New analysis estimates agency-by-agency sequestration cuts

The Professional Services Council has run some numbers on the likely cost of sequestration's first year.

Civilian government agencies can expect to see their fiscal 2013 budgets decline by roughly 7 percent if sequestration becomes a reality on Jan. 3, according to new data from an industry group.

The Professional Services Council estimates non-Defense Department agencies’ combined discretionary spending will fall by $39 billion, from $551 billion in fiscal 2012 to $512 in fiscal 2013.

The terms of the Budget Control Act largely spare the Veterans Affairs department from sequestration, according to the PSC analysis. (A small block of VA civilian pay and contractor spending will still be subject to the sweeping cuts, according to Alan Chvotkin, PSC's executive vice president and counsel.) Given that exclusion, the PSC estimate means all other non-DOD agencies will face cuts of approximately 7.8 percent.

See the PSC's analysis here.

The PSC used the fiscal 2012 budget as its basis for estimates, because fiscal year 2013 is beginning with a six-month continuing resolution rather than a full budget. Earlier, PSC estimated that the Defense Department's funding would fall from a total of $713 billion to about $658 billion -- about 7.7 percent -- in 2013 under sequestration.

The news comes as the Office for Management and Budget on Aug. 20 released some guidance for agencies to begin preparations for the so-called fiscal cliff that will arrive in the new year if Congress fails to come to a last-minute agreement.

It is still possible that Congress could avert the budget cuts, but there are only a few months left for it to do so.  And an analysis in The Hill explains why, politically, a deal is unlikely before the November elections.

“Both parties overwhelmingly say the cuts should not take effect and are bad policy, but there’s been little movement toward actually reaching a deal in the past year,” writes Jeremy Herb. “Part of the reason that’s unlikely to change between now and November is that both Democrats and Republicans see sequestration as a winning issue on the campaign trail. The defense cuts themselves have been wrapped into the larger debate about taxes, and each side says the other is willing to harm the military in order to get its way on the Bush tax rates.”

The Obama administration is slated to submit a report to Congress in September on what steps need to be taken to achieve the sequestration cuts. That document will bring some clarity to the issue, said John Palguta, vice president of policy at the Partnership for Public Service.

"Regardless of what is in that report, your employees will want to know how it will impact them and their jobs, and you need to be prepared to respond," he said. "Even if the answer is that the exact details are still unclear, let them know what you don't know and that you will share additional information as it becomes available -- and then follow through."

FCW calls to several agencies on Aug. 28 suggested that federal officials are awaiting that guidance from the Office of Management and Budget. All declined to comment on the projected cuts or how they might be implemented. 

Agencies bracing themselves for the massive cuts need to first know exactly how sequestration works and its impact on operations, including the potential impact on contractors and/or program beneficiaries, said Chvotkin.

The next step is to create alternative plans for addressing the cuts, including considering whether employees need to be furloughed or if certain types of contract work must be terminated, deferred or reduced, he said.

Managers should also look to develop communications strategies for the agency employees and any relevant stakeholders in coordination with supervisors, the human resources department and the legal staff. "Don't accept the inevitable automatic responses of 'Don't do anything' or 'We're working on it, and we'll let you know later,'" Chvotkin added.

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