DON’T LOOK NOW, BUT POSSIBILITY OF SEQUESTRATION RETURNS
The “s” word of government contracting is starting to be spoken more and more on Capitol Hill as Congressional budget and appropriations members look to create a budget deal that would head-off mandatory cuts during the next fiscal year. If you don’t remember the last sequestration, ask your fellow contractors. It was not a pleasant experience. If there is no budget deal that increases spending caps, the sequestration formula would kick in, making across the board, automatic spending cuts by whatever amount appropriations were made above “approved” levels. If, for example, DOD had appropriations for $750 billion, but budget caps only approved $720 billion in spending, sequestration would take $30 billion in spending out of the picture. There is currently no threat for cuts for this fiscal year, though agencies have to deal with the usual year-end rush to spend uncommitted dollars. The real concern would for FY’2020. Some potential concerns include the fact that most of the major Congressional players that achieved the last budget deal are no longer in Congress and there is a distinct lack of bi-partisanship generally. In addition, there are new players at the White House who will likely have a lot to say about whether they approve of any deal. There is plenty of time to achieve a budget cap deal and avoid cuts that could impact everything from military readiness to office supply acquisitions. Congress is not traditionally known, though, for acting before the clock starts getting closer to zero. Watch this space.