Defense contracts strengthen economy

Defense contracts are providing significant revenues for northern Nevada manufacturers and creating one of the brightest spots in the region's economy.

For some companies, contracts with the Department of Defense are worth hundreds of millions of dollars.

Sierra Nevada Corp., for instance, won a $50 million contract in September. It's a follow-up to a $248.3 million contract awarded in June of 2009 to provide the U.S. Navy with electronic systems that jam radio-controlled improvised explosive devices. SNC will provide the Navy with 2,500 electronic jammers, as well as provide support equipment and services. Ninety percent of the work on the project is being done at SNC's facility in Sparks.

In another major defense deal, weapons manufacturer U.S. Ordnance, which operates at Tahoe Reno Industrial Center, won contracts worth up to $500 million to provide machine guns to the U.S. Army.

While much of the defense work headed to northern Nevada companies isn't in the $100 million range, a slew of smaller contracts are keeping many regional companies moving forward.

Chromalloy, which builds, repairs and provides parts and coatings for the heated areas of gas turbine engines, has more than a $1 billion in current military contracts, says Andrew Farrant, vice president of marketing and corporate communications. The company's Carson City facility, which employs about 450, handles a fair amount of Chromalloy's work in the defense industry.

"We have done military work for number of years going back to conflict in Vietnam," says Farrant. "This work is very important to us; they are a great customer. We are happy to be working with them and actively looking to find other ways to work the military."

A Senate appropriations bill, meanwhile, includes funding for northern Nevada suppliers such as:

* Night Operations Systems of Reno, which is working to develop a nighttime lighting system that would illuminate targets beyond 3,280 feet.

* MC-21 Inc. of Carson City, which has developed a high-strength composite aluminum that has the potential uses as lightweight, multi-layer armor.

* Advanced Materials and Devices Inc. of Reno, which is working on technology to improve the ability of U.S. Navy submarines to survive shock.

* Software and Engineering Associates of Carson City, which is developing software that will assist in designing a next-generation cannon with reduced recoil, weight, wear and erosion.

* Nevada Nanotech Systems of Reno, which is developing chemical sensors intended to sniff out chemical and biological warfare agents and explosives that could be housed inside the millions of shipping containers annually entering U.S. ports.

Ralph Whitten, president of Nevada Nanotech Systems Inc., says NevadaNano is several years into a Department of Defense-funded development program that will be field tested in 2011.

The core of the company's work is producing a low-cost, small about half the size of a toaster molecular property spectrometer that can be mass manufactured and placed inside shipping containers to detect radiation and other threats.

U.S. ports, Whitten says, handle about 11 million shipping containers each year, but only 1 or 2 percent can be inspected because of time it takes inspectors to complete the task.

"Our whole economy is based on these shipping containers," Whitten says. "About 90 percent of our goods come in on shipping containers."

NevadaNano employs 11 at a 6,000-square-foot facility in Sparks. Whitten says the Defense Department has been almost the sole source of funding for the company.

"This technology we are working on is so advanced that it would be hard for many companies to undertake it without the backing of the defense industry," Whitten says. "They recognize there is a technology they need that is vital to the security of country so, they are willing to take the risk and fund the development of it.

"Congress has mandated that by 2012 all containers coming into U.S. should be inspected," he adds. "If we are successful in this development, we could service that market as well as follow-up markets for airport security and other commercial markets."

Many Nevada companies find opportunities for defense work through the Procurement Outreach Program, a department of the Nevada Commission on Economic Development in Carson City.

Rick Horn, POP director, says defense contracts play an even bigger part in the regional economy with the lack of commercial and private work brought about by the recession.

Another way northern Nevada companies can land lucrative defense contracts, Horn says, is to partner with larger companies that can't pursue government contracts designated for small businesses.

"There is a lot of teaming," Horn says, "because big companies can't access certain contracts as a prime contractor. The big thing now is how to fit into these markets and how to fit in."

Horn says many companies that formerly pursued commercial contracts now are trying to change their approach to include federally funded work.

"There is a lot of stability in government contracting a lot of them are long-term relationships," Horn says.