DEEP DEFENSE CUTS MAY NOT BE IN PLAY
“Arbitrary reductions would not be the right way to go,” said Senate Armed Services Committee Chair Jack Reed (D-RI) last week, when asked whether he expected deep cuts in Pentagon spending as an offset to pandemic funding. He prefers to examine proposals made by Pentagon leaders first, to see what weapons programs and other cuts they recommend. Reed, and other Congress watchers, also point out that any steep defense cuts would require Republican support given the 50-50 split in the Senate and the razor-thin Democratic majority in the House. This could all be good news for contractors that sell anything from professional services to products to DOD customers. Many companies have expected substantial cuts to programs as the new Congress looked for ways to balance defense spending with civilian agency priorities. Contractors thathave been planning for flat DOD spending and may be well-positioned to continue doing business if such forecasts prove accurate. Where defense money ends up is still far from certain, despite Reed’s statements and those made in late 2020 by his House counterpart Adam Smith (D-WA). At least one member wants further cuts to so-called “4th estate” DOD civilian workers. Neither party, however, wants to be seen as weak on defense spending with the growing international presence of China and Russia. Defense spending may not increase as it has, but most companies should continue to find good opportunities throughout the agency.