|Two years ago General Dynamics, one of the biggest federal contractors, reported a quarterly loss of $2 billion. An “eye-watering” result, one analyst called it.|
Diminishing wars and plunging defense spending had slashed the weapons maker’s revenue and left some subsidiaries worth far less than it had paid for them. But the company was already pushing in a new direction.
Soon after Congress passed the landmark Affordable Care Act, the maker of submarines and tanks decided to expand its business related to health care. Its 2011 purchase of health-data firm Vangent instantly made it the largest contractor to Medicare and Medicaid, huge government health plans for seniors and the poor.
“They saw that their legacy defense market was going to be taking a hit,” said Sebastian Lagana, an analyst with Technology Business Research, a market research firm. “And they knew [the ACA] was going to inject funds into the health care market.”
They were right. In a way that is deeply changing Washington contracting, growth opportunities from the federal government have increasingly come not from war but from healing, an examination by Kaiser Health News and The Washington Post shows.
Politics are frozen. Budgets are tight. But business purchases by the Department of Health and Human Services have doubled to $21 billion annually in the last decade and are expected to continue rising.
HHS is now the No. 3...