Defense Breakdown Economic Impact Reports 2.0: FAQs
1. What is the Purpose of the Defense Breakdown Economic Impact Reports?
Our goal is to encourage and empower a more informed discussion about the economic impacts, as well as the national security impacts, of the impending defense cuts. We want to help bring this discussion to the local employers, citizens and community and business leaders who will need to prepare for possible job losses and business failures.
To accomplish this, we have provided summary reports – two pages each – for all fifty states and the District of Columbia, and also over 29,000 additional detailed reports for all states and territories online. All reports can be viewed at www.forthecommondefense.org/reports .
The February 13, 2012 Version 2.0 online detailed reports include 2,744 U.S. state and territory reports for 2006-2010 for defense contracts sorted by “contractor location” (the contractor business office) with city, county, and other data; and also 26,355 U.S. state and territory reports for 2010 sorted by “place of performance” (where the contract work is actually done) for individual cities, counties and states, with detailed info for weapon systems, government contracting office and product/service categories.
If you are a citizen, or city or county elected official or economic development staff, or a state official concerned about the impact of defense cuts in your community, or a local business owner concerned about direct or indirect impacts of cuts on your business and employees, go to www.forthecommondefense.org/reports and browse for the name of your state, city, county or congressional district. The reports are formatted for printing or for saving to your computer. The 2010 reports include two levels estimated reductions due to defense budget cuts, described below.
2. What are the planned cuts for 2013-2021 in the Defense budget?
Two levels of defense budget cuts have been passed into law for 2013-2021.
· In 2012, President Obama limited U.S. military capability to fighting one “regional conflict” and one “holding action.” Defense budgets for 2013-2021 were cut $487 billion – a 9% cut, at a minimum. On February 13, the Obama administration releases the 2013 budget affected by the first year of this $487 billion cut.
· In addition to the $487 billion cuts, a mandate called “Sequestration,” required by law with passage of the Budget Control Act in 2011, mandates $500 billion more in 2013-2021 defense cuts – an 18% total cut, at a minimum. Although Sequestration will go into effect- by law - in 2013, the administration has NOT submitted a Sequestration budget to Congress. But President Obama has said he will stop any attempt by Congress to reverse these cuts.
3. What is “Sequestration”?
The “Sequestration” mechanism is a tool that was agreed to in the Budget Control Act approved by Congress last July in 2011. “Sequestration” went into effect when the Super Committee, also created as part of this legislation, failed to agree upon $1.2 trillion in budget savings through spending cuts and new taxes. “Sequestration” requires mandatory across-the-board spending cuts divided equally between non-defense and defense spending. “Sequestration” disproportionately affects our national security, which only accounts for 20% of the federal budget but must supply 50% of the spending cuts.
Secretary of Defense Leon Panetta has stated that Sequestration cuts would be like “shooting ourselves in the head.” Yet President Obama has said he will stop any attempt by Congress to reverse these cuts.
4. How can local elected officials, policymakers and citizens use the Defense Breakdown Economic Impact Reports to estimate the economic impact of defense cuts on their community?
STEP ONE: BE PREPARED – Get the “National Average” defense budget cut estimate for your community:
Version 2.0 shows two kinds of reports: by Contractor Location (previously in the February 1, 2012 Version 1.0), and by Place of Performance (the February 13, 2012 Version 2.0 addition).
The
purpose of the Defense Breakdown Economic Impact Reports is to help citizens,
local businesses and their employees, and local governments prepare for the
probable economic impact of both the current level of defense cuts ($487
Billion or 9% over 10 years) and the mandated Sequestration level of defense
cuts (another $500 Billion or 18% total over 10 years). In 2013, these
cuts in defense jobs and businesses will begin hitting counties, cities and
industries across America.
These reports show how “National Average” defense budget reductions of at
least 9% and 18% could affect cities, counties, states, congressional districts
and categories of business owners (ethnic, women-owned, veteran-owned etc),
using actual 2010 data for revenues received by local contractors. We
will update the report with 2011 data by late March when Fiscal Year 2011 data
is finalized. The reports provide defense contract revenue data:
· By Contractor Location (showing 9% and 18% reductions from the 2010 baseline):
o Total defense contract revenue by the Contractor Location (business office) for 2006-2010 for states, counties and cities (will be updated to 2011 data in March 2012)
o State-wide data by industrial classification
o State-wide data by categories of ethnicity, women-owned, veteran-owned, HUB-zone, business type (such as small businesses)
o Congressional district totals (pro-rated estimates, in part, due to zip codes in some congressional districts that are split among more than one congressional district
o Optional Congressional district (on-demand) detailed reports for all contractors in congressional district including split zip codes, for researchers to conduct further analysis
· By Place of Performance (showing 9% and 18% reductions from the 2010 baseline):
o For all-USA, and all states, for weapon system, government contracting office, and product/service for 2010 (will be updated to 2011 data in March 2012), showing % reductions
o For each state for weapon system, government contracting office and product/service for 2010, showing % reductions
o For each county in each state for weapon system, government contracting office and product/service for 2010, showing % reductions
o For each city in each state for weapon system, government contracting office and product/service for 2010, showing % reductions
STEP TWO: ASK QUESTIONS: Compare your “National Average” defense cut estimates to actual budget cuts published at http://comptroller.defense.gov/ .
· Browse the Defense Breakdown Reports to find the profiles for past defense spending in your community: On February 13, 2012, an expanded version of the Defense Breakdown Economic Impact Reports (Version 2.0) will be available at www.forthecommondefense.org/reports with summary reports on “Place of Performance” revenues for 2010 for counties, cities, and states, and with 3 categories of reports for each location: Weapon System, Government Contracting Office, and Product/Service. Local cities, counties and states will then be able to view the programs that have been active in their community.
· Compare the estimated cuts with the 2013 proposed defense budget cuts: In 2012, Congress and President Obama will decide on the specific defense budget cuts for 2013. On February 13, 2012, these specific cuts will be announced. 2013 budget information is published online at the Comptroller website: http://comptroller.defense.gov/ . Citizens, business owners and local governments can review President Obama’s proposed 2013 budget by weapon system or contracting office, and compare the programs he plans to cut with those funded in their own community.
· Ask Questions: Communities can also contact their congressmen to find out if these defense cuts affect their communities more – or less – than the national average as presented in the Defense Breakdown reports. Some communities will experience significant job losses and business closings; many defense contractors are already slowing hiring and purchases in anticipation of these cuts. Others may find the cuts affect them less than the national average estimate.
· What About the Sequestration Budget? Although the Obama administration is required to submit a budget for Sequestration (the additional $500 billion in defense cuts), they have not yet done so. You can ask your Congressman about Sequestration’s likely effect on your state, county and city – or on your own business or employment status.
· In late March all reports will be updated with 2011 data. The 2010 data will continue to be available at the site as well for comparison purposes.
5. Where can more detailed information be found for cities, counties and states?
Reports showing contractors or contracts for a city, county or state, can be reviewed and downloaded at www.governmentcontractswon.com (nominal charge for full reports), as well as other companies providing constructed reports from the government data. Detailed reports can also be constructed and downloaded at the Federal Procurement Data System (no charge, requires login and some knowledge of the system to generate Standard Reports, and a training session to construct Ad-Hoc Reports), or at www.usaspending.gov .
6. What are the sources for the over 29,000 online reports at www.forthecommondefense.org/reports?
The online Defense Breakdown Economic Impact Reports are based on detailed reports on every individual contractor and contract, provided by www.governmentcontractswon.com . These reports from www.governmentcontractswon.com are based on even more detailed public information on Department of Defense contracts which is compiled and made available by the Federal Procurement Data System (FPDS at www.fpds.gov). This FPDS public information is also provided in other summaries and views at the government website www.usaspending.gov , which also incorporates data from sources other than FPDS, and through various commercial businesses such as www.governmentcontractswon.com who provide pre-configured or custom reports. The online Defense Breakdown Economic Impact Reports also use public information from census data (www.census.gov).
The defense contract data reported in the online Defense Breakdown Economic Impact Reports include government contracts, but not grants, loans, Indefinite Delivery Vehicles, or sub-awards. Data is reported for fiscal years, not calendar years. Data is reported for Fiscal Year 2010 because Fiscal Year 2011 data is still being updated by FPDS for 2011. Data for 2011 will be added for all reports in late March.
Press and other inquiries about the Defense Breakdown Economic Impact Reports should be directed to Travis Korson, manager of public information, Center for Security Policy at tkorson@securefreedom.org (202-835-9077). Specific questions about www.governmentcontractswon.com reports, which were used as inputs, should be directed to Vince Ryan, research director, press@governmentcontractswon.com (310-383-7994).
7. What are the sources for the Summary Reports (the 2 page summaries for each state with an introductory FAQ, linked at the top right of the main index page)?
· Source for the estimated percentage reductions used for “National Average” estimates for states, counties and cities: The estimated 9% national average percentage reduction resulting from the $487 billion cut in the defense budget, and the 18% national average percentage reduction resulting from the $500 billion Sequestration cut, were provided by the House Armed Services Committee (HASC). These percentages are based on the assumption that personnel cuts will be part of the 2013-2021 cuts. A qualifying assumption is that the decline in End Strength will take 5 years, and therefore that is not a straight-line decrease. The most recent estimate provided by HASC is that the overall decrease is 9% in the topline over the 10-year period, and 18% under Sequestration cuts.
· Source for President Obama’s statement that he would veto any attempt by Congress to reverse “Sequestration” cuts: http://www.mediaite.com/online/president-obama-on-the-super-committee-failure/
· Source for Center for Regional Analysis estimates for national losses due to defense budget cuts including Sequestration in jobs, earnings and gross state product, by state: The analysis was done by Dr. Stephen S. Fuller, Dwight Schar Faculty Chair, University Professor and Director, Center for Regional Analysis at George Mason University, and by Economic Modeling Specialists Inc. (EMSI), on behalf of the Aerospace Industries Association.
The Center for Regional Analysis report looks at the impact of both budget cuts (the 10-year $487 billion and the Sequestration $500 billion cuts) for an estimated combined cut of $45 billion specifically in 2013. The analysis is limited to specific NAIC codes: 332992, 3329903, 332994, 332995, 334220, 334511, 336,411, 336412, 336413, 336414, 336415, 336419, 336611, and 336992. This is a subset of the larger group of NAIC codes (AKA “Industrial Classifications,” and shown by their text, not numeric, label) that are included in the Defense Breakdown Economic Impact Reports, which include all DOD contractors. For the detailed Center for Regional Analysis report:
Download full impact analysis - http://secondtonone.org/wp-content/uploads/2011/10/aia_impact_analysis.pdf
Download state economic impact - http://www.aia-aerospace.org/assets/state_dod_impact.pdf
Download bio of Dr. Fuller - http://secondtonone.org/wp-content/uploads/2011/10/Stephen-Fuller.pdf
Download AIA press release - http://secondtonone.org/wp-content/uploads/2011/10/63_Jobs-at-Risk.pdf
· Source for estimates of job losses, by state, of military active-duty personnel and DOD civilian personnel under “Sequestration” budget cuts: The personnel data in the Summary Reports is based on public information (2009 is the most recent year listed) from DoD Personnel and Procurement Statistics available through Statistical Analysis Informational Division of the DoD at http://siadapp.dmdc.osd.mil/ . The estimated national average percentages used to project reductions were provided by the House Armed Services Committee. These estimated percentage reductions were 16.6% (1/6) for active-duty military personnel, and 25% for civilian personnel.
· Source for “Top 5 Counties Projected Revenue Reductions Based On National Average” Table on Page 1 of the Summary Report for each state, and all information on page 2: The remainder of the information in the Summary Report for each state was sourced from the same contractor data used for the over 29,000 online reports: from Federal Procurement Data System publicly available xml data archives, as constructed into Excel spreadsheet reports by www.governmentcontractswon.com.
8. What methodology was used to assess impacts on congressional districts?
In the online reports on congressional districts, the calculated totals of Revenues and number of contracts for Defense contracts for each congressional district are estimates, because the amounts are aggregated by zip code, and a single zip code may include portions of two or more congressional districts. To obtain these estimated total revenues for any given congressional district, the following algorithm was used:
· If the zip code was located only in a single district, the amounts (number of contracts, dollar amount) for that zip code were assigned in full to that district.
· If a zip code was located across multiple districts, the amounts (number of contracts, dollar amount) were divided by the number of districts shown in the listing, and assigned to each of those districts. Rounding errors were adjusted in the final district of the sequence, so that the total amounts remain the same overall. Whole dollars (no cents) were used in each such distribution.
The results are therefore by necessity approximate. If you would like more accurate data, CSP has developed a custom report for individual congressional districts, available on request, which provides contractor data for all zip codes that lie completely or partially within a given congressional district. In this way, researchers who request the report can determine the location of contracts for the district on a street by street basis. Other forms of reports on congressional district data are also available at the Federal Procurement Data System and usaspending.gov.
9. Questions?
Please contact the Center for Security Policy at 202-835-9077 or email Travis Korson at tkorson@securefreedom.org