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FY 2015 Defense Spending By State report now available for download.

Defense Industry Transformation


Regional Background

For Massachusetts, the defense sector is a $13.9 billion industry employing over 130,000 people. There are over 2,500 businesses tied to the Department of Defense and Homeland Security through 17,042 contracts. However, with a decline in defense industry spending, Massachusetts faced a $13 million spending cut in Fiscal Year 2014, including an $8 million reduction in Army spending and $5 million reduction in Air Force spending. These cuts will have a catastrophic effect not only for the defense sector, but for the Commonwealth’s economy as a whole.

Project Overview

To mitigate the adverse effects of defense spending cuts and sequestration on the Commonwealth’s economy, the Massachusetts Development Finance Agency (MDFA) received a Defense Industry Adjustment grant from DoD’s Office of Economic Adjustment. In order to plan for the impacts of the decrease in defense spending, the Defense Industry Transformation project in Massachusetts plans to research and evaluate its current market base and map its potential for expanded opportunities outside of the defense industry. The study will identify methods to create new employment opportunities and include:

  • Conducting a thorough assessment of the existing defense-related economic base.
  • Conducting asset mapping for defense industry.
  • Focusing on the potential for expanding technology transfer and identifying methods to accelerate the commercialization of defense- related products.
  • Identifying potential for new applications of defense-related products and expanding the customer base of defense industry.
  • Integrating and coordinating response efforts with other defense-impacted areas where practicable.
  • Formulating recommendations and an implementation strategy.

The study will be conducted in two distinct phases. Phase I, Setting the Stage for Action, will address the assessment and economic diversification approach, while Phase II, Taking Action, will address the implementation strategy and sustainability.

Projected Outcomes

Through enhanced coordination between the state and localities, MDFA will look to mitigate the effect of the anticipated loss of jobs as a result of DoD budget cuts; support local adjustment and diversification initiatives which seek to lessen the impact on supply-chain/downstream defense companies in Massachusetts; and provide business planning and market exploration services to defense contractors and subcontractors.