[Defense in Brief] Report says 17,000 defense contractors have left the industry


The defense drawdown agreed to by the Obama administration and Congress that took place between 2011 — the year the Budget Control Act was passed — and 2015 resulted in a loss of at least 17,000 defense contractors, thereby harming the Pentagon’s civilian industrial complex.

The Center for Strategic and International Studies analysis said the number of first-tier prime vendors declined by roughly 17,000 companies, or roughly 20 percent, during the time period, raising questions about the health and future of the industrial base.

The authors noted that they used publicly available contractor data for their study and thus it’s unclear — due to the limitations in the subcontract database — to know whether all of those firms have left the industry altogether or are performing lower-tier work now.

“There is no doubt that a huge portion of the recent turbulence in the defense industrial base has taken place among subcontractors, who are less equipped to tolerate the defense marketplace’s funding uncertainly and often onerous regulatory regime — yet it remains extremely difficult to determine the real impact of these conditions on subcontractors,” the authors conclude. [source(Analyst comment: More evidence that the Budget Control Act and perpetual continuing resolutions rather than actual defense budgets are depleting military readiness. This para says it all: “The CSIS summary links 2011 Budget Control Act caps, subsequent short-term budget agreements, and Congress’ ‘unpredictable and inconsistent’ appropriations process to the ‘lost suppliers, changes in competition and market structure, and other turmoil’ it found. The years 2011-2015 are considered a period of defense drawdown and decline.)

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