The stability of the defense market is reflected in the top nine companies on the list, all of which were in the top 10 last year — though the order has slightly shifted.

Growing defense revenue isn’t something a company can do overnight. One of the fastest ways is by merging or acquiring another company, but the U.S. government has made clear its opposition to major mergers — as well as some smaller deals. (Lockheed Martin unsuccessfully sought to acquire Aerojet Rocketdyne in 2021 and 2022; now L3Harris Technologies has acquired it.)

The other, generally slower way is finding new work. But the defense budget, while boosted by Ukraine war spending, is generally about flat these days, meaning there’s no massive surge of money into new or unexpected programs.

Even so, there is some movement on the list. Boeing dropped to the fifth spot, down from 3rd last year, and its lowest ranking since it placed 5th in the 2018 list. The company last year reorganized its defense unit after delays of key programs, rising costs, quality concerns and significant losses.

Ukraine’s Ukroboronprom moved up 24 spots this year to 65th place, as the country has spent nearly 18 months fighting Russia’s invasion.

A closer look at the list

Just over half of the companies on the list are U.S. businesses. Thirty-one firms are based in Europe, and eight non-Chinese firms from the Asia-Pacific region are on the list.

Still, we recognize this list has some gaps. We can’t capture the defense revenue of Indian companies this year in large part because our correspondent there was arrested. We rely on a think tank to provide the data for the Chinese companies; three state-owned enterprises that were in last year’s list did not release figures for consideration in this version by press time.

There are no Russian firms on this year’s list because they did not respond to our requests for information and we couldn’t locate reputable sources of data.

Some private companies with significant defense revenue, such as General Atomics, opt not to provide data, while technology companies including Amazon and Google don’t offer comprehensive information on their defense revenue.

We also opt not to include medical and pharmaceutical companies in our list, even though they often have sizable military business, because we focus on companies producing weapons systems, military capabilities and associated technology.

That said, we hope this list offers a useful snapshot of who’s who in the modern industrial base as well as a window into how it’s changing.

Click here to see the Top 100 list.

The move comes after Lockheed Martin ended its acquisition effort in February.

L3Harris, which is the United States’ sixth-largest defense company, said it would pay $58 per share in an all-cash deal to acquire the defense contractor, which specializes in propulsion systems and energetics. Aerojet, which generates about $2.3 billion in annual revenue, has facilities in California, Arkansas, Florida, Alabama and Washington, among other states.

Two years ago, Lockheed announced it would acquire Aerojet, but the deal quickly drew controversy. Raytheon Technologies publicly objected, saying the transaction would force it to negotiate with Lockheed, a major competitor, for solid-rocket motors.

Sen. Elizabeth Warren, D-Mass., also questioned the deal and called for the Federal Trade Commission to examine it.

In early 2022, the FTC announced a lawsuit that sought to block the proposed $4.4 billion merger on antitrust grounds. The agency said it was concerned the deal would hurt competition in the defense industry by allowing Lockheed to cut off other contractors from vital missile components Aerojet provides, particularly scramjet engines for hypersonic missiles and control systems for missile interceptors.

Weeks later, Lockheed announced it would no longer seek to acquire Aerojet. In a statement, Jim Taiclet, Lockheed’s chief executive, said the company “determined that in light of the FTC’s actions, terminating the transaction is in the best interest of our stakeholders.”

L3Harris has dramatically reshaped itself in recent years. In 2019, L3 Technologies and Harris Corp. merged into what became the ninth-largest defense firm in the world at the time. The year before, L3 Technologies ranked 18th, and Harris Corp. ranked 26th.

The combined company, with $14.9 billion in 2021 defense revenue, was the 10th largest defense firm in this year’s rankings. Aerojet’s nearly $1.5 billion in defense revenue put the company at 65th place on this year’s Defense News Top 100 list.

In its announcement Sunday, L3Harris and Aerojet said the deal “will ensure the defense industrial base and our customers will have a strengthened merchant supplier to effectively address both current and emerging threats — and promote scientific discovery and innovation — through targeted investment in advanced missile technologies, hypersonics and more.”

The deal is slated to close in 2023 and requires regulatory approvals.

Stephen Losey contributed to this report.

At BAE Systems, the company is looking to address both areas, Tom Arseneault, who heads the contractor’s U.S. business, told Defense News during an interview on the sidelines of the forum.

He said the February invasion of Ukraine by Russia created both a near- and midterm horizon, adding to the longer-term one focused on China. The near-term effort is centered around “what can we get to Ukraine and how quickly,” while the medium-term horizon, meaning the next few years, is focused on the defensive posture of Eastern Europe, he said.

This interview was edited for clarity and length.

You indicated the war in Ukraine created two new horizons, adding to the longer-term one. Can you explain that?

The near-term horizon is the one we’ve all been scurrying to do. What’s transpired there is the recognition that you can’t just turn the production lines on like a light switch. We’re going to lean on legacy technologies, draw out of the inventories of the services, and then have a backfill strategy where appropriate and possible.

So to the extent possible, how can we draw off of more current production lines to backfill? Case in point: M113s, the old Vietnam War-era personnel carriers, of which 152 are in Ukraine today from a number of countries. The U.S. Army has seen fit to now backfill those with our Armored Multi-Purpose Vehicle. It’s a good example of trading out legacy hardware for a more current version.

The medium-term horizon — we’re starting to see that play out, most notably at our BAE Systems Hägglunds business in Sweden, where there’s been an acceleration of procurements in both the Czech Republic and in Slovakia, very close to the conflict. We’ll be working our CV90 infantry fighting vehicle into those two countries.

The China horizon — the long-term one — seems relatively certain for you as a company. The short-term and the medium-term horizons seem more uncertain. The makeup of Congress is changing; members may lose some of the appetite for Ukraine aid. How do you think about it as a company?

It all comes down to budgets and priorities. The balancing act will be the urgency of the defense of Eastern Europe juxtaposed against the threat and the timeline of the pacing challenge in China.

The fact that today [militaries] are drawing out of current inventories, they’re creating a gap in what they would hope to have. In fact, it has woken much of the world up to the inventories that they thought were sufficient. Now, as they draw these down in support of Ukraine, it raises some questions as to whether we had the right inventory level then and what’s it going to take to get back there.

There’s some certainty around that because no country wants to be vulnerable in that way. Somehow or another, both of these horizons will need to be dealt with, and the budgets will need to support them.

As you’re seeing equipment head to Ukraine, what lessons has industry learned?

Just to pick an example, the relevance of a certain system and the inventory levels at which that system should be stocked are being reviewed. The M777 towed artillery gun is out of production effectively. Now, artillery suddenly becomes an interesting thing in the wake of the conflict in Ukraine. So the call for more M777s around the world comes back up. The relevance of the system is in review, and the stocks of those systems around the world is in review.

These are things that have been out of production for a while. If they continue to be relevant in some way, what does it take to start those back up? And was it wise to shut them down?

Wouldn’t it have real effects for industry if militaries around the world decide that they need to pay for higher levels of inventory, that they need to keep some production lines they’d rather let go, just in case?

If we’re going to decide that we want to shut down the line, that we cannot sustain it for 20 years longer, then let’s get a sense of what’s the real demand out in the world, and let’s put that in inventory. So when the time comes, and if we need to do like we’ve done in Ukraine and send some of these systems elsewhere around the world, they’re there and there’s enough left for us to satisfy our own needs in the long term.

It’s a balancing act. What industry would love to see is just a steady, predictable budget and demand signal. That’s when we can create the economies of scale that get the services the best buying power. But it is very difficult to do in the environment we’re in with cyclical budgets and demand volatility.

Though known as a shipbuilder, HII, which includes Newport News Shipbuilding and Ingalls Shipbuilding, has sought to expand its portfolio. The company last year acquired Alion for $1.65 billion, adding more than 3,200 employees. In 2016, the company had picked up Camber, including 1,700 employees.

Alion was best known for its expertise in training and simulation, cyber technology, and intelligence, surveillance and reconnaissance, whereas Camber contributed capabilities including software engineering and intelligence analysis.

In an interview with Defense News on the sidelines of the Reagan National Defense Forum, which took place Dec. 2-3, Chris Kastner said the company is focused on getting out of debt. The top executive added that HII doesn’t see significant capability gaps for which it needs acquisitions to fill, but remains open to evaluating potential deals.

The McLean, Virginia-based mission technologies division includes six groups: C5ISR; cyber, electronic warfare and space; unmanned systems; live, virtual, constructive solutions; fleet sustainment; and nuclear and environmental services. While Kastner said this business will grow faster than the shipbuilding units, he doesn’t have a specific target for its size.

Meanwhile, he said inflation is going to make it “potentially a challenge getting new ships under contract.” The question will be whether there’s “enough funding to support the price,” he added.

He told Defense News the company is providing the U.S. Navy and the Office of the Secretary of Defense with data about increased costs, including for the workforce and parts.

“We’re trying to get in front of it,” he said. “It’s going to play out over the next three years.”

The problem of inflation, Kastner added, will weigh on both the company’s supply chain and lead times.

WASHINGTON — Software and data specialist Deltek, which keeps tabs on major government contracting programs, has created a list of the largest competitive opportunities emerging next year among defense agencies.

Some contracts have incumbent prime contractors; others pull together existing deals to create a larger one. But all are expected to release solicitations in FY23, with awards to follow.

1. Medical Q Coded Support and Services Next Generation

Description: This contract will provide supplemental medical staffing, medical support services and contract management to military treatment facilities throughout the United States.

Government lead: Defense Health Agency

Data of solicitation release: Nov. 15, 2022

Proposals due: Jan. 30, 2023

Anticipated value: $44 billion

2. Contract Field Team Program

Description: This program is meant to provide contract field teams who can modify, maintain, inspect and repair systems ranging from aircraft to missile systems to subsystems like engines. The government is considering 10 large and 10 small contractors.

Government lead: Air Force

Expected solicitation date: June 2023

Anticipated value: $8 billion

3. Mission Partner Environment Program

Description: This contract is expected to provide worldwide information sharing capability to help the Pentagon and its partners work together. This IT initiative consolidates more than 70 contracts.

Government lead: Air Force

Expected solicitation date: May 2023

Anticipated value: $10 billion

4. Common Hardware Systems 6th Generation

Description: This deal is meant to help the Army and other Defense Department organizations acquire simplified C5ISR tech. It’s focused on commercial IT hardware and services; General Dynamics Mission Systems has been the incumbent for decades.

Government lead: Army

Date of solicitation release: Oct. 7, 2022

Proposals submitted: Nov. 22, 2022 (currently under protest)

Anticipated value: $7.9 billion

5. Defense Logistics Agency J6 Enterprise Technology Services

Description: This program, dubbed JETS 2.0, provides IT support to the Pentagon and the Defense Logistics Agency, including to DLA program executive officers and DLA’s information operations enterprise.

Government lead: Defense Department

Expected solicitation date: March 2023

Anticipated value: $6 billion

6. Warfighter Training Readiness Solutions

Description: This initiative was previously known as the Army Training Aids, Devices, Simulators and Simulations, or TADDS, maintenance program. Lockheed Martin is the incumbent.

Government lead: Army

Expected solicitation date: September 2023

Anticipated value: $5 billion

7. Missile Defense Agency Integration and Operations for Enterprise Solutions

Description: This program will focus on a broad range of areas, from research and development IT services to mission operations to systems engineering. It is a follow-on to a contract held by Jacobs Engineering, but the scope of this effort will be different.

Government lead: Defense Department

Expected solicitation date: August 2023

Anticipated value: $4.6 billion

Speaking to Defense News on the sidelines of the Reagan National Defense Forum here, John Mengucci said the contractor sees its research as a way to differentiate itself. He said he doesn’t have a future goal for the amount spent on IR&D; instead, the company is focused on what the research produces.

“You can spend money and get minimal results,” Mengucci said. “There has to be a purpose and an outcome that we’re trying to serve.”

CACI in 2013 acquired Six3 Systems, primarily for its space capabilities, according to Mengucci. In 2019, the company picked up LGS Innovations, which specialized in spectrum management and cyber work. Two years later, CACI bought SA Photonics, a photonics technology company.

Those three deals helped drive the company’s increased push to invest in research. “They gave us the foundation in tech,” Mengucci said.

Historically, government service providers focused on providing labor rather than products, making research investments less important. But in recent years, these contractors have increasingly incorporated technology into their businesses.

CACI’s $35 million annual investment is far smaller than some of the large prime contractors; Northrop Grumman, for instance, reported in its annual Securities and Exchange Commission report this year it spent $1.1 billion on IR&D in 2021.

Mengucci said CACI doesn’t aspire to provide major weapons systems. In mission technology, which includes areas like counter-drone systems and cyber operations, the company sees itself competing against and working with large, prime contractors.

He told Defense News the company is focusing its independent research in three areas: signals intelligence, electronic warfare and space.

“We’re not going to push the state-of-the-art,” Mengucci said. “We’re going to be pushing the customers’ mindsets. ‘Hey, if you took this and that and combine it with that, did you know you could do that?’ ”

Gen. CQ Brown, speaking here on a panel at the Reagan National Defense Forum, said that he visited Silicon Valley recently and met with multiple companies and venture capitalists. While he didn’t identify specific firms, he said he “learned a lot this past week on semiconductors and artificial intelligence.”

“What we’ve got to do is actually pick some winners,” he said, pointing to rocket maker SpaceX as an example of an innovative company that has gained traction in the defense space.

“How we align and bring them forward — it’s going to take some nurturing,” Brown said of helping new tech companies move through the acquisition process. “It’s like hand-walking a staff package through the Pentagon to make sure it gets done.”

Once successful, Brown added, the military will have developed a “pattern of doing things a little differently.”

Commercial tech firms have become increasingly involved in the annual Reagan Forum, but the event’s panelists generally represent large firms, such as Microsoft or Google.

Indeed, speaking on the same panel, Karen Dahut, a former Booz Allen Hamilton executive recently tapped to run Google’s public sector business, said this is the most fruitful time for innovative companies focused on aerospace and defense, given significant VC investment.

“We need to get that capital working for us,” she said, referring to the military. “Those companies have not been able to get to a scaled program inside the department.”

Dahut advocated for picking several key technologies and giving them to troops for testing.

A group overseen by the deputy defense secretary is working aggressively to address the “pain points” faced by small companies who want to work with the Pentagon, according to Heidi Shyu, the under secretary of defense for research and engineering.

She said she presented to the deputy defense secretary a collection of issues she heard during meetings with small companies.

Kathleen Hicks, the No. 2 civilian in the department, said, ‘This is great. Let’s go tackle this,’” and then brought in other Pentagon offices, including acquisition and sustainment, the chief information office and the chief digital and artificial intelligence office, among others, Shyu said.

Now, those offices are tackling a variety of issues, from security clearance issues to workforce challenges. Hicks is holding monthly meetings on their progress, Shyu said.

The goal is to “simplify our contracting so we can award small companies much quicker, rather than taking many, many months,” she added. “We absolutely are trying to tackle a lot of acquisition pain points.”

Speaking at the Reagan National Defense Forum here, Rep. Adam Smith, D-Wash., said the focus on oversight is “part of Russian propaganda.”

“Ukraine is spending the money really well; that’s why they’re winning,” he added. “Yes, we need oversight, but we don’t need that as an excuse to not fund what we’re doing.”

The White House last month requested another $38 billion in Ukraine aid. If approved, it would bring the total amount Congress has appropriated for Ukraine to more than $100 billion.

But there are signs of waning conservative support. Earlier this year, 57 House and 11 Senate Republicans voted against a $40 billion Ukraine supplemental. And last month, a coalition of a dozen conservative groups signed a letter urging the House not to approve the new request.

During the same panel at the Reagan Forum, Sen. Deb Fischer, R-Neb., advocated for closer oversight of Ukraine spending and said involving more members of Congress in classified briefings would help.

That would allow them to be “informed [so] they don’t buy into a lot of noise that’s going on out there.”

“We have to be more transparent with the American people so that they can filter through the barrage of information that they receive and that they then are … more capable of discerning for themselves what the truth is,” said Fischer, a senior member of the Senate Armed Services Committee. “I don’t think it’s going to change minds on one side or the other for us to sit up here and say, ‘This is what you should believe.’”

In another panel later Saturday, Sen. Lindsey Graham, R-S.C., said Republican support for aid to Ukraine will continue.

But, he said, the GOP wants more oversight of U.S. aid to Ukraine and wants allies to do more to help Ukraine to maintain constituent support.

”The Republican Party will hold on Ukraine,” Graham said. Rep. “Kevin McCarthy [R-Calif.], hopefully, gets to be Speaker [of the House]. But I think you’ll find bills to make the aid more transparent [and] account for the weapons. You’ll be finding efforts by me and others to get Germany and other allies to do more. Because it’s easier for me to go back home and say, ‘Listen, if you don’t think Ukraine is important, you’re missing the boat. Because China is watching everything we do.’”

Both Fischer and Smith said the chaotic Afghanistan withdrawal have weighed on the American public’s willingness to engage abroad.

Fischer called it a “tipping point” that “made the American people question more,” while Smith said it led to “this feeling that America was too engaged.”

“There’s a certain amount of humility that every single one of us has to have,” Smith added.

He told forum attendees the government must “build a better narrative for why spending money on defense actually does make sense.”

“Ukraine is helping,” Smith added, noting that while many Democrats want to spend less on defense, “Democrats support helping Ukraine more than Republicans do.”

Meanwhile, Smith vowed to file compromise 2023 defense authorization bill on Monday, following bipartisan negotiations between the House and Senate. Minority Leader Kevin McCarthy, R-Calif., last month threatened to delay passage of the bill until January when Republicans take control of the House.

“There are a fair number of people that are trying to stand in the way of that,” he said. “We will vote and we will pass it this week one way or another.”

Stephen Losey contributed to this report.

Jim Taiclet, the chief executive of Lockheed Martin, put it this way in a recent earnings call: “The clutch isn’t engaged yet.”

“It’s going to take two to three years,” he told analysts. “That’s for our allies as well because they not only have to go through their own processes internally, they then have to go through generally the [U.S.] Foreign Military Sales process.”

Indeed, these kinds of changes are slower to emerge when it comes to company revenue, and that may be why much of this year’s Defense News Top 100 list looks similar to last year. (Lockheed Martin, Raytheon Technologies and Boeing predictably take the top spots.)

That said, there are some notable changes. Peraton, which made several major acquisitions, has jumped nearly 75 slots to join Leidos, Amentum and Booz Allen Hamilton as the largest U.S. government services contractors.

KBR, which is 32nd, also jumped up the list, while Ukrainian conglomerate Ukroboronprom surged eight spots.

Of course, the list doesn’t capture everything. Only one Russian company participated this year, giving us limited insight into the country’s defense industry. We rely on analysts to provide the data for Chinese companies.

And some of the major players in technology, from Amazon to Google, provide only limited windows into their defense work, meaning we can’t include them on the list because we don’t have a clear understanding of the scope of their defense work.

It’s a reminder that this list isn’t perfect, but what we hope it provides is a meaningful view of the industry and how it changes — or doesn’t — from year to year. It can show trends in sales, acquisitions and geopolitics. And this year’s list does that.

It’s a snapshot that we hope will serve as a useful tool for readers.

See the Top 100 list here