Nov. 12 (Bloomberg) -- Boeing Co., the second-biggest defense contractor, plans to buy companies in areas that are growing faster than proposed U.S. spending on new weapons, including homeland security, intelligence programs and logistics support.

``We are working very hard to move ourselves into parts of the marketplace that are growing faster than'' the U.S. defense budget, Jim Albaugh, the company's defense chief, told investors at a Merrill Lynch & Co. conference today. ``Intelligence and homeland security are areas we are going after, and we see opportunities in international markets as well.''

The global market for weapons outside the U.S. that Boeing plans to compete for is in ``excess of $80 billion over the next 10 years,'' Albaugh said.

The defense industry wants President-elect Barack Obama's administration to set a minimum military budget pegged to the U.S. economy of 4 percent of GDP, to sustain spending on new weapons, according to Marion Blakey, president of the Aerospace Industries Association.

About $120 billion to $150 billion a year should be spent on developing and buying new arms, the Washington-based trade group said.

U.S. defense companies, including Boeing and larger rival Lockheed Martin Corp., have been helped by a 70 percent increase in U.S. military spending since 2000, boosted by wars in Afghanistan and Iraq that lifted last year's expenses to $671.7 billion.

New Administration

The new Democratic administration faces decisions on $125 billion in major weapons programs even as financial pressures may require closer scrutiny of the Pentagon's budget.

Obama's campaign Web site said he intends to reduce cost overruns, end no-bid contracting and increase oversight of weapons acquisitions. Obama supports the Pentagon's plan to increase the Army's troop strength by 65,000 and the Marine Corps' by 27,000 by 2013, which will add to the military budget.

Defense programs bring in about half of revenue at Boeing, which also is the world's No. 2 commercial-jet builder.

To contact the reporter on this story: Gopal Ratnam in Washington at gratnam1@bloomberg.net; Susanna Ray in Seattle sray7@bloomberg.net.

Last Updated: November 12, 2008 16:54 EST