL has crossed over to all branches of the military, platforms, systems and subsystems causing the size of Department of Defense (DoD) PBL spending to grow faster than the market as overall.

"Our study demonstrates that during times of budgets constraints, the U.S. military may find opportunities to reduce costs, improve dispatch reliability and to transfer risk to defense contractors who know their equipment best. For suppliers, this is a beneficial and opportune trend, given the dynamic defense budget," said Tom Captain, vice chairman, Deloitte LLP, and the Global Aerospace & Defense Sector leader.

DoD spending on PBL contracts has grown from an estimated $1.4B in 2001 to an expected $5.0B in 2009 or 17.2 percent compound annual growth rate (CAGR). Furthermore, based on the study, DoD spending is expected to continue growing at a rate of 10.3 percent CAGR to reach $7.4B by 2013. The average size of DoD contracts has grown from an estimated $26.4M in the 2007-2009 timeframe or 12.3 percent CAGR, and it is expected to continue growing at a rate of 7.6 percent CAGR to reach $85.8M by 2013.

For more information,visit: www.deloitte.com/us/aerospace&defense/PBLstudy . or www.deloitte.com/us/a&d .

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SOURCE: Deloitte