- Advocacy & Policy
- Research Center
In response to the release of AIA’s new report from Dr. Stephen S. Fuller of George Mason University, “The Economic Impact of Sequestration on Small Business,” House Small Business Committee Chairman Sam Graves (R-Mo.) called a hearing focusing on the threat sequestration cuts pose to small businesses, jobs and the defense industrial base during National Aerospace Week on Thursday, Sept. 20.
“I am committed to cutting spending and getting our nation back on a fiscally sound course,” said Chairman Graves in his opening statement. “But I question the wisdom of using sequestration’s crude cuts rather than deliberate, targeted cuts. I think we all agree the patient is sick, but I’d prefer that the surgeon use a scalpel rather than a meat cleaver. The sweeping, unfocused cuts of sequestration are certain to have unintended negative consequences, including for America’s small businesses … Without strong small business participation in procurement, we will have less competition and innovation in contracting, which will result in higher prices for the government.”
In his testimony, Dr. Fuller predicted that nearly half of the 2.14 million jobs at risk next year from sequestration cuts would come from small businesses. “That small businesses are more vulnerable to changes in the economy than large businesses is well established in the literature,” said Fuller. “Small businesses are less able to sustain themselves when they experience a loss of a contract, either as a prime or subcontractor … [they] typically do not have the financial resources to sustain unprofitable operations for a sufficiently long period to permit restructuring and alternative product or market development.” Fuller added, “Not only will small businesses shoulder a disproportional share of the job losses attributable to sequestration but their ability to survive these losses and remain viable further challenges the efficacy of sequestration.”
The hearing was divided into two panels, with the first panel focusing on DOD’s assessment of the impact of sequestration on defense contracting, particularly with regard to smaller contractors. Principal Deputy Undersecretary of Defense (Comptroller) Michael J. McCord provided testimony with support from Director of Defense Procurement and Acquisition Policy Richard Ginman.
Also testifying at the hearing were: Beacon Interactive Systems CEO ML Mackey, who testified on behalf of the National Small Business Association; Adaptive Manufacturing Solutions President Laurie Moncrieff, who testified on behalf of the National Defense Industrial Association and Oak Grove Technologies Founder and CEO Mark Gross.
The witnesses discussed how sequestration would irrevocably harm the industrial base, especially in areas such as research and development, manufacturing and aerospace. They also spoke about the uncertainty that small businesses are already facing due to sequestration, at the prime and subcontract level.
To read the full witness statements, please click on the following link: http://smallbusiness.house.gov/calendar/eventsingle.aspx?EventID=308375
To read Dr. Fuller’s study, please click here: http://secondtonone.org/sequestration-study-956181-small-business-jobs-at-risk
To find out more about the Second to None campaign, including coverage of rallies and several other papers assessing the impacts of sequestration, please click here: http://secondtonone.org/news
AIA Source: dan.stohr[at]aia-aerospace.org