What’s the real outlook for defense-related employment? It’s probable that the Department of Defense will finally see an increase in appropriations after multiple years of declines, but will that translate into federal jobs? And what are the implications for Department of Defense jobs and military contractor jobs? If you’re considering a transition from the military, or if you’re currently employed in a defense-related federal job or within the defense industry, the answers to these questions will impact your career decisions.
If the Trump administration’s proposed budget can be used as a barometer, it looks like the winds are shifting to fill the sails of America’s defense establishment. The administration’s budget calls for a $54 billion increase for defense to $603 billion. Hawkish Congressmen, including Sen. John McCain and Rep. Mac Thornberry would like to see a defense budget of $640 billion.
Optimistic projections for defense appropriations presume that Congressional Republicans will get behind Trump’s “hard power” agenda. They also assume that the Congress will actually pass a regular appropriations bill on time. If previous experience holds, it’s more likely that there will be a continuing resolution as in 2017. Worse, the possibility of sequestration imposes at least the chance of debilitating short-term cuts to military budgets.
The impact of defense increases on federal jobs isn’t clear
Even if the budget increases progress unscathed through the Congressional appropriations process, the money will likely be targeted towards hardware. The President is calling for a 350 ship Navy, up from today’s 274. That would be the largest naval buildup since the Cold War. Air Force readiness is also targeted, and the 2018 proposed budget would include additional F-35s to the arsenal. The impact of these major acquisition programs on federal hiring would be indirect.
The federal job outlook is further complicated by the administration’s continuing efforts to reduce the federal workforce. The hiring freeze, lifted April 12, created disruption within the civilian workforce at the DOD. While hiring for federal DOD jobs can now resume, OMB Director Mick Mulvaney’s “smarter, more strategic” plan for federal hiring hasn’t been unveiled. The director’s statement that agencies can’t begin onboarding new employees “willy-nilly” does little to clarify policy.
A better indicator for the federal defense job outlook may come from a February 1 directive from Deputy Secretary of Defense Robert Work that clarified the implementation of the hiring freeze at Defense.1 That memorandum identified 16 categories of positions that were exempted from the freeze and considered “necessary to meet National Security or Public Safety Responsibilities.”
The exempt categories represent immediate opportunities for Department of Defense jobs and military contractor jobs. Included in the list are:
- Direct support of military operations
- Cyber security and cyberspace operations and planning
- Space operations and planning
- Medical care for the military and military dependents
- Base and installation level positions providing childcare for military dependents and support to prevent child abuse, sexual assault, domestic violence and suicide.
- Positions related to treaty enforcement
- Mortuary and related services
Final y, the possibility of sequestration throws another kink into the prospects for near-term DOD hiring. Congress has already missed a debt ceiling deadline that passed on March 15. The federal government is currently operating on emergency funding measures and technically running out of cash. April 29 is the budget deadline to avoid sequestration. Sequestration imposes automatic spending caps across all federal agencies, though there has been clear indication that the administration would call for exemption of Defense. Another continuing resolution would maintain funding for all departments at 2016 levels.
Private Sector prospects look more promising
What’s clear is that global political instability is good for the defense industry in the U.S. That’s one of the conclusions of Deloitte’s recently released 2017 Global Aerospace and Defense Sector Outlook.2 The report predicts that U.S. outlays with defense contractors will increase in 2017, reversing five years of decline. It also projects increases in both demand and profits for defense contractors resulting from higher defense budgets across the globe:
Several governments have already started increasing their defense budgets to address security threats and to battle against terrorism. For instance, China, Russia, Saudi Arabia, and South Korea’s 2015 military expenditure rose by 7.4 percent, 7.5 percent, 5.7 percent, and 3.6 percent year-on-year, respectively.
For defense contractors, this represents an opportunity to place more equipment and military weapons systems with these Countries. Key defense products which are likely to experience increased interest from buyers, include armored ground vehicles, ground attack munitions, light air support aircraft, intelligence, surveillance and reconnaissance electronic sensors, cyber protections, maritime patrol ships and aircraft, as well as provision for equipment maintenance and sustainment, as the military operations tempo continues to increase.3
According to the Deloitte report, Department of Defense contractors have an operating advantage over their global competition. The graph below compares operating earnings/employee of US defense firms and foreign competitors:
Earnings/employee is a direct indicator of efficiency and productivity and it also provides a clue to job seekers who might be considering entry into the defense sector. Tune up your skills. An intimate acquaintance with Agile manufacturing, Six Sigma, and the latest manufacturing trends could give you the edge in searching for a Department of Defense contractor job.
Smaller Companies could be good targets
The defense industry is massive and the Big 5 defense vendors – Lockheed Martin, Boeing, Northrop Grumman, General Dynamics, and Raytheon – have typically accounted for around 30 percent of DOD contractor jobs. Another newly released report from the Center for Strategic International Studies projects the large company share of defense allocations to remain stable as defense outlays increase.4
In contrast, the share of smaller companies has increased dramatically from 16% of allocations prior to 2013 to 19% in recent years. Increased opportunity for smaller contractors stems partially from policies that promote small business participation, but also possibly from a Defense Innovation Initiative, started during the Obama administration. That strategy was intended partially to diversify opportunities for innovation by investing in a broader array of platforms and technologies, at least partially replacing the focus on large defense contracts.
If you’re considering a transition to the private sector from the military or from government service, the Defense Acquisition Trends report can provide valuable background information about what the DOD buys, how they buy it, and the kinds of contractors they use.
Charting Your Course
While the barometer reading and the forecast for defense-related jobs are somewhat uncertain at present, increases in defense spending are likely to occur. Presumably, the OMB will produce an approach to streamlining the operations of the federal government that is more rational than a hiring freeze.
While there may be some pent-up demand to fill support positions that were tied up by the hiring freeze, near-term prospects in the private defense sector look brighter than those within the federal government. Over a longer period, bigger military budgets will inevitably produce associated increases in employment within the DOD.
Chart your course carefully. Regardless of your decision to wait for federal openings or steer for a DOD contractor job, you’ll need to prepare a great resume for your next career move. The Master resume writers at CareerPro Global are here to assist. Since 1986, we have helped thousands of job seekers like you to reach their career goals. If you’re considering a military transition, a federal career move or a new private sector job, we hope you’ll get in touch for a free consultation.
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1 Memorandum for Secretaries of the Military Departments, et. al., Deputy Secretary of Defense, 2/1/17.
2 2017 Global Aerospace and Defense Sector Outlook, Deloitte, 2017.
4Hunter, Andrew et. al, Defense Acquisition Trends, 2016, Center for Strategic International Studies, March 2017
McCain and Thornberry, Breaking Defense
Shipbuilding, Wikimedia Commons.
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