Measuring the Impact of Sequestration and the Drawdown on the Defense 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 cuts in the Budget Control Act of 2011 has caused concerns for the industrial base, the resulting debate has been lacking in solid 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 is to analyze prime and subprime DoD contract data along with select companies experiences to identify and illustrate trends and to compare the current defense drawdown with external shocks in other markets. The expected results of this research are fourfold, and each result offers significant benefit to the public. First, this research will provide significant new data and analysis on the impact of the defense drawdown on the tiers of the industrial base. Second, both the analysis and dataset will be made available publicly, helping to illuminate the little understood dynamics of subcontract awards. Third, this research will contribute to the academic discussion on how markets reorganize in response to shocks. Finally, the analysis found in the final report will provide lessons learned to those facing future market shocks.