COVID-19 crisis hitting small business hardest in revenues, contract obligations, NDIA survey finds

ARLINGTON, VA – The COVID-19 crisis will hit small businesses most in their revenues, their ability to carry out contracts and their access to capital, according to results of a survey from the National Defense Industrial Association, the Arlington, VA-based group announces today.

“We are particularly unsure about how long this will last and, the longer it lasts, the less confident we are that we will be able to recoup the revenue,” one respondent said. This disrupts “our ability to provide full-time pay and meet our regular expenses.”

As of Friday morning, 458 small businesses responded to the brief, confidential survey. Of those respondents, 55% are businesses with less than $5 million in annual revenue and 70% have less than 50 employees.

Among respondents’ concerns:

• 30% expect overruns on fixed-price contracts as a result of the Coronavirus disruptions. Those that do expect them predict overruns of 10% to 20%.
• 62% have seen disrupted cash flow as a result of the crisis. The most common causes are cuts to billable hours, delayed payments from prime contractors and government customers because of shut down or telework, and lack of telework options or schedule flexibility in contracts. 
• 54% cannot work on a contract because of a shelter-in-place order.

Other challenges survey respondents cited are access secure work facilities, workforce availability, clear information from the Defense Department, access to contracting officers and confidence in supply-chain partners. Availability of and cost of materials are their least concerns.

When asked what would be most helpful to mitigate negative impacts, respondents rated flexibility on contract performance, followed by accelerated payments from DoD and prime contractors, short-term loans and additional performance guidance.

Survey results are available here. The results were presented Friday to officials from the office of Ellen Lord, DoD’s undersecretary for acquisitions and sustainment. NDIA is part of regular discussions with Lord’s office on obstacles the defense industrial base faces with COVID-19 response and how to best resolve them.

“This survey shows how the defense lifeline runs through small business,” said Hawk Carlisle, NDIA’s president and CEO. “These companies must survive if the defense industrial base is to remain the best in the world on other side of COVID-19.” NDIA pledges to continue to do everything in its power to support the DIB during these extraordinarily challenging times.

NDIA’s strategy and policy department is managing the survey, which will continue through April 10. Small businesses doing defense work are encouraged to respond. NDIA will then compile the results for a broader look into the COVID-19 crisis’ reach into this sector.

For media queries, please contact Evamarie Socha at esocha@NDIA.org or (703) 472-3806.