Washington: In the wake of the COVID-19 spread in the US more than 60 per cent of small companies in the country’s defence supply chain are seeing disrupted cash flow, a new survey by the National Defense Industrial Association (NDIA) showed.
“This survey shows how the defense lifeline runs through small business,” Hawk Carlisle, NDIA’s president and CEO, said in a statement. “These companies must survive if the defense industrial base is to remain the best in the world on other side of COVID-19.”
As of March 27, 458 small businesses had responded to the survey, which will remain open through April 10. 55 per cent of respondents have less than $5 million in annual revenue, and 70 per cent have less than 50 employees.
The world’s largest defense company will speed up cash payments to small subcontractors to help with bills, among other steps.
Sixty-two per cent of the respondents have seen disrupted cash flow as a result of the economic downturn. Primarily, those have come as cuts to billable hours or delayed payments from prime contractors because of shutdowns or telework. A lack of telework options is also an issue for contractors.
Notably, 54 per cent of respondents say they cannot work on a contract because they are currently under a shelter-in-place order.
And optimistically, 69 per cent do not expect cost overruns on fixed-price contracts as a result of the coronavirus-related disruptions. Those that do expect such overruns predict them to be in the 10-20 per cent range.
The results of the survey were delivered on March 27 to Ellen Lord, Under Secretary of defense for acquisition and sustainment. Speaking to reporters, Lord said she is closely watching the lower tier of the supply chain for weak spots that may appear.
Last week, the Defense Department announced new measures to increase progress payments out to both small and large companies to ensure they are able to keep work moving on schedule.
