
WASHINGTON
—
The
government
has
been
shut
down
for
a
month,
but
for
the
most
part,
the
CEOs
of
some
of
America’s
top
defense
companies
say
they’re
not
seeing
a
financial
impact
to
their
business
—
not
yet,
that
is.
Government
funding
expired
on
Oct.
1,
too
late
to
put
a
dent
into
third
quarter
earnings,
which
defense
executives
have
detailed
over
the
past
two
weeks.
But
although
CEOs
are
not
sounding
the
alarms
to
investors,
they
cautioned
that
a
prolonged
shut
down
will
cause
delays
to
contract
awards
that
could
whittle
away
projected
revenue
for
the
year.
“The
government
shutdown
is
clearly
the
challenge.
It’s
disappointing
where
we
are,
and
we
need
Congress
to
get
together
and
resolve
this
situation,”
said
L3Harris
CEO
Chris
Kubasik,
who
called
the
shutdown
“baffling”
during
an
earnings
call
with
investors
on
Thursday.
L3Harris
is
already
seeing
impacts
to
cash
collection
and
delays
in
the
timing
of
contract
awards,
Kubasik
said.
For
example,
the
government
will
need
to
reopen
to
move
forward
on
programs
like
the
Space
Development
Agency’s
Tranche
3
tracking
system
and
Missile
Defense
Agency’s
Hypersonic
and
Ballistic
Tracking
Space
Sensor.
“There’s
clearly
an
incongruency
within
the
government.
The
DoW
[Department
of
War]
wants
to
go
fast,”
he
said,
using
a
secondary
name
for
the
Defense
Department.
“They
meet
with
us
all
the
time,
[telling
us]
we’ve
got
to
go
quicker,
and
then
Congress
can’t
fund
the
DoW.
So
we’re
kind
of
stuck
between
those
two
situations.”
The
company
remains
confident
it
will
be
able
to
meet
its
financial
guidance
for
the
year
and
is
currently
projecting
that
the
government
will
reopen
in
November,
Kubasik
said.
“Then
we’ll
have
a
busy
December
to
catch
up
on
everything.”
Northrop
Grumman
CEO
Kathy
Warden
noted
that
Northrop’s
latest
financial
guidance
for
2025
already
bakes
in
some
of
the
delays
the
company
anticipates
in
terms
of
getting
programs
under
contract,
and
that
it
does
not
project
any
“significant
impact”
on
financial
results
so
long
as
the
shutdown
is
resolved
“in
the
near
term.”
“We
are
assuming
that
this
only
goes
a
few
more
weeks,
say
around
mid-November,”
Warden
said
last
week.
“If
it
goes
beyond
that,
we
may
start
to
see
some
additional
delays
in
getting
funding
on
contract,
or
even
delays
in
receiving
payment
before
year
end that
could
impact
our
cash
flows
for
the
year.
We
don’t
anticipate
that
at
this
time,
but
it’s
certainly
something
we’re
watching.
And
so
we’re
very
hopeful,
as
I
said,
that
the
government
will
agree
to
reopen
soon,
even
if
under
a
continuing
resolution.”
At
the
same
time,
she
added
that
the
shutdown
is
already
slowing
down
the
Pentagon’s
ability
to
make
decisions
on
programs.
For
example,
although
the
Pentagon’s
fiscal
2026
budget
has
yet
to
be
approved
by
lawmakers,
the
reconciliation
legislation
passed
by
Congress
earlier
this
year
includes
$4.5
billion
to
increase
the
B-21’s
production
rate
that
is
already
available
for
the
Pentagon
to
execute.
However,
discussions
with
the
Air
Force
to
define
the
specifics
of
the
ramp-up
plan
—
including
the
max
production
rate
and
the
timing
for
the
production
acceleration
—
have
“been
held
up
a
bit”
because
of
the
government
shutdown,
Warden
said.
Leonardo
DRS
is
another
company
that
is
expecting
the
shutdown
to
last
no
longer
than
November.
“As
it
starts
to
go
longer
than
that,
the
people
who
pay
us
and
give
us
the
awards
aren’t
there.
And
so
you’ll
start
to
see
delays
in
awards
and
delay
in
pay,”
said
its
CEO
Bill
Lynn,
who
is
retiring
later
this
year.
“But
it
would
really
have
to
keep
going
for
a
longer
period
—
where
we’re
already
basically
longer
than
we’ve
ever
seen
—
but
it
would
have
to
be
a
historic
length
before
we’d
see
an
impact.”
General
Dynamics
CEO
Phebe
Novakovic
said
a
long
shutdown
would have
particular
impact
on
short-cycle
programs
where
contracts
need
to
be
renewed
more
frequently,
although
she
wasn’t
willing
to
say
at
what
point
the
company
would
expect
to
see
a
financial
impact.
“The
uncertain
duration
and
future
potential
impacts
of
the
government
shutdown
creates
a
lack
of
clear
visibility
into
our
cash
forecast
for
the
remainder
of
the
year,”
she
said.
“We
are
taking
prudent
actions
to
conserve
cash
and
liquidity.
If
a
resolution
can
be
reached
in
the
near
term,
we
would
expect
to
be
able
to
achieve
the
forecast
that
I
just
discussed.
However,
in
the
event
of
a
protracted
shutdown,
it
is
unclear
how
and
when
our
cash
flow
will
be
impacted,
despite
our
careful
efforts
to
diligently
manage
cash.”
Novakovic
laid
out
one
such
step:
Following
the
third
quarter,
the
company
re-entered
the
commercial
paper
market
—
a
financial
term
used
to
describe
what
is
essentially
an
IOU
sold
by
a
company
to
help
finance
short
term
debts
—
which
she
said
would
support
the
company’s
liquidity
during
the
government
shutdown
in
the
event
of
slow
or
nonpayment
issues.
General
Dynamics
is
evaluating
the
impacts
to
its
contracts
on
a
weekly
basis,
and
while
the
shutdown
has
not
yet
impacted
cash
collection,
the
furlough
of
certain
department
contracting
personnel
has
resulted
in
a
delay
in
awards,
Novakovic
said.
“If
it
goes
into
next
year,
that
increases
the
likelihood
this
will
have
additional
impact,”
she
said,
adding
that
“particular
lines
of
business”
could
begin
to
run
out
of
funding.
For
HII,
shipbuilding
programs
continue
to
be
supported,
with
no
impact
to
ongoing
shipbuilding
operations
or
the
contract
negotiations
for
the
next
round
of
Columbia-class
ballistic
missile
submarines
and
Virginia-class
attack
submarines,
said
CEO
Chris
Kastner
during
an
earnings
call
Thursday.
However,
there
has
been
an
impact
to
the
company’s
mission
technologies
business,
which
Kastner
characterized
as
“immaterial”
so
far.
“We
are
watching
those
programs
closely
as
they
are
more
likely
to
be
impacted
by
budget
timing.
We
continue
to
support
completion
of
the
FY26
appropriations
process
as
soon
as
possible
to
minimize
the
impact
that
a
lapse
in
funding
could
have
on
our
programs,”
he
said.
Not
all
defense
CEOs
spoke
at
length
about
the
shutdown
or
its
impacts.
Lockheed
Martin
CEO
James
Taiclet,
who
leads
the
world’s
largest
defense
contractor,
said
the
company
is
closely
watching
congressional
deliberations
on
the
shutdown
and
FY26
budget
but
“continue[s]
to
see
broad
support
through
all
of
this
for
national
defense
priorities.”
Two
CEOs
with
a
large
commercial
aerospace
footprint
—
RTX’s
Chris
Calio
and
Boeing’s
Kelly
Ortberg
—
did
not
mention
the
shutdown
at
all
during
their
remarks.












Kathryn
