Northern Virginia Technology Council | Press Room | AIA, PSC and NDIA Detail Impact of Defense Cuts on Contractors

January 9, 2012

AIA, PSC and NDIA Detail Impact of Defense Cuts on Contractors

On January 6, the Defense Industrial Base Task Force, convened jointly by the Aerospace Industries Association, National Defense Industrial Association and Professional Services Council, released a report assessing potential impacts of severe cuts in defense spending over the next 10 years. The report addresses two scenarios: a $480 billion defense budget reduction over 10 years, and the $1 trillion in cuts that would hit the Department of Defense under sequestration if Congress fails to enact other budget reduction initiatives before January 2013.

The Task Force, composed of small, medium and large aerospace and defense companies, was asked to assess the impact of major defense budget cuts in investment, industry structure, workforce, and sector health and responsiveness. The industry executives concluded that smaller budgets would make the industry less innovative, force skilled technical personnel layoffs, freeze investments and escalate the pace of mergers and acquisitions. In addition, the report outlines how these budget cuts would impact smaller companies in the defense supply chain, as prime contractors are forced to bring critical services in-house, reducing competition and innovation and leading to higher costs. Click here for more information, and to view the full report, click here.