National Press Club

Sequestration's Impact Felt by Defense Industry, Newsmaker Panel Says

May 21, 2013 | By Monica Coleman and Richard Alan Coleman Jr. |

Defense contractors are having a tough time under sequestration, the automatic across-the-board spending cuts that took effect when President Barack Obama and congressional Republicans couldn't agree on an alternative.

That's according to a panel of industry chief executive officers at a Club Newsmaker May 16.

“I think that what you’re going to see is that there will be some businesses that just won’t survive, especially on the small business side,” said Kevin W. Miller, president and chief executive officer of Sciolex Corp. "Just making a bid is a big decision for small companies. Small businesses are the life blood of America.''

Frank Mendicino, chief executive officer of Skydex Technologies, whose products include blast mitigation and shock attenuation equipment, said expensive, innovative equipment that may be invaluable during wartime are often displaced by cheaper products in tough economic times.

“When you’re dealing with just low price, what happens is that you see contracts that are awarded to companies that really can’t deliver and the customer suffers,” said John Jumper, chairman and chief executive officer of Science Applications International Corporation.

Panelists addressed ways in which the White House, Congress and agencies can support recovery. Miller focused on government/business relationships in finding new networks. Jumper suggested allow agencies to set priorities as opposed to automatic cuts across all programs. Mendicino encouraged officials to listen to the pleas of the people and work together to find solutions.

Eventually, the industry's problems will be solved, panelists said.

“I’m not worried about our future,” Mendicino said. “I think America is still the home of the greatest innovation and creativity of any country in the world, and I think we will continue to follow in that line in the future.”