Since late 2011, defense contractors big and small have been planning for the previously announced reduction in defense spending of $487 billion over 10 years. But they could lose an additional $492 billion under sequestration, the automatic spending cuts that kick in on Jan. 2 if lawmakers on Capitol Hill and the White House fail to reconcile their differences.
Less taxpayer money to the Pentagon (and to fund wars and other operations overseas) means fewer contracts, which means fewer jobs in a sector that directly employs nearly 2 million Americans, roughly split between the public and private workforces, according to estimates by Deloitte Development. This means facilities across the country will manufacture fewer land, sea and air combat vehicles, assemble fewer electronics systems and provide fewer logistics and IT support networks/.../
For the time being, contracts that have already been signed will be honored. The effects of cuts are not “cliff-like” but rather an increasingly downward pitch that will become more noticeable beyond next year, according to a report by the Washington-based Center for Strategic and Budgetary Assessments.
The center recently conducted a series of strategic-choices exercises with defense contractors, lawmakers and think tanks to see what cuts they would make if they had the flexibility to choose rather than undergo across-the-board sequestration cuts over all accounts.
“There are a number of really difficult strategic choices you’ll have to make, such as what’s the right mix of long-range versus short-range aircraft; what’s the right mix of surface versus undersea ships for the Navy; what’s the right size and mix of ground forces,” the report’s co-author and senior fellow at the center, Todd Harrison, told Bloomberg TV.
Harrison’s group identified the four “crown jewels” of military capability that the Pentagon probably will fight to protect as the nation’s main defense foci. They are: special operations (the kind of military capability that killed Osama bin Laden in May 2011), submarine warfare systems, cyberspace operations and long-range manned and unmanned military surveillance (drones).
“Those are the really critical capabilities the DoD would need in the future even if you’re in a constrained funding environment,” said Harrison.