Measuring the Impact of Sequestration and the Defense Drawdown on the Industrial Base

Abstract

The presence of a technologically superior defense industrial base has been a foundation of U.S. strategy since 1945. While the implementation of the budget cuts in the Budget Control Act of 2011 has caused concerns for the industrial base, the resulting debate has been lacking in empirical analysis. The purpose of this research is to measure the impact of the current defense drawdown across all the tiers of the industrial base. The technical approach analyzes prime and subprime DoD contract data to measures the impacts of the drawdown by sector to better understand how prime and subprime contractors have responded to this external market shock.