Business

Sequester could hit small DOD providers hard

pen and contract

Military officials warned a panel of lawmakers Feb. 28 that small businesses will feel the immediate impacts of sequestration as the military branches cut their operations and management budgets.

Lt. Gen. Charles Davis, military deputy in the Office of the Assistant Secretary of the Air Force for Acquisition, said the effects of sequestration will cascade down through the prime contractors and subcontractors that support the each of the Air Force's programs. The fact that a continuing resolution is funding the government will also affect contractors, he said.

"The absence of a final fiscal 2013 appropriations bill thrusts each military service into a planning purgatory of sorts, clouding near- and long-term fiscal programming with a fog of ambiguity," he told the House Armed Services Committee's Tactical Air and Land Forces Subcommittee.

He added that the Air Force is already $170 million behind its small-business contracting goals compared to its fiscal 2012 numbers.

Small business will feel the pinch, because "they are core to the way we do our business," said Sean Stackley, assistant secretary of the Navy for research, development and acquisition.

Heidi Shyu, assistant secretary of the Army for acquisition, logistics and technology, testified too that large prime contractors have the capital to survive the downturn, but small firms, particularly those that serve a niche area, do not have those same resources.

While the House, Senate and the president attempt to reach a deal, defense suppliers are waiting, as are federal program managers and acquisition officials, wondering what is coming in terms of money and spending amounts, Davis said.

An Air Force small business-only solicitation released on Feb. 27 is an example of what might lie ahead. The solicitation for Air Force Contracting Information Systems begins: "Funds are not presently available for this effort. No award will be made under this solicitation until funds are available." Officials warn in the solicitation that they can cancel the contract at any time, with no obligation to reimburse any costs.

About the Author

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

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