A pair of government contracting experts told the U.S. House of Representatives' Armed Services Committee on Monday that without reforms, small companies will have an increasingly difficult time doing business with the Pentagon as its budget shrinks.
Joel Johnson, director of the defense consulting firm Teal Group Corp., and Allan Burman, president of the contractor Jefferson Solutions, told the committee that the U.S. Department of Defense would benefit by creating new incentives for small business contracts.

Johnson and Burman testified before the committee as part of an ongoing set of hearings called "Doing Business with the DOD." It is the second hearing this year that has touched on contracting obstacles for small businesses.

According to Johnson, shrinking research and development budgets will cause major contractors to stop subcontracting with smaller counterparts, likely forcing small businesses to make painful workplace reductions.

"Smaller companies currently not doing defense work will be skeptical that this is an area to pursue, particularly if the civil economy is beginning to show signs of life," Johnson said. "This makes it all the more important that the government is not seen by potential innovators in the private sector as being an unattractive customer, partner or investor."

Beijing will tread carefully in punishing Boeing over sales of Patriot missiles to Taipei. Near term, it will tilt more purchases by state-controlled carriers away from the U.S. aircraft manufacturer to Airbus, but Airbus lacks the capacity to meet all of China's long-range civil aviation needs. And there's another consideration, as aerospace consultant Joel Johnson of the Teal Group Corp. explains: "A little over half their fleet is Boeing. If they retaliate against (Boeing) aircraft parts, they're only screwing their own airlines."

The source code is "kind of the holy grail" for this, controlling everything from weapons integration to radar to flight dynamics, said Joel Johnson of TEAL Group, an aerospace consultancy in Fairfax, Virginia.

"The last bastion of the losing protectionist is to wave the bloody 'Buy America' shirt," said analyst Joel Johnson of the Teal Group. "It tells you they don't have another argument -- e.g., the (Northrop) product was newer, more capable and less risky."

"Some bread on the table is better than none," said Joel Johnson, an expert on international arms sales at the Teal Group, a Washington-area consulting firm. "Rather than turn a Navy ship into a reef, it's better to send it to a third-world nation which can then hire an American contractor to refurbish it."