DOD civilians, not contractors, can expect sequestration’s first punch

Many defense contractors, both large and small, have been worrying about sequestration and bracing for impact – but it’s the Defense Department workforce that will feel the effects first, according to a new analysis.

Because most contract activities for fiscal 2013 are already funded, the 10.3 percent that sequestration would shave from the DOD budget won't affect them. But with the Pentagon leadership looking at defense cuts of more than $56 billion in fiscal 2013, as many as 108,000 civilian workers could lose their jobs.

The findings are part of a report from the Center for Strategic and Budgetary Assessments released Aug. 24. According to the report, defense contractors could go years without facing sequestration’s impact.

“The delayed effect between budget authority and outlays means that defense contractors would not feel the full effect of sequestration immediately. Sequestration would, however, force layoffs of DOD civilian employees soon after it takes effect,” CSBA’s Todd Harrison wrote in the report. Harrison also noted that base closures, military personnel accounts and overseas contingency operations funds, which pay for the war in Afghanistan, are all exempt from sequestration.

“It will be three or four years before defense companies feel the full impact of sequestration,” Harrison wrote.

The timing of sequestration – a quarter of the way into the fiscal year – means that 25 percent of the fiscal 2013 budget will already have been spent. According to the analysis, that means that to cut funding by 10.3 percent for the year, DOD reduce the workforce by nearly 14 percent.

DOD reported that it plans to employ 791,000 full-time equivalent civilians. This means that as many as 108,000 DOD civilians could lose their jobs in the weeks immediately after sequestration goes into effect,” Harrison wrote. “And the longer DOD waits to reduce its civilian workforce once sequestration goes into effect, the deeper it will have to cut civilians for the remainder of the fiscal year.”

About the Author

Amber Corrin is a former staff writer for FCW and Defense Systems.

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