Drivers
- A proposed Senate appropriation would significantly increase funding levels for Fiscal Year 2022 defense research by 12.5 percent for basic research (fundamental research at universities) and 12 percent for the Defense Advanced Research Projects Agency. While not yet appropriated by Congress, the proposed increased funding is promising.
- The Department of Defense (DoD) Small Business Strategy is working to reduce barriers that can reduce critical manufacturing capacity, competition and the availability of vital goods, products and services. Small businesses play a major role in DoD supply chains. Last year it awarded $80 billion dollars to small businesses through prime contracts. Still, over the last decade, small businesses in the defense industrial base have declined by more than 40 percent.
Drawbacks
- Defense spending has grown significantly over the past decade; however, we are entering a cycle where the top-line budget will keep pace with inflation. The military services have urgent and competing modernization and recapitalization needs and have a renewed interest in incorporating innovative technologies, such as quantum computing, artificial intelligence and hypersonic weapons. Companies that develop innovative technologies may find their products are in high demand but must create cost reduction strategies to keep pace with reduced spending power.
- The Congressional Budget Office (CBO) examined the effects a substantially smaller defense budget on U.S. forces. It created three broad options the U.S. could pursue if the budget is gradually cut by $1 trillion, or 14 percent, between 2022 - 2031.
