Sequstration could cut off some suppliers for agencies

One aspect of sequestration that agencies should brace for is the effect of the budget cuts on small business, according to a report from the Aerospace Industries Association and other experts. The Defense Department and NASA will feel the effects of sequestration as small suppliers and innovative companies will face closures, the report warns.

“As contracts are canceled, re-negotiated, or otherwise reduced, small-business leaders will have limited flexibility in adjusting their business model. While some will seek to diversify, others will just downsize, and still more may simply have to close their doors,” reads the report, issued Sept. 20.

To read the report, click here.

Small companies don’t have the deep pockets and diverse business investments of the major federal contractors, experts say. Large contractors have sufficient scales of operations to survive tight times, even if it means they have to adjust their business processes or cut jobs. Small firms usually lack the ability to adjust.

Steve Fuller, George Mason University professor and director of its Center for Regional Analysis in the School of Public Policy, told the House Small Business Committee on Sept. 20 that small businesses will bear a disproportional impact of the federal spending reductions under sequestration.

Richard Ginman, director of defense procurement and acquisition policy at DOD, told the committee small businesses won’t be the target when defense officials begin their cuts. The department simply will have less money so there will be fewer opportunities going forward, if sequestration takes effect.

“What we buy is what we need for our warfighters,” he told Rep. Nydia Velázquez (D-N.Y.), the committee’s ranking member, who wanted an assurance that small businesses won’t take the hit first. “If there is something that we don’t need, that will be what we stop spending on first.”

He added too that DOD won’t change its small-business set-aside policies in light of sequestration.

The sequestration wouldn't take effect until January, unless Congress and President Barack Obama can reach some accord beforehand. To some, it looks bleak and the clock is ticking loudly.

At a speech Sept. 17, Adm. Mike Mullen, former chairman of the Joint Chiefs of Staff, stopped short of saying he is certain sequestration to happen, but he was not optimistic.

“I’m not as hopeful as others that we won’t drive off this cliff. I’m worried sick about it, quite frankly,” he said.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

FCW in Print

In the latest issue: Looking back on three decades of big stories in federal IT.


  • Anne Rung -- Commerce Department Photo

    Exit interview with Anne Rung

    The government's departing top acquisition official said she leaves behind a solid foundation on which to build more effective and efficient federal IT.

  • Charles Phalen

    Administration appoints first head of NBIB

    The National Background Investigations Bureau announced the appointment of its first director as the agency prepares to take over processing government background checks.

  • Sen. James Lankford (R-Okla.)

    Senator: Rigid hiring process pushes millennials from federal work

    Sen. James Lankford (R-Okla.) said agencies are missing out on younger workers because of the government's rigidity, particularly its protracted hiring process.

  • FCW @ 30 GPS

    FCW @ 30

    Since 1987, FCW has covered it all -- the major contracts, the disruptive technologies, the picayune scandals and the many, many people who make federal IT function. Here's a look back at six of the most significant stories.

  • Shutterstock image.

    A 'minibus' appropriations package could be in the cards

    A short-term funding bill is expected by Sept. 30 to keep the federal government operating through early December, but after that the options get more complicated.

  • Defense Secretary Ash Carter speaks at the TechCrunch Disrupt conference in San Francisco

    DOD launches new tech hub in Austin

    The DOD is opening a new Defense Innovation Unit Experimental office in Austin, Texas, while Congress debates legislation that could defund DIUx.

Reader comments

Fri, Sep 21, 2012 SPMayor Summit Point, WV

This is so much cheap bologna. The Congress is an utter failure in managing its responsibilities. For all the thunder and noise over mismanagement is some agencies the Congress is far and away the worst example of mismanagement. Of course, any contractor who deals with and is dependent on the Federal Government as a client will be impacted. Size may define the nature of the impact but no one is getting out of this unharmed.

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

More from 1105 Public Sector Media Group