战略与国际研究中心-Impact-of-Sequestration-and-the-Drawdown-on-the-Different-Sectors-of-the-Industrial-Base_16页_3mb

Summary of "Measuring the Impact of Sequestration and the Defense Drawdown on the Industrial Base, 2011-2015"

Core Content

This report analyzes the impact of the 2011 Budget Control Act (BCA) and the subsequent defense drawdown on the U.S. defense industrial base from 2009 to 2015. It highlights how sequestration and budget caps significantly affected defense contract obligations and the structure of the industrial base, with varying effects across different sectors and vendor sizes.

Main Points

• Sequestration and Drawdown Impact: The BCA led to a severe market shock, resulting in a substantial decline in defense contract obligations. The overall decline ranged from 15% in FY 2013 to 23% during the BCA decline period (FY 2013–2015).

• Sector-Specific Effects:

  • Land Vehicles experienced the most severe decline (56%).
  • Space Systems and Other Services also saw significant reductions (32% and 28%, respectively).
  • Ships and Submarines, Missile Defense, Aircraft, and Other R&D had declines ranging from 16% to 20%.
  • Facilities and Construction and Electronics, Communications, and Sensors (EC&S) had relatively smaller declines.
  • The Aviation sector experienced a "whipsaw" effect, shifting from growth to sharp decline.

• Vendor Size Impact:

  • Small vendors generally held steady or increased their share of contract obligations in most sectors, except Ordnance and Missiles and Ships and Submarines.
  • Large and medium vendors were more adversely affected, especially in R&D and services.
  • The Top 5 vendors saw a shift in their contract portfolio, moving away from R&D toward products and services.

• Effective Competition:

  • The overall rate of effective competition remained steady at around 50%.
  • However, Aircraft and Space Systems saw more significant declines in effective competition, dropping from 23% to 19% and 43% to 33%, respectively.
  • Ships and Submarines and Facilities and Construction showed increases in effective competition.

• Vendor Count Decline:

  • The total number of first-tier prime vendors declined by approximately 20%, or 17,000 vendors, from pre-drawdown levels.
  • Ships and Submarines and Space Systems saw an increase in vendor numbers during the drawdown, though these trends may be temporary.

Key Information

• The study uses data from the Federal Procurement Data System (FPDS) and Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS).
• The drawdown is defined as the combined effect of sequestration and declining OCO funding.
• President Trump's Executive Order 13806 (2017) prompted a review of the defense industrial base, which is informed by this study.
• CSIS and the Aerospace Industries Association (AIA) collaborated to analyze the effects of the drawdown on the industrial base.
• The report identifies gaps in data, particularly regarding subcontractors, making it difficult to assess their full impact.

Research Design and Methodology

• The study divides the timeline into three periods:
  • Pre-drawdown: FY 2009–2010
  • Start of Drawdown: FY 2011–2012
  • BCA Decline Period: FY 2013–2015
• It examines five key research questions:
  1. Did DOD components respond differently to sequestration and drawdown?
  2. Were subsectors of the industrial base equally impacted?
  3. How did the share of contract obligations change among vendors of different sizes?
  4. Did the number of prime vendors change?
  5. Did the rate of effective competition change within a sector?

Conclusion

The defense drawdown had a substantial impact on the industrial base, with varying degrees of decline across sectors. While small vendors generally fared better, the Top 5 vendors saw a shift in focus from R&D to products and services. The decline in the number of prime vendors and the reduction in effective competition in certain sectors underscore the need for a comprehensive review of the defense industrial base. The study serves as a foundation for advocacy efforts and policy discussions aimed at restoring the capacity and resilience of the U.S. aerospace and defense sector.