Warn Of Adverse Effects Of Deep Defence Cuts
Impending cuts to the defense budget will stifle the ability of
the defense industry to deliver innovation and urgent wartime
capabilities according to a report released by the Defense
Industrial Base Task Force Friday. The Task Force, composed of
companies from AIA, NDIA and PSC, was formed last October as a
result of Defense Secretary Panetta's meeting with representatives
of AIA's Executive Committee in September.
"This report paints an alarming picture for the future of the
aerospace and defense industry," said AIA President and CEO Marion
C. Blakey. "Secretary Panetta outlined very severe reductions in
the defense budget. Any further cuts will cripple crucial
industrial base capabilities in the national security sector."
The report, based on an industry analysis initiated by the Task
Force, concluded that smaller budgets would make the industry less
innovative, force the layoff of skilled technical personnel, freeze
investments and escalate the pace of mergers and acquisitions.
Respondents expect that cuts to procurement and R&D will be
frontloaded in the first several years.
"The findings and conclusions of this report emphasize the
critical need for government-industry dialog and partnership," said
NDIA President and CEO Lt. Gen. (Ret.) Lawrence Farrell.
"Especially in this time of shrinking defense budgets, government
needs to communicate openly and often with industry to ensure
impacts to the industrial base are deliberately managed, rather
than left solely to market forces."
The Task Force sent the report to Secretary Panetta on Nov. 11.
On Dec. 22, Deputy Secretary Ashton Carter, Acting Under Secretary
of Defense for Acquisition, Technology and Logistics Frank Kendall
and Deputy Assistant Secretary of Defense for Manufacturing and
Industrial Base Policy Brett Lambert met with Task Force
representatives to discuss the paper.
"We were very pleased to have the opportunity to discuss the
paper with Secretary Carter and his team," said PSC President &
CEO Stan Soloway. "We strongly believe that the impacts could be
partially mitigated over time, particularly if DOD focuses heavily
on 'how' it is buying and, in so doing, genuinely incentivizes the
kinds of innovation that is necessary."
Industry acknowledges that in the current economic environment,
budget reductions are necessary. However, the U.S. defense
industrial base is a national strategic asset. The draconian
approach if sequestration is triggered will cause the loss of
critical skills and capabilities as companies make business
decisions based on these radical cuts.
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