Federal budget cuts could have impact on Vermont defense contractors in coming decade

General Dynamics Armament and Technical Products, a business unit of General Dynamics delivered 85 MK19 40mm grenade machine guns recently to the U.S. Army under the company's latest contract award for the weapon. General Dynamics Armament and Technical Products was awarded an $8.7 million order for more than 650 MK19 weapons in September 2011.

General Dynamics Armament and Technical Products, a business unit of General Dynamics delivered 85 MK19 40mm grenade machine guns recently to the U.S. Army under the company’s latest contract award for the weapon. General Dynamics Armament and Technical Products was awarded an $8.7 million order for more than 650 MK19 weapons in September 2011.

A report released last week by a Washington, D.C., think tank says that Vermont could lose up to $109 million statewide over the next 10 years if scheduled federal defense budget cuts go into effect.

If an 18 percent defense budget reduction is enacted by Congress in January 2013, under so-called “sequestration” budget cuts across several departments and agencies, Vermont’s government defense contractors will lose out, according to research by the nonprofit Center for Security Policy, undertaken for the pro-defense Coalition for the Common Defense.

A VTDigger data analysis shows that a large percentage of government contract dollars awarded by the Department of Defense to firms headquartered in Vermont goes to Williston-based General Dynamics Armament and Technical Products Inc.

General Dynamics won 327 government contracts in fiscal year 2011, the year the data covers, worth a total of over $438 million. Simmonds Precision Products of Vergennes came in second with a combined $99.7 million spread over 237 contracts that same year.

The aerospace and defense industries contribute for $1 billion in direct economic activity to Vermont.

According to its website, General Dynamics’ Vermont key operations involve “engineering, design, testing, and evaluation of armament systems and vehicle survivability products.” The company tests weapons at the Vermont National Guard’s Ethan Allen Firing Range in Underhill and maintains operations in Williston and Burlington.

While General Dynamics spokesman Karl Johnson couldn’t comment on the impending federal budget cuts and their likely effect on the firm’s Vermont operations, he said the company’s “significant presence in Vermont” manages all government contracts for guns and other arms, for the national firm headquartered in North Carolina.

Johnson also referenced a recent letter in which company CEO Jay Johnson said the uncertainty surrounding Defense Department budget cuts had already affected their local business practices.

Representatives of Simmonds Precision Products and Stewart Construction, the Vermont firms which received the next highest amount money in government defense contracts statewide, couldn’t be reached for comment.

Simmonds does business as Goodrich Sensors and Integrated Systems in Vergennes and manufactures aerospace equipment, according to Bloomberg, while Stewart Construction in Essex Junction has won contracts to upgrade Vermont National Air Guard buildings in South Burlington.

Congressman Peter Welch voted against the broad sequestration budget cuts, which allocated budget cuts split 50-50 between the defense sector and all other departments, saying that the cuts would lead to “adverse economic impact in the entire nation, not just Vermont.”

“There’s no question that the sequester will have an adverse impact on our economy, in Vermont and every other state,” said Rep. Welch. “It’s a crazy across-the-board meat cleaver approach.”

While Welch couldn’t comment on the importance of the defense industry to Vermont’s economy, he said that he’d generally criticized excessive defense expenditures, but also preferred government defense spending to take place in Vermont, over other states, if such spending had to happen.

While the 18 percent budget cuts would apply to the entire defense budget if enacted, meaning cuts to military personnel, military programs, and other consolidations are likely included, the data analysed takes as a baseline amount exclusively government contract awards from October 2011 to October 2012.

Sen. Patrick Leahy’s spokesman David Carle called the group authoring the report a “neo-con defense spending advocacy organization,” adding that the report did not accurately depict “how sequestration would work. Cuts would be at the program level — not, in most cases, on a contract level.”

“It is not known how such cuts would filter down to individual contracts unless the contract takes up the entirety of a program account,” said Carle. “Vermont is not a major defense contract state,” continued Carle, also arguing that sequestration should not happen and was never meant to happen, since “sequestration of the domestic and defense budgets would be an abdication of Congress’ responsibility to set priorities.”

The data also did not include government contracts for developing weapons systems, explained Center for Security Policy researcher Christine Brim, because those contracts often lacked detailed contract information or remained classified.

Vermont businesses won contracts worth a total of $333 million in fiscal year 2011 to develop or maintain weapons systems, according to Brim, with relevant weapons ranging from the Black Hawk to the F-16 and the Patriot missile.

Other points of interest include the 16 businesses each based in Williston and South Burlington, as key areas where several businesses doing defense work maintain addresses. Chittenden County contained the most contractors by far, with 86 contractors working there, with Windsor and Washington counties taking distant second and third place.

A total of 192 defense companies in Vermont received government contracts from the Department of Defense in fiscal year 2011, according to the data. Notable groups doing work for the department include Casella Waste Systems, Norwich University, and Revision Eyewear Ltd. Of those 192 businesses, only 10 were minority, educational, nonprofit, or small disadvantaged business institutions.

The spreadsheet for Vermont is included below. The Center for Security Policy used public data compiled from the federal procurement data system, where detailed contract information can be found, and also used a public records database website.

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Nat RudarakanchanaNat Rudarakanchana

Comments

  1. Tom Licata :

    I pointed this out and much more five years ago, in 2007, when Vermonters For Economic Health launched a state-wide economic presentation on what is now transpiring in Vermont, our nation and worldwide. Over two dozen presentations, including at the statehouse, were given. The legislators looked miffed as they listened in disbelief. I could tell them, and Vermont’s inculcated intelligentsia and citizen-drones what’s next on their plate, but they are beyond my pay grade and deserving of their fate.

  2. Barry Kade :

    I’ll bet that neither Canada, Mexico, nor North Korea invade after the cuts go into place. The U.S. spends something like half of all the world’s expenditures on war and war preparation. I prefer not to use the term “defense” which is a misnomer.

    • Christian Noll :

      Nice point Barry.

      True it has little to do with “defense” and how ironic that the original name of the Defense Department was the War Department.

      A big misnomer indeed.

  3. Alex Barnham :

    Praise the Lord and pass the ammunition. Shoot them commies and damn the torpedoes. Let’s raise some cane and put our toys on the shelf.

  4. Demilitarizing Vermont would be good for Vermonters and for democracy in Vermont.

    Decreasing Vermont’s dependence on military contracts would cause people to devote more resources to making peaceful goods and services.

    The F-35 should not be in Burlington making people miserable. They will make much more noise than the F-16, which also should not have been in Vermont.

    Anyone living a few miles from the airport will be impacted.

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