Defense Industry Adjustment

Defense Industry Adjustment 101

Presented by

Michael GilroyProgram Director (DIA)Office of Economic Adjustment

(in billions)Fairfax County, Virginia $19.1San Diego County, California $15.1Tarrant County, Texas $13.8Los Angeles County, California $8.0Santa Clara County, California $7.4District of Columbia Excluding Exceptions $7.0Madison County, Alabama $7.0Honolulu County, Hawaii $6.7Bexar County, Texas $6.6Newport News City, Virginia $6.2Middlesex County, Massachusetts $6.0St. Louis County, Missouri $5.0Maricopa County, Arizona $4.8King County, Washington $4.7Arlington County, Virginia $4.7Pima County, Arizona $4.6Norfolk City, Virginia $4.2Allegheny County, Pennsylvania $4.2El Paso County, Colorado $4.1Jefferson County, Kentucky $4.0Cumberland County, North Carolina $3.8Sacramento County, California $3.7Orange County, Florida $3.7New London County, Connecticut $3.6Pierce County, Washington $3.6

Top 25 Defense Spending Locations (Personnel and Contracts)

Sources: Defense Manpower Data Center and Chmura Economics & Analytics

The Defense Industry Today

•Nature of defense industry• No longer vertically integrated• Data-driven• Just-in-time supply chain• Globalization

• Businesses• OEMs dominate most discussions but…• …small firms drive the DIA program

DIA Historical Background• Current program based on White House concern

over DoD’s impact on economy after ending 2 wars.• OEA developed proposal for expanded DIA program

throughout late 2011 and 2012. • In November 2013 proposed program of $300

million over 5 years (FY14-FY18 FYDP)• RMD 700A1 (March 2013) instead authorized the

following ($ in millions):

FY 14 FY 15 FY 16 FY 17 FY 18

48.1 46.1 33.1 10.2 5

OEA’s Defense Industry Adjustment Program

• Assistance for regions impacted by Defense budget and contract reductions

• Supports communities to carry out strategies to retain critical workforce skills and business capacities• Work with Federal, state and local agencies to

integrate regional project plans and identify specific actions to support regional cluster growth and job creation

• 22 active projects with 18 more expected to be assisted in FY 15

• PB FY 2016 requests $33.1M for program

Greater Wichita Region

State of Oklahoma

Southwest Ohio Region(Wright-Paterson AFB)

Commonwealth of Pennsylvania

Commonwealth of Massachusetts

State of Arizona

St. Louis Region

Texarkana Region

Middle Georgia Region(Warner-Robins AFB)

State of Georgia

Solano County(Travis AFB)

State of IndianaKern County

State of Rhode Island

State of South Carolina

State of Alabama

State of New Mexico

City of Long Beach

State of Wisconsin

Oshkosh Region

State of Washington

Commonwealth of Virginia

State of Maryland

Southern CaliforniaRegion

Allen County(Joint Systems Manufacturing Center)

State of Colorado

Southeast Michigan Region(Detroit Arsenal)

State of Connecticut

State of New Jersey

State of Tennessee

State of Illinois

Active projects

Developing projects

Defense Manufacturing Assistance Program (DMAP)(UMichigan/OhioState/Purdue)

State of New Hampshire

State of West Virginia

Central Ohio Region

State of Ohio

Project Approach and Structuring

Three Step Process

8

How is DIA Different From BRAC?

• No single starting point or animating event• Contract cancellations• Contracts which do not materialize• Personnel reductions

• No clearly identifiable geography around which to organize a response.

• No clearly identifiable entity to be in charge• No consensus on target for manufacturing

communities• Preserve defense industrial base?• Expand defense-oriented foreign business?• Diversify into non-defense lines of business?

What Are We Seeing Today?• Organizing is most difficult and time-consuming

activity regardless of grantee type.• Our best managed projects tended to recognize this in

their initial application.• Most grantees already have everything they need

to recover – but the assets are not aligned.• The Chicken and Egg argument• Grantees generally see businesses as the economic

growth/recovery driver.• Businesses see workforce as their growth driver.

• Planning is necessary, but not sufficient• Sustainability is critical – yet few grantees address it.

• About 50% of the time MEP is not at the table.

What are DIA Grantees Doing?Organization• Salaries & Expenses (S&E)• Charrette Meetings / Outreach• Stakeholder Engagement• Social Network Analysis• Website / Social Media• Measurement & Evaluation• IMCP Supply Chain• Mapping• Direct Assistance / MEP Assistance• Mfr. Collaboration Studies• Cluster• SWOT• Asset Mapping• CEDS Update• Defense Diversification• Defense Impact / Dependency

Acceleration/Incubation• Facility / Op. Plans• Programming• Curriculum• Salaries & Expenses (S&E)Workforce• Dislocated Worker Training /

Assistance• Skills Gap Analysis• Career Pathway Study / Mapping• Curriculum Development• Supplies & Equipment Other• Tech. Transfer / Commercialization• Pilot / Demonstration Projects• Export Assistance• Tooling & Equipment Disposal• Facility Reuse • Access to Capital Markets

Eligibility

Eligibility• Two fold test: • Legal grantee• Eligible event

• Legal grantees:• States• Municipalities• Tribal Nations• Public instrumentalities

• Eligible Events:• Cancellation or termination of a DoD contract • Planned major reduction in DoD spending • Closure or reduced operations of defense facility• Diversification

Assistance Types in DIA Portfolio

• Community Economic Adjustment Assistance for Reductions in Defense Industry Employment • CFDA 12.611• EADS Project Codes: CR, PR, BC

• Community Economic Adjustment Assistance for Advance Planning and Economic Diversification • CFDA 12.614• EADS Project Type: DD

• Economic Adjustment Assistance for State Governments• CFDA 12.617• EADS Project Type: ST

Take Aways for Potential Applicants• When in doubt….call OEA earlier rather than later.• Learn from other grantees. OEA can help you make connections.

• Devote bulk of your time to networking, communications and outreach before you apply, or….• Extend your organize/planning phase and use OEA resourcing to get

organized• Use a facilitation expert/consultant when needed

• Spend as much time as it takes up front to define the problem, the strategy, the goals and the tasks.

• Use a formal project plan with reporting mechanisms• Who is responsible?• When is it due?• What does it cost?

Contact OEA

Michael P. GilroyProgram Director (Defense Industry Adjustment)Office of Economic Adjustment2231 Crystal Drive - Suite 520Arlington, Virginia 22202Office: (703) 697-2081Cell: (703) 901-7660NIPR: michael.p.gilroy3.civ@mail.mil

Questions?