Testimony of Marion C. Blakey President and CEO, Aerospace Industries Association

To the U.S. Senate Commerce, Science and Transportation Committee

The Impacts of the Government Shutdown on our Economic Security

October 11, 2013

Chairman Rockefeller, Ranking Member Thune and members of the committee, I appreciate the opportunity to provide testimony on this very important subject. From the perspective of the Aerospace Industries Association, our member companies and their thousands of skilled and dedicated workers, I can report that the partial government shutdown is having a very negative impact on many of the civil aerospace programs that help advance our nation's technological and economic progress. We also expect that the longer this goes on, the worse it will become.And while not much attention has been paid to the private sector workforce that supports our government agencies, they too are suffering the consequences of the shutdown. We are particularly concerned about the small companies that are vital to our nation's aerospace and defense supply chain. With limited cash flow, they are at risk of shuttering their operations in the event of an extended shutdown. And unlike the Department of Defense, many domestic agencies have furloughed most of their financial and accounting staff, leaving companies often performing essential work without reimbursement.

It is impossible to predict exactly what the economic and other impacts will be of a two week, four week, or longer period of the shutdown. Each program, each contract is different and it will take some time to work through the consequences in terms of both costs and delays. However, I believe that the following facts and concerns that we have regarding the impacts of the shutdown to NASA, NOAA, the Federal Aviation Administration and aerospace product exports will help impress upon this Congress and the Administration the need to end the shutdown.

I also want to emphasize our industry's concern about the ongoing problem of sequestration and lack of budget predictability. In the absence of a bipartisan agreement to address fundamental fiscal issues, the sequestration budget cuts will continue to undermine work on the very federal programs that make our country stronger, safer and more economically robust. With these thoughts in mind, I would like to address emerging and expected impacts of the partial shutdown to date to NASA, NOAA, FAA and Department of Commerce export activities, and related industry impacts.

Civil Space Impacts

Under the Federal government shutdown, NASA has been operating with a skeleton crew of less than three percent of its 18,000 workers, hampering many of the agency's ongoing programs as well as programs in development, and impacting industry's ability to do its job efficiently. The industry workforce supporting NASA is also being affected. Program costs are expected to rise as schedules slip. All of NASA's programs may face future funding challenges as a consequence. While the industry's work on high visibility NASA programs - including the Space Launch System heavy-lift rocket, the Orion Multi-Purpose Crew Vehicle and the James Webb Space Telescope - has been largely unaffected to date, this has not been just due to good fortune; rather, it is due to smart planning by industry and NASA in anticipation of a shutdown and the availability of DoD quality assurance inspectors at facilities with a DoD presence. The situation in other facilities where these inspectors are not present is more problematic as I will explain in more detail.

With regard to NASA facilities, with a few notable exceptions such as the International Space Station support activity at the Johnson Space Center's Mission Control in Houston, and those needed for the upcoming launch of the MAVEN mission to Mars, they are shuttered and unavailable for industry access. For support contractors working at NASA locations, this means they are unable to do their jobs. To compensate, larger companies are forced to encourage workers to take unplanned vacation time off or try to find other work that they can do elsewhere. Smaller firms often do not have this flexibility; in many cases September 30th marked the end of a contract period of performance. With no funding and no contract in place, small firms are keeping their workforce together at their own risk with no assurance the workers will be paid for the work done during the shutdown. For companies of all sizes, if the shutdown persists, these workers will face furloughs and, unlike furloughed Federal employees, there is no guarantee that will be reimbursed for lost wages. There is a real potential for a negative ripple effect throughout local economies in these regions. Other work that contractors are doing at NASA facilities - including preparations for the first Orion space capsule test launch in 2014 are shut down since contactors are not allowed access to the NASA facility where the work must be performed.

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Testimony of Aerospace Industries Association President and CEO Marion Blakey