Small defense businesses seeing cash issues during coronavirus outbreak: Survey
WASHINGTON — Over sixty percent of small companies in the defense supply chain are seeing disrupted cash flow, according to a new survey put forth from the National Defense Industrial Association.
“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 Friday, 458 small businesses had responded to the survey, which will remain open through April 10. 55 percent of respondents have less than $5 million in annual revenue, and 70 percent 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.
62 percent 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 the contractors.
Notably, 54 percent of respondents say they cannot work on a contract because they are currently under a shelter-in-place order.
And optimistically, 69 percent do not expect cost overruns on fixed-price contracts as a result of the Coronavirus disruptions. Those that do expect such overruns predict them to be in the 10-20 percent range.
The results of the survey were delivered Friday to Ellen Lord, the undersecretary of defense for acquisition and sustainment. Speaking to reporters on Wednesday, Lord said she was watching the lower-tier of the supply chain closely for weak spots that may appear.
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Last week, the department announced new measures to increase progress payments out to both small and large companies, in order to ensure companies are able to keep work moving on schedule.
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