Sequestration & Defense: News from the Navy Opportunity Forum

Capstone attended the Navy Opportunity Forum  in Crystal City, Va., last week for an inside look at incredible and versatile new technologies in the defense industry. The Navy Opportunity Forum is an annual conference that showcases new technologies and businesses that have sprung up from Department of Defense research and that seek to be acquired by an outside party.

The technologies ranged from biomedical devices like a cooling vest that reduces the risk of heat stroke to training devices like efficient and realistic simulators for P-3s, C-130s, and other aircraft to future corrosion predictors that predict repair needs and replacements. The breadth and diversity of technologies at the conference was very impressive.

The Navy Opportunity Forum also provided a valuable look at the current market for defense technology from the DOD, especially in regard to the sequester. “There’s no easy way out soon,” said Frank Kendall of the Department Of Defense in his speech on the sequester.

Kendall, DOD’s undersecretary of defense for acquisition, technology and logistics, focused on the impact sequestration has on research and development within the DOD.  Because of high wartime operating costs and the sequester, the DOD is more than $30 billion short in its operation and maintenance accounts and recently decided to furlough more than 85% of its civilian employees for up to 11 days. Within California, Georgia, Maryland, Texas and Virginia alone, $819 million in wages will be lost.

The DOD believes that limited R&D spending across the board will lower the revenues of small defense technology companies. These small businesses invent lifesaving technology, but with funding cuts the chances for innovation are dramatically decreased.

Kendall blamed a lack of compromise in Washington for the sequester and its damaging effects on small businesses in defense technology. Asked who had been affected by the sequester, more than half of those in the room, which was dominated by small business owners or workers, raised their hands.

The DOD considers the sequester a mistake that has damaged the market for defense technologies. It is less clear how to confront the problem. Both Kendall and President Obama are strong supporters of repealing the sequester. However given Congressional inability to compromise and find agreement, only time will tell what will happen to both the sequester and the small businesses in the defense technologies industry.