Keeping the Defense Industrial Base Afloat During COVID-19

A Review of Department of Defense and Federal Government Policies and Investments in the Defense Industrial Base

by Anna Jean Wirth, Sydney Litterer, Elvira N. Loredo, Laura H. Baldwin, Ricardo Sanchez

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Research Question

  1. How did U.S. government and DoD policies and programs support the DIB during the first nine months of the pandemic?

Concerns about the financial solvency of the Defense Industrial Base (DIB) and the stability of supply chains that are key to national security prompted the U.S. government and Department of Defense (DoD) to make policy changes and investments to support the DIB during the coronavirus disease 2019 (COVID-19) pandemic. The health of small businesses was of particular concern because these companies can have limited visibility in supply chains and are often more vulnerable to financial disruptions.

In this exploratory analysis of Paycheck Protection Program (PPP) data, the authors summarize investments in DIB businesses that received assistance during the early months of the pandemic (through mid-2020). Descriptive analytics of open source data revealed that the PPP offered financial assistance that reached many small businesses in the manufacturing industry, an important sector for national security supply chains whose production was especially hard hit by the COVID-19 crisis.

Key Findings

The U.S. government and DoD made significant investments in the DIB throughout the early months of the COVID-19 crisis

  • Their investments aimed to help struggling companies maintain financial solvency and keep national security supply chains operational.

Small businesses in the DIB benefited from federal and DoD policies implemented during the pandemic

  • Small business DoD contractors in the manufacturing sector had high uptake of benefits from the PPP.
  • Most of the DoD contractors taking advantage of the PPP had fewer than 100 employees.

This research was sponsored by the Office of the Secretary of Defense and conducted within the Acquisition and Technology Policy Center of the RAND RAND National Security Research Division (NSRD).

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