Jul 19, 2021

A Bloomberg Report: Need for Speed

The thousands of defense contractors across the country are far too critical to national security to fail, according to the U.S. Under Secretary of Defense for Acquisition and Sustainment, Ellen Lord. In response to the looming facilities shutdown necessitated by COVID-19, Lord issued a memo in March 2020 explaining that suppliers to the Department of Defense have a special responsibility to maintain their normal work schedule.

“We need your support and dedication in these trying times to ensure the security of this nation,” Lord wrote. 

That’s welcome language for suppliers facing the impact of an unprecedented pandemic, and the DOD’s words have buoyed the hopes of companies trying to establish new roots or expand operations. 

The real threat, however, that generated this nationalistic message may not necessarily be COVID-19, but rather China’s pursuit of American supplier ingenuity. Flashes of that coveted innovative spirit are revealed daily across the Hoosier state, from legacy tool and die shops to the hypersonic research labs at Indiana University. The Department of Defense is in a race to shore up support for these contractors.

The DOD has relied on innovative contractors throughout its history, and it’s a strategic advantage for the U.S. to lean on the talents of private industry to protect the nation’s military interests.

The growing importance of contractors over the past 30 years can clearly be seen in the sheer number of contracts awarded and the type of work being performed. In fiscal year 2018, for instance, the Defense Department awarded more money to fulfill federal contracts — $360 billion — than all other government agencies combined.

The contracts were dominated by five companies: Lockheed Martin Corp., The Boeing Co., Raytheon Co., General Dynamics Corp. and Northrop Grumman Corp. Those companies rely on thousands of subcontractors globally to help make products and provide services.

Indiana is a key player. From 2000 through 2019, Indiana-based companies were awarded 135,686 contracts connected to the U.S. Department of Defense, valued at $69.4 billion. And given the state’s rich history of military support, contracts are likely to be rewarded for years to come.