If you work in the D.C. area, there is a good chance that your work is impacted by the federal government and the ebb and flow of today’s federal budget back-and-forth. In the past year, there has been a great deal of debate and concern regarding proposed cuts to the Department of Defense budget, and it has many in the defense contracting community concerned.
Much of the news coverage is setting an alarming tone. A recent Bloomberg Business article noted: “Contractors worry about a lack of leeway if the full $55 billion in cuts goes into effect. Last year’s Budget Control Act, which established the sequestration process, said cuts should be made at the “programs, projects and activities” level. Meaning that depending on which program or project you support, significant cuts are likely on the way.
The article went on to say, “Not all companies will be affected in the same way. If the budget ax falls, contractors that provide services to the Pentagon, such as Virginia-based Computer Sciences Corp. (CSC) (CSC) in Falls Church or SAIC Inc. (SAI) (SAI) of McLean, probably will see a drop in revenue faster than weapons makers such as Lockheed Martin, analysts said.”
Nathan Hodge with the Wall Street Journal describes the coming cuts as a specter- “specter is haunting Washington—the specter of sequestration.” That is powerful imagery which represents the even more powerful fears looming over the defense contracting community.
The article goes on to say, “With more than $50 billion in new Pentagon cuts set to kick in in early January, industry officials say they must begin notifying employees of potential layoffs or plant closings this fall, consistent with state and federal laws. In an election year, however, it’s unclear whether lawmakers can agree on a deal to reverse some of the cuts.”
A report, Defense Budget Priorities and Choices, which was released by the Department of Defense last January, documents a list of strategies and plans to cut the budget. A few are listed below:
- More skillful contracting practices to increase competition, reduce costs, and increase buying power
- Better use of information technology
- Better use of business and enterprise systems
- Streamlined staff
- Limitations on official travel
- Better inventory management
- Reductions in contract services
- Deferral of some military construction to align our facilities more closely with the size and posture of our future forces
- Reductions in planned civilian pay raises
The report goes on to say, “Beyond the roughly $60 billion in efficiencies and overhead savings, we eliminated a number of poorly performing programs describe later in the paper. The Department of Defense’s current strategy guidance was driven by the approaching end of a decade of war, a changing technological and geopolitical landscape, and the national security imperative of deficit reduction. The Department’s investment choices for FY 2013- 2017 were derived from this guidance and conform to the 2011 Budget Control Act requirement to reduce Defense Department future expenditures by approximately $487 billion over the next decade or $259 billion over the next five years. Reflecting these reductions, the Department will request funding of $525 billion for 2012, rising to $567 billion by FY 2017.”
The only thing certain about sequestration and impending budget cuts is the fact that they’ll remain in the news, with ever increasing doomsday coverage. With actual cuts slated to begin in 2013, that’s at least six months of speculation.
Diana M. Rodriguez is a native Washingtonian who currently works as a professional writer, blogger, social media expert, commentator, editor and public affairs practitioner. Diana previously worked as an editor and senior communications analyst for the Department of Defense.
