Since the new fiscal arrived with a whisper - no federal government shutdown danger this year thanks to the continuing resolution - sequestration guessing is the main parlor game now. The administration’s report to Congress last month didn’t really detail what programs or projects would be canceled. Instead, it straight-lined a roughly 8 percent across the board cut, agency by agency. In some ways, it was 394 pages of passive-aggressive.
On the other hand, White House officials are saying they don’t think Congress will ever actually let the sequester happen. They may be right. A bipartisan group of six Senators said, just before the recess, they might have a plan for a “balanced” - read “includes tax hikes” - approach to settling the budget issue. That, too, might be a pipe dream, based on the lack of success of the original 12-member, bipartisan panel earlier this year. Its failure to reach consensus put the looming sequester in place.
This week the ballet between contractors and the government grew more elaborate. OMB decided to back up the earlier Labor Department advisory to contractors, telling them not to warn employees of impending mass layoffs, as ordinarily required by federal law. But not in this case because no one is certain if the sequester will occur, and even if it does, there’s scant knowledge of which contracts are likely to be affected.
To underscore the point, the administration said it would obligate agencies to pay for legal and compensation costs related to layoffs for companies who don’t warn employees but which later have layoffs because of sequester. Contractors got the message. By Monday, Lockheed said it would not issue warnings, the same Lockheed that first issued a warning and caught the attention of the Labor Department.
Looking at the situation, I think it’s possible to make educated guesses about which contracts might be affected by sequestration.
- Governmentwide acquisition contracts (GWACs) or agency Multiple award contracts (MACs) will likely see slowdowns if non-personnel, discretionary funds get pinched. But since few if any large contractors rely entirely on any one of these vehicles, those would not be candidates to cause layoffs. Ditto for the GSA multiple award contracts.
- Single-vendor or few-vendor acquisition programs, mainly those of the Defense Department, would probably take the greatest hit. Since the president ordered personnel accounts sequestered from the sequester, the “platform” buys - like ships and planes - would see stretch-outs or even cancellations. That’s the kind of thing that could trigger layoffs.
- Service support contracts required for ongoing agency operations and mission delivery could see trimming, but not outright cancellation given the government’s inability to replace contractors employees with agency employees. Time and budget constraints wouldn’t allow it.
The problem with sequestration isn’t so much the absolute spending levels it would impose. Congress could end, oh, farm subsidies and save a trillion dollars in 10 years no sweat. The problem is that it exposes the faults in the political and budget processes. Members of Congress want the administration to come up with detailed plans for what it will cut, yet Congress doesn’t have the collective will to actually end programs, almost any program.
So the workaway federal managers and the contractors they rely on have no real idea over what will happen, much less have any control over it. And yet they will be blamed if things go wrong because a given level of output must somehow be done with 1-n amount of resources. It’s the fiscal equivalent of speeding up the chocolate production line. And the results will be the same.