The Effects of the Budget Control Act of 2011 on the Defense Industrial Base

The Aerospace Industries Association (AIA) is undertaking a study of the effects of the Budget Control Act of 2011 (BCA) on mid- and lower-tier suppliers that support key U.S. defense capabilities. This study will attempt to move beyond widespread anecdotes about the damage done by ‘sequestration’ by depicting actual examples of lost suppliers, program delays and other turmoil in the defense industrial base.

Since enactment of the Budget Control Act (BCA) in 2011, funding for the Department of Defense (DOD) has been reduced, and made arbitrary, unpredictable, and inconsistent. While the full impact of sequestration has been somewhat mitigated by short-term Congressional budget agreements, effects of the cuts have been felt widely in the defense industry. Neither the government nor the private sector can operate effi ciently under these conditions.

The BCA requires the President to withhold (‘sequester’) discretionary appropriation accounts to stay below arbitrary annual spending limits – automatic, across-the-board cuts to government agencies, totaling $1.2 trillion over 10 years, split evenly between defense and domestic discretionary spending. The entire national security establishment has struggled to support its respective missions in response to these reductions.

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