Defense industry shifts focus to minimizing damage from sequester

The defense industry is no longer fighting to stop sequestration before March 1.

Recognizing that no one in Congress expects a deal before the across-the-board cuts hit in March, industry groups are now strategizing to get them reversed as soon as possible after they take effect, keeping the damage to a minimum.

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The Aerospace Industries Association (AIA), which has led the fight to stop the cuts, is changing its tactics to highlight the impacts of sequestration as they happen, rather than warning of theoretical dangers.

“The fight’s not over. When sequestration goes into effect on March 1, we don’t shrivel up and die — we just get louder,” said AIA spokesman Dan Stohr.

“We’re trying to strategize how we want to approach this in a way that really raises the volume in an effective way and convinces Congress that they need to do something about this as soon as possible.”

AIA has been warning Washington about the dangers of sequestration for more than 18 months now, but most of the talk has been about the potential for jobs lost.

Now AIA will look to highlight what’s happening in real time as sequestration hits, from the nearly 800,000 civilian Pentagon workers who will face furloughs to the cancellation of the Hampton Roads Air Show at Langley Air Force Base, which was announced Friday, citing sequestration.

The defense industry has also teamed up with trade associations supporting health and education that are fighting against the non-defense sequestration cuts, a partnership that will likely continue into March.

What little hope that AIA and other groups may have had for a last-minute sequestration solution before the March 1 deadline went out the door as Congress left town for a weeklong recess Friday.

The House and Senate will return the week of Feb. 25, just four days before sequestration takes effect.

A growing number of lawmakers have said that sequestration is going to happen, including on Friday one of the industry’s biggest defenders, House Armed Services Chairman Buck McKeon (R-Calif.).

"Sequester is going to kick in,” said McKeon, who has been a vocal opponent of the cuts for more than a year.

Congress held three hearings this week to highlight the dangers of the cuts — including two featuring rare joint appearances by the Joint Chiefs — but there was no movement toward stopping the cuts.

Most of the chatter in Washington has been a blame game over who is responsible for sequester in the first place: Republicans blame President Obama for coming up with the idea, and Democrats say that Republicans agreed to it.

Stohr said that the deal before the first sequestration deadline in January was also reached at the last minute, but those negotiations had a much different feel and were tied to the expiration of the Bush-era tax rates.

“At least around New Year’s it felt like there was a conversation going on. That doesn’t appear to be the case now. And that’s unfortunate,” Stohr said.

The across-the-board sequestration cuts would reduce the 2013 budget by $85 billion, including a $45 billion cut to the defense budget. Sequestration would reduce defense and non-defense budgets by $1 trillion over the next decade if it remained law.

Loren Thompson, an analyst at the Lexington Institute who consults for defense firms, said that defense contractors are prepared for sequestration to begin to take effect, but they believe it will end quickly.

“The industry’s view is that sequestration will trigger as scheduled on March 1, but from that point onward, members will be so inundated with complaints from their constituents that it won’t last very long,” Thompson said. “What industry has figured out is that until members start hearing from their constituents, there’s not much pressure to change the course they’re on.”

For large defense contractors like Lockheed Martin and Northrop Grumman, much of the impact of sequestration would be felt over the long-term and not immediately, because big firms have a backlog of contracts they are already working on.

The immediate effects of the cuts will be felt in places like ship repair yards and others in the services sector, Thompson said.

Many think the best chance for a quick fix to avert sequestration is the expiration of the continuing resolution on March 27, which the Pentagon has also warned would cause major disruptions if a Defense appropriations bill is not passed.

Even defense supporters think there will be some long-term reductions to Defense budgets in a deal to avert sequestration, but they say this is preferable to the mindless across-the-board manner of cutting — and the uncertainty that’s been hanging over the industry for the past year.