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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Reader comments

Mon, Mar 4, 2013 Kim Thompson metro DC

Maybe I'm a little naive with all of this budget mess, but this sequestration thing seems like a "blessing in disguise". Surely it will hurt lots of people's pockets, but cream always rises to the top, and hopefully after the dust settles we will have a leaner, more efficient, more productive federal government. I just hope that the small businesses critical to our DoD infrastructure can maintain through the tough times.

Fri, Mar 1, 2013

I am a small business owner but I'm also a proud american and a tax payer and I'm thrilled that this happened. Senior DoD leadership should be embarrassed that they lost control so badly that it came to this, it should have happened years ago! Our forefathers would be mortified by the lack of actual leadership within DoD, the fact that DC is full of politicians rather than leaders, the pathetic approach of simply throwing money at problems, the constant goal of looking for the easy way, and the misconception that change is progress when far too often it is a huge waste of money but somebody in a leadership role (ha, ha, ha) wants to claim it as an improvement that happened under their watch! Say it with me "Fraud, Waste, and Abuse"!

Fri, Mar 1, 2013 Former DOD KO

Thank you, Juniper. Exactly correct. This is the problem when people who do not understand federal contracting attempt to weigh in on it. Standard language in any solicitation notice or sources sought when they do not currently have funding in hand. Not a sequestration thing at all. And Cali, I'm sorry for your rough patch, but my small business is up 111% year over year in DOD work. Perhaps sequestration is not the cause of your losses?

Fri, Mar 1, 2013

Don't forget the lunch shops. If folks stay home a day a week, they'll eat at home and make their own lunches for the other days. That's >20% hit to you local restaurants, who already run on hin margins & can't really raise prices.

Fri, Mar 1, 2013 California

Totally agree. I am a small business owner and all my contracts with the Defense Department were not renewed since January 2013. The one proposal I still have into the Defense Department is 2/3rds of what the previous contract was for since that is all they have approval for and they want the same amount of work.

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