San Diego Military Economic Impact Study

Transcription

1 San Diego Military Economic Impact Study June 2012 Commissioned by: > Fermanian Business and Economic Institute i

2 Copies of this report may be obtained by visiting the San Diego Military Advisory Council website at: Copyright 2012 by the San Diego Military Advisory Council. All rights reserved. The material in this report includes forecasts and projections and may, in some instances, be judgmental in nature. PLNU, The Fermanian Business & Economic Institute, and the San Diego Military Advisory Council disclaim any and all liability from the use of this material. Publication or distribution of any portion of this document is prohibited without the express approval of the San Diego Military Advisory Council. ii

3 About the San Diego Military Advisory Council (SDMAC) Mission SDMAC is a nonprofit mutual benefit corporation, whose mission is to support, promote, and represent the common business and other interests of the military, their quality of life issues, and the defense industry community in the San Diego area. Membership SDMAC s current membership is comprised of 135 corporate members and over 300 individual members across the San Diego region. For general information and membership details, go to iii

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5 LETTER FROM THE SDMAC PRESIDENT June 2012 Dear SDMAC Members and Supporters: The San Diego Military Advisory Council (SDMAC) is delighted to present the 2012 San Diego Military Economic Impact Study (SDMEIS). San Diego is home to the largest concentration of military in the world. It is homeport to over 60 percent of the ships of the U.S. Pacific Fleet and over one-third of the combat power of the U.S. Marine Corps. There are over 100,000 active-duty Navy and Marine Corps personnel assigned to the ships and bases in the San Diego region. The strategic value of the San Diego region cannot be overstated. The unique relationship that exists between the military and the San Diego region exists nowhere else in the country. The Department of Defense (DoD) generates a significant economic impact on the San Diego region that far outpaces other industries in the area. In 2008, SDMAC undertook the effort to document the economic impact that the military has on the San Diego region. This was done utilizing quantitative economic data available from various agencies of the Federal Government, and applying processes and models that are recognized and accredited by the economic community. Earlier this year, SDMAC selected the Fermanian Business & Economic Institute of Point Loma Nazarene University to conduct the next two SDMAC San Diego Military Economic Impact Studies. The following 2012 SDMEIS reflects the most recent data available. The study also provides an initial projection of the impact of DoD budget trends on the region using information available from the proposed 2013 Defense Budget, information from the Program Objectives Memorandum (POM), and the Five Year Defense Plan (FYDP). The Budget Control Act of 2011 imposed automatic cuts to the 2013 Budget which take effect January 2, 2013 through a process called sequestration as a consequence of the inability of Congress to reach an agreement on reductions to the Federal deficit. This would impose devastating effects on the U.S. Military. I would like to extend our deepest appreciation to: Rear Admiral Dixon Smith, USN, Commander Navy Region Southwest; Brigadier General Vincent Coglianese, USMC, Commanding General Marine Corps Installations West; Rear Admiral Patrick Brady, USN, Commander SPAWAR; Rear Admiral Forrest Faison III, MC, USN, Commander Navy Medicine West; and, Brigadier General Daniel Yoo, USMC, Commanding General Marine Corps Recruit Depot San Diego. We thank them for their leadership, insight, and contributions to this Study. Sincerely James A. Johnson RADM MC USN RET SDMAC President 2012 v

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7 LETTER TO THE READER June 2012 Dear SDMAC Members and Supporters, Point Loma Nazarene University, through its Fermanian Business & Economic Institute, is pleased to present its research and analysis of the military s economic impact upon the San Diego Region. This report builds upon the previous research done by the FBEI for SDMAC regarding the significant economic role of the military in the San Diego Region. With the military s role as a key economic and employment force in the San Diego Region, strategic research and action are essential for the future vitality of both the military and the region. With the presence of more than 100,000 active-duty Navy and Marine Corp personnel, combined with the homeport activity for a majority of the U.S. Pacific Fleet, the military represents a significant influence for current and future community planning. This study presents our findings regarding the economic role the military plays in the San Diego Region and its importance in continuing the important mutual relationship between the military and the region. Every effort has been made to carefully collect, analyze, and present our research in a format that is straight forward and accessible for decision-making purposes in our process of actionable economics. On behalf of PLNU s Fermanian Business & Economic Institute, Chief Economist, Dr. Lynn Reaser, and Executive Director, Dr. Randy Ataide, we are pleased to present to the San Diego Military Advisory Council this report for your consideration and use. Positively, Bob Brower, Ph.D. President vii

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9 DEDICATION The SDMAC Military Economic Impact Study is dedicated to the memory of John Nersesian, SDMAC President 2009 and long term SDMAC Board Member who left us on May 29, It was John s vision that recognized the need to quantify and document the military s many contributions to the San Diego region, and it was his initiative, drive and encouragement that were the forces that resulted in the San Diego Military Advisory Council producing the annual Military Economic Impact Study. John was a patriot and a great supporter of the military and their families. His contributions to the military s mission and improving the quality of life for the military and their families in the San Diego area were truly significant, and are his legacy. He will be sorely missed. John Nersesian SDMAC President 2009 (Nov May 2012) ix

10 ACKNOWLEDGEMENTS SDMAC would like to acknowledge the following individuals who were key players in the preparation of this study: Military Jason Ashman Performance Management Navy Region Southwest N56 Ron Ronquillo Business Anaylst Navy Region Southwest N56 Jerry Avila Business Anaylst Navy Region Southwest N56 Chris Haley External Liaison Navy Region Southwest N00L Steven Davis Corporate Communications and PAO SPAWAR Bernie Lindsey Utilities and Energy NAVFAC Southwest Maj. Erin Mackin Public Affairs MCI West Mike Wiener Public Affairs Naval Medical Center San Diego Janice Hagar Public Affairs MCRD Jeremiah Glover Environmental Programs NAVFAC Southwest San Diego Military Advisory Council (SDMAC) 2012 Military Economic Impact Study (SDMEIS) Oversight Group Terry Magee, CAPT, USN (Ret.) SDMAC President 2008 Board Member and Co-Chair of SDMEIS Oversight Group Annette Peck, J.D. SDMAC Treasurer Board Member Fermanian Business & Economic Institute (FBEI) Staff Randy M. Ataide, J.D. Lynn Reaser, Ph.D. Cathy L. Gallagher Executive Director Chief Economist Director John Nersesian SDMAC President 2009 Board Member and Co-Chair of SDMEIS Oversight Group Larry Blumberg, CAPT, USN (Ret.) SDMAC Executive Director Emily Gallentine Manager Dieter Mauerman Research Assistant Special thanks to the entire FBEI student staff for their assistance. > Leah Crane > Billy Kailamai > Tim Marcacci > Kristen Raney The Fermanian Business & Economic Institute (FBEI) is a strategic unit of Point Loma Nazarene University (PLNU) providing expert business and economic commentary and speeches, as well as presentations, roundtables, consulting services, research projects, and events to our students, alumni, and the business community. x

11 SPONSORS SDMAC would like to thank the following companies and organizations for their generous support in helping to make this 2012 San Diego Military Economic Impact Study possible. xi

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13 TABLE OF CONTENTS INDEX OF EXHIBITS LIST OF ACRONYMS xiv xv EXECUTIVE SUMMARY 1 STUDY PURPOSE AND SCOPE 3 SECTION I: THE ECONOMIC IMPACT 5 The Military s Footprint in San Diego 5 Charting the Channels of Defense Spending in San Diego 7 Tracing the Ripple Effects of Defense Dollars 12 A Substantial Financial Impact to San Diego Region in Budget Cuts in Defense Spending Forecast and San Diego in Conclusions 21 Methodology 21 SECTION II: SOCIOECONOMIC IMPACT 25 Environmental Stewardship 25 Energy Conservation & Alternative Energy Development 28 Secondary Economic Impacts to the San Diego Economies 29 Engagement with Local Community 33 Conclusion 35 SECTION III: NAVY AND MARINE CORPS INSTALLATIONS 37 Navy Region Southwest 38 Naval Base Coronado 39 Naval Base Point Loma 40 Naval Base San Diego 41 Marine Corps Installations West 42 Marine Corps Base Camp Pendleton 43 Marine Corps Air Station Camp Pendleton 44 Marine Corps Air Station Miramar 45 Marine Corps Recruit Depot San Diego 46 Conclusion 47 xiii

14 INDEX OF EXHIBITS Exhibit 1 Military Funds Flow to San Diego through Different Channels 5 Exhibit 2 Military Dispersed By Installation 6 Exhibit 3 Military Reserves Are Strong in San Diego Region 7 Exhibit 4 San Diego Veterans Come from Different Wars 7 Exhibit 5 Defense Dollars Feed Directly into San Diego Region s Economy 7 Exhibit 6 Military Has Large Payroll in San Diego Area 8 Exhibit 7 Benefit Payments Help Retired San Diego Military and Veterans 8 Exhibit 8 Aircraft, Engineering, and Shipbuilding Lead San Diego s Procurement Contracting 9 Exhibit 9 Defense Contracts Buttress San Diego Firms 9 Exhibit 10 Procurement Contracts Disbursed over Time 10 Exhibit 11 Various San Diego Firms Benefit from Military s Credit Card Purchases 11 Exhibit 12 U.S. Marine Corps Graduates Drive Tourism Dollars 11 Exhibit 13 Defense Spending Creates Stability in San Diego s Job Market 12 Exhibit 14 Defense Sector Is Prime Income Generator for San Diego 12 Exhibit 15 Military Makes Large Contribution to San Diego s Gross Regional Product 13 Exhibit 16 Defense Spending Plays Key Role in San Diego 13 Exhibit 17 The Military Gives San Diego Needed Support in Exhibit 18 Military Responsible for 25% of All San Diego Jobs 14 Exhibit 19 Defense Creates Jobs in Many San Diego Industries 15 Exhibit 20 Jobless Rate Would Be Lower if Military Were Included 15 Exhibit 21 National Security Spending to Decline 16 Exhibit 22 Sequestration Would Drain U.S. Defense Spending 16 Exhibit 23 Military Spending to Hold Steady In San Diego 18 Exhibit 24 Military Employment to Remain High in San Diego 18 Exhibit 25 USS Ronald Reagan to Boost Navy Ship Crew Count in Exhibit 26 Previous Contracts Sustain Procurement Spending 20 xiv

15 LIST OF ACRONYMS ACSP C&D CALFIRE CBO CFFR CNRSW CRADA DECA DMDC DoD DoN EMS FBEI FPDS FEDFIRE FIRST FRCSW GPC LEED MAG MAW MCAS MCB MCRD MCI MHPI NAB NASNI NAVSUP NBC NBPL NBSD Audubon Cooperative Sanctuary Program Construction and Demolition California Department of Forestry and Fire Protection Congressional Budget Office Consolidated Federal Funds Report Commander, Navy Region Southwest Cooperative Research and Development Agreement Defense Commissary Agency Defense Management Data Center Department of Defense Department of Navy Environmental Management System Fermanian Business & Economic Institute Federal Procurement Data System - Next Generation San Diego Federal and Metro Fire and Emergency Services For Inspiration and Recognition of Science and Technology Fleet Readiness Command Southwest Government Purchase Card Leadership in Energy and Environmental Design Marine Aircraft Group Marine Air Wing Marine Corps Air Station Marine Corps Base Marine Corps Recruit Depot Marine Corps Installations Military Housing Privatization Initiative Naval Amphibious Base Naval Air Station North Island Naval Supply Systems Command Naval Base Coronado Naval Base Point Loma Naval Base San Diego xv

16 NOSC NEX NMCSD NRSW OMB RDTA&E SCEP SDPTA SPAWAR STEM STEP TSC VA Naval Operations Support Center Naval Exchange Service Command Naval Medical Center San Diego Navy Region Southwest Office of Management and Budget Research, Development, Test, Acquisition, and Evaluation Student Career Employment Program San Diego Port Tenants Association Space and Naval Warfare Systems Command Science, Technology, Engineering, and Mathematics Student Temporary Employment Program Training Support Center Department of Veterans Affairs xvi

17 EXECUTIVE SUMMARY San Diego s military community and defense cluster continue to represent an integral part of the region s economy. This report documents the current impact on jobs, income, and output and explores the future role of national security spending in an era of greater fiscal austerity. > An estimated total of $20.6 billion of direct spending related to defense will flow into San Diego County during fiscal year 2012, an amount equal to more than $6,500 for each of the County s residents. > The military sector is responsible for 311,000 of the region s total jobs in 2012 after accounting for all of the ripple effects of defense spending. This represents one out of every four jobs in San Diego s economy. > The jobs created as a result of defense spending span a wide range, including engineering, food services, construction, shipbuilding, health care, real estate, financial services, and research. > San Diego s unemployment rate would be more than one-half percentage point lower than the officially reported number if Navy and Marine Corps personnel were included. > Defense-related activities and spending will generate $32 billion of gross regional product (GRP) for San Diego County in fiscal year This is more than the total economic output estimated for Colorado Springs, Colorado, or El Paso, Texas. > Dollars linked to national security enter San Diego through three primary channels: wages and benefits for active duty and civilian workers; benefits for retirees and veterans; and spending on contracts, grants, small purchases, and tourism from visiting family members and friends of the military. > Each defense-related dollar entering San Diego generates additional jobs, income, and output as orders feed through the supply chain and workers employed throughout that chain spend some of their resulting incomes on the region s goods and services. > For every $1,000 of output or GRP created directly as a result of defense-linked spending, another $550 is generated due to the ripple effects of that spending. For every 1,000 jobs created directly by defense expenditures, another 640 positions are made available due to multiplier effects. > The winding down of the U.S. military commitment in Iraq and Afghanistan together with budget pressures indicate that national security spending has peaked at least for the near-term. The Administration s Budget over the last few years has included Overseas Contingency Operations (OCO). For FY 2013 the budget calls for national security spending to equal $640 billion compared with an estimated $670 billion in fiscal year 2012 and $711 billion in fiscal year

18 > Failure of Congress to find ways to cut the budget deficit over the decade could trigger automatic spending cuts or sequestration as soon as January Such cuts would pare national security spending another $60 billion from projected levels for > San Diego will not be immune to the planned cutbacks in troop levels and spending by the Department of Defense. The Marine Corps is expected to see its size gradually reduced over the next five years primarily through attrition and a reduction in recruiting. > The number of Navy personnel based in San Diego is projected to increase in fiscal year 2013 with the return of a second aircraft carrier, the USS Ronald Reagan. The shift in strategic focus to the Asia Pacific region will continue to support the Navy s presence in San Diego as with the potential addition of a third aircraft carrier. > Various San Diego defense contractors will face a shrinking defense budget but could benefit from the emphasis on unmanned vehicles and equipment, cyber security, energy efficiency, and new technologies. The Military Gives San Diego Needed Support in 2012 FY estimate* Military Responsible for 25% of All San Diego Jobs Share of total, FY 2012 estimate Jobs 311,000 Jobs Supported by Defense Spending 25% Income $17.7 billion Gross Regional Product $31.9 billion Other 75% *Includes all ripple or multiplier effects Source: FBEI Source: FBEI Source: FBEI 18 2

19 STUDY PURPOSE AND SCOPE As San Diego strives to set its economy on a stronger track and define its future, two major issues must be considered. First, what is the current role of the military and defense spending in the region? Second, in view of current and anticipated budget constraints for DoD and changes in national defense strategy, what will be the implications for San Diego going forward? This report seeks to address these important topics. Section I of this study analyzes in detail the dynamics of the defense cluster in the San Diego region. It begins with a description of the military s footprint: the troops and supporting personnel based here; defense contracts, grants, and spending benefiting San Diego firms; and various benefit and other payments accruing to veterans and retired military and civilian workers. It then maps all of the various ripple effects on the broader economy as defense dollars feed through the supply chain and support household spending on a wide variety of goods and services. The military s total impact in 2012 is presented in terms of the impact on jobs, income, and gross regional product (GRP) along with comparisons to 2010 and The budget outlook for fiscal year 2013 is then explored, including the possibility of large automatic spending cuts under sequestration. The implications for San Diego in fiscal 2013 under the most likely path for defense spending are then discussed. The section concludes with a longer term assessment of the role of the military in the region s economy. Section II of the study looks at the more qualitative dimensions of the military s presence and defense spending in San Diego. It examines the military s impact on the environment and conservation, work force development, and community support through volunteer efforts and partnerships with schools and charitable organizations. Section III of the study provides a comprehensive description of the principal Navy and Marine Corps installations located throughout the region to provide a clear picture of the operations of this key San Diego cluster. 19 3

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21 SECTION 1: THE ECONOMIC IMPACT The Military s Footprint in San Diego The military and defense spending have long played a dominant role in the San Diego region. Even as the economy has diversified into other areas, including life sciences, telecommunications, alternative energy, and health care, national security comprises a significant part of the region. Funds devoted to fulfilling the nation s security mission flow into the San Diego area through three primary channels: wages and salaries to support the Navy and Marine Corps personnel stationed in the region; spending on materials, equipment, services, and research to both support the local bases and U.S. defense operations worldwide; and retirement benefits to individuals who have devoted significant parts of their lifetimes to serving the military. In fiscal year 2012 (1 Oct Sept. 2012), an estimated $20.6 billion will come to San Diego to support these three principal channels. This amount equals more than $6,500 for every San Diego resident. Nearly half (48%) of the 20.6 billion represent outlays for various defense contracts and other types of spending, while 39% represents the payrolls of active duty military and civilian workers connected to local military operations. The remaining 13% will go for the payment of retirement and other benefits accruing to veterans, retired military, and retired civilian Department of Defense employees. (See Exhibit 1.) Exhibit 1 Military Funds Flow to San Diego through Different Channels Billions of dollars, FY 2012 estimate Total= $20.6 Billion Retirement and Benefits 13% Wages and Salaries 39% Procurement and Spending 48% Source: FBEI Source: CNRSW; FBEI 5

22 San Diego s Military Face The People Exhibit 2 Approximately 100,000 active duty and 30,000 full-time civilian workers connected to the military currently work in various locations throughout the San Diego region. (See Exhibit 2.) Close to 51,000 of these are members of the U.S. Navy, which represents about one in six members of the nation s total Naval force. The largest share of the region s Navy (over 20,000) are stationed at Naval Base San Diego. Military Dispersed By Installation Number of Employees, FY 2012* Installation Civilian Marine Corps Navy Total MCAS MIRAMAR 453 9, ,376 MCB & MCAS CAMP PENDLETON ,620 3,949 47,319 MCRD SAN DIEGO 725 6, ,202 NAVMEDCEN SAN DIEGO 2, ,561 5,884 NB CORONADO (IMPERIAL BEACH) NB CORONADO (NAB CORONADO) ,280 6,061 NB CORONADO (NASNI and SCI) 4, ,060 16,263 NB POINT LOMA (NMAWC) 246 1,955 2,201 NB POINT LOMA (OTC) ,168 NB POINT LOMA 7,954 1,761 9,715 NB SAN DIEGO 2, ,040 22,742 NB SAN DIEGO (BROADWAY) NWS SEAL BEACH DET FALLBROOK NOSC SAN DIEGO OTHER, INCLUDING VA 2, ,658 Total 25,682 56,990 50, ,323 *Reserves not included Source: CNRSW; FBEI Marines total close to 57,000 in San Diego, which includes the average number of recruits located here during the year (approximately 4,000 in fiscal year 2012). Approximately one out of every four individuals serving in the Marine Corps is based in San Diego County. Camp Pendleton alone houses nearly 41,000 Marines. An additional 26,000 civilian employees on the payrolls of the Department of Defense (DoD) or Department of Veterans Affairs (VA) support the operations of active duty and retired personnel throughout the region. 6 Defense dollars support approximately 8,200 members of the Armed Services Reserves who reside in San Diego County. These individuals take part in various training exercises throughout the year and support crisis situations that may develop either in the U.S. or abroad. While nearly one-third of San Diego residents serving in the Reserves are affiliated with the Navy, sizable numbers also are aligned with the Marine Corps, Army, and Air Force. (See Exhibit 3.)

23 San Diego s defense face is also defined, often poignantly, by the more than 220,000 veterans who reside here. These individuals have served in various wars, including World War II, the Korean War, the Vietnam War, and the conflicts in Iraq and Afghanistan. (See Exhibit 4.) Exhibit 3 Military Reserves Are Strong in San Diego Region Percent of total, FY 2011 Exhibit 4 San Diego Veterans Come from Different Wars Percent of total Air National Guard 4% Navy 31% Air Force 7% Army Reserve 16% Post 9/11 25% WWII 8% Korean War 10% Marine Corps 23% Army National Guard 19% First Gulf War 23% Vietnam War 34% Source: FBEI Source: CNRSW; FBEI Source: U.S. Census Bureau; FBEI Source: U.S. Census Bureau; FBEI Charting the Channels of Defense Spending in San Diego Each of the three principal ways in which defense-related dollars (direct payrolls; contracts and other spending; and benefit payments) enter the region s economy has distinct characteristics and impacts the economy in different ways. Because some of these channels have significant tributaries, the dollars entering the region can be further delineated into several distinct streams of influence. (See Exhibit 5.) Exhibit 5 Defense Dollars Feed Directly into San Diego Region s Economy Millions of dollars, Fiscal Years e 2013f Procurement Outlays $8,278 $9,224 $9,736 $9,572 Active Duty Salaries $6,454 $6,563 $6,269 $6,458 Civilian Salaries $1,869 $1,849 $1,888 $1,845 Retirement and Veteran Benefits $2,296 $2,525 $2,614 $2,723 Government Purchase Card $100 $87 $91 $90 Grants $40.8 $39.8 $38.4 $36.2 Tourism (MCRD) $13.9 $14.2 $14.3 $14.0 Total $19,053 $20,302 $20,650 $20,739 e=estimate; f=forecast Source: CNRSW; FBEI 7

24 Active Duty and Civilian Salaries The total payroll of Navy and Marine Corps personnel (including recruits) will total about $6.2 billion in fiscal 2012, with another $1.9 billion going to civilian workers. (See Exhibit 6.) While San Diego s military operations support a wide range of job categories and skill sets, the average pay for Navy and Marine Corps employees is about $59,000 (including benefits). For civilian workers, which include large numbers of scientists and engineers, salaries average about $75,000 per year. Retirement and Veterans Benefits Approximately $2.6 billion will benefit various San Diego residents in fiscal year 2012 who are retired military workers, retired DoD civilian employees, and veterans. (See Exhibit 7.) The Department of Defense funds the first two groups, while the Department of Veterans Affairs funds the latter. These funds provide a vital base supporting income and spending in the region. In addition, close to $420 million in government insured and guaranteed loans are expected to be provided to veterans in 2012, providing a vital support for the region s beleaguered real estate and housing sector. Exhibit 6 Exhibit Military Has Large Payroll in San Diego Area Billions of dollars, FY 2012 estimate Benefit Payments Help Retired San Diego Military and Veterans Billions of dollars, FY 2012 estimate Marines & Recruits Navy Civilian (DoD & VA) 0 Retired Military Veterans Retired Civilian Source: CFFR; FBEI Source: CFFR; OMB; FBEI Source: CNRSW; CFFR; FBEI 8

25 San Diego has a large cluster of firms who benefit from contracts with various branches of the military. Leading companies and industries involved with such contracts include aircraft, engineering, shipbuilding, construction, R&D, communications equipment, and electronics. (See Exhibits 8 and 9.) An estimated $9.7 billion will flow into San Diego County during fiscal year 2012 from current and past contracts. Exhibit 8 Aircraft, Engineering, and Shipbuilding Lead San Diego s Procurement Contracting Billions of dollars, FY 2011 Aircraft Engineering Shipbuilding Construction R&D Technical Services Communications Equipment Aircraft Parts Electronic Components Source: DMDC; FBEI Exhibit 9 Defense Contracts Buttress San Diego Firms Top 10 recipients, FY 2011 Company Name Dollars General Atomics Aeronautical Systems, Inc. $1,629,631,209 National Steel & Shipbuilding $964,512,995 Science Applications International Corporation $922,165,691 Northrup Grumman Corporation $758,389,180 Northrup Grumman Systems Corporation $681,788,162 BAE Systems San Diego Ship Repair Incorporated $364,165,802 General Atomics $261,798,782 Northrup Grumman Space and Mission Systems Corporation $243,851,991 Viasat, Incorporated $172,241,403 Harper Construction Company, Inc $141,895,667 Total $6,140,440,882 Source: DMDC; FBEI 9

26 Many defense contracts take place over time frames that can comprise up to five years or even longer. (See Exhibit 10.) R&D contracts typically are relatively short-term in nature, with much of the work completed within the first two years. Aircraft and construction projects frequently see a peak of activity in the second year, although sizable amounts of work continue into the third, fourth, and fifth years. Shipbuilding has the most even build-out rates, with about 10-20% of project funds expended during each of the five years of a typical project. Exhibit 10 Procurement Contracts Disbursed over Time Percent of total spending per year 60 R&D Construction Aircraft Ships 10 0 Year 1 Year 2 Year 3 Year 4 Year 5 Source: OMB; CBO; FBEI The Navy and Marine Corps contract with other firms to provide a wide range of goods and services to carry out the operations and maintenance functions of the facilities based within San Diego County. These include food service, janitorial, telecommunications, logistics, and other functions. Government Purchase Cards In addition to the goods and services furnished to military operations based in San Diego County through various procurement contracts, smaller transactions (less than $3,000) are carried out using Government Purchase Cards (GPC). These purchases, which are estimated to total $91 million in fiscal year 2012, benefit a wide range of businesses in the San Diego region. These include various business services (such as printing), retailing (such as automotive parts), building materials, electronic components, and laboratory instruments. (See Exhibit 11.) 10

27 Grants Grants from the Defense Department and VA represent another source of funding for San Diego County firms, with the total estimated at about $38 million for fiscal year These fund a variety of research efforts related to medical, weapons, alternative energy, intelligence, and other defense issues. Tourism Completing the total procurement and spending channel of the military s influence on San Diego, tourism injects funds into the region. While not funded by the government as are the other components of defense-related dollars, family members and friends related to military personnel bring a considerable sum of funds from outside the region into the San Diego region each year. This effect is particularly evident in relation to the multiple graduations that take place each year at the Marine Corps Recruiting Depot (MCRD). In fiscal year 2012, it is estimated about 16,000 individuals will graduate from the facility. Approximately 53,000 family members and friends will come to the ceremonies over the course of the year, spending an estimated $6.3 million on hotels, $5.0 million on food, and $3.0 million on entertainment, for an estimated total of $14.3 million. (See Exhibit 12.) Exhibit 11 Exhibit 12 Various San Diego Firms Benefit from Military s Credit Card Purchases Millions of dollars, FY 2011 Business Services Misc. Retail U.S. Marine Corps Graduates Drive Tourism Dollars Millions of dollars, FY 2012 estimate General Merchandise Building Materials Electronic Components 2 Laboratory & Medical Instruments Hotels Food Entertainment Source: NAVSUP; FBEI Source: San Diego Convention & Visitors Bureau; FBEI Source: San Diego Convention & Visitors Bureau; CNRSW; FBEI 11