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The Impact of Sequestration on Government Contracting

If sequestration occurs, the Congressional Budget office estimates defense programs will be cut by 10 percent and non-defense programs will be cut by 8.5 percent in FY 2013. Consequently, contractors should prepare to navigate in an environment of increased competition.

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Topics: ECA Risk Forecast Report 2013, Government Contracting, Sequestration

Government Contracting and Relationships: Is the “Fiscal Cliff” as Dire as Advertised?

The FY 2012 budget included close to $1 trillion in cuts over 10 years, with $21 billion taking effect last year. The Budget Control Act (BCA) of 2011 requires the federal government to reduce spending by more than an additional $1 trillion by 2021. This amounts to cutting about $109 billion from the budget each year. To accomplish this, the BCA created the Joint select Committee on deficit Reduction (the “super Committee”).

 “Sequestration” was the name given to the mandatory, across-the-board spending cuts (totaling about $1.2 trillion) that would occur automatically should the committee fail to compromise. As we know, there was no grand compromise. Through sequestration, budget cuts would be split equally between defense discretionary spending and non-defense mandatory (entitlement) and discretionary (non-entitlement) spending, without an increase in tax revenue. This represents about $55 billion in cuts from both the defense and non-defense budgets every year.

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Topics: ECA Risk Forecast Report 2013, Ethics & Compliance, Government Contracting, Sequestration