Negative Behavior

The threat of sequestration introduces a huge amount of uncertainty for the defense industry, which could lead to negative behaviors, Brett Lambert, the deputy assistant secretary of defense for manufacturing and industrial base policy, said today.

Speaking at a Bloomberg Government defense conference in Washington, Lambert said the industrial base needs certainty to be able to make plans six months, 12 months or 18 months down the road to provide goods and services to the warfighter.

Sequestration, which would cut hundreds of billions of dollars from the Pentagon over the next decade, is slated to begin in January 2013 if lawmakers do not act.

"In the absence of certainty, people will tend to gravitate to the most negative behaviors," Lambert said. He noted that the Budget Control Act of 2011, which set up sequestration as a trigger if Congress failed to create a plan to cut the deficit by at least $1.2 trillion, was pretty clear about how these cuts would affect the Defense Department. Defense officials state they are not creating plans to deal with these cuts.

Marion Blakey, the president and chief executive officer of the Aerospace Industries Association, said these negative, or conservative, behaviors that industry is engaged in consist of holding back on investments or not deploying capital in a way to help the economy. Industry is also not training or hiring, she said.

She noted that observers are beginning to see the "withering" away of both companies and vital capabilities. "You’re also loosing vital capabilities in terms of technology and our ability to advance in ways that will spur our economy," Blakey said.

She said time is running out for Congress to solve the sequestration threat. She said the rational approach would be to directly repeal the law.