Military Contractors Optimistic Despite Slump

A consensus is emerging among military leaders and Pentagon suppliers: If the Defense Department’s financial outlook doesn’t worsen, the budget reductions that the Obama administration proposed for 2013-2017 will be manageable.

Industry concern about a budget collapse has been greater for suppliers of the U.S. Army, which is scheduled to downsize considerably over the next five years as thousands of troops withdraw from combat zones. But contractors still can expect a healthy market for ground-war equipment.

“The Army has been through all of this before after major wars,” said retired Army Gen. Gordon R. Sullivan, president of the Association of the U.S. Army.

“Army leadership knows what they want to do with the dollars they see. You heard the chief [of staff] say that and acquisition folks. I don’t think the mood has been dampened at all by the budget news,” he said last week at AUSA’s winter symposium.

Gen. Ray Odierno, Army chief of staff, echoed that message in a keynote address that capped off the four-day event.

“For 236 years, the Army has continued to overcome challenges,” Odierno said. “Today, we face another challenge.”

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