Federal agencies have signficant discretion in how to handle the 2013 sequester, according to industry experts.
Agencies looking to prepare for the fiscal year 2013 sequestration are in for a bumpy ride, but it doesn’t mean they have no say in how the spending cuts will be administered, according to experts.
In a Jan. 17 panel discussion hosted by the Professional Services Council, participants explained how the coming sequestration will affect agencies and how to best prepare. Last year's failure of the so-called supercommittee to find $1.2 trillion dollars in savings over a decade triggered automatic across-the-board cuts that will begin on Jan. 2, 2013.
What does sequestration really mean for DOD?
Although Congress and President Barack Obama still have the ability to head off the sequester by enacting a law, chances are the cuts will occur, said Robert Keith, former senior specialist at the Congressional Research Service.
“In theory, a sequester could be nullified after it’s been passed, maybe days, weeks, a month or so [later] and an alternative package could be put in place,” Keith said. “I’m not advocating it; it would be messy but it’s conceivable. Jan. 2 may not be the fast, hard ending.”
However, in the most likely scenario of a sequester -- Obama has vowed to strike down any efforts to stop the cuts -- agencies still have significant discretion in determining what will be on the chopping block. Among other options, agencies will be able to allocate among programs in a line item, as well as between employee cuts and contract expenditures within a program, said John Cooney, a partner at Venable LLP.
Agencies will also have several months to implement the sequester, which means that contracting officers won’t know about its true impact on contracts until later in the process, he said. What can be expected though, particularly in the forthcoming lame-duck session, is that sequestration will bring about intense policy arguments and discussions, Cooney added.
“It’s going to be a very dynamic process over the course of the year -- fasten your seat belts,” he said.
However, the silver lining is that Congress will be able to look to the past to a similar sequestration that spanned 1985 and 1986, and apply a lessons-learned approach, Cooney said.
“It was a wrenching process for all concerned,” he noted. “But in the course of running all the scenarios, Congress and the executive branch figured out what spending cuts were available and what effects they would have on programs.’