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GOVERNMENT CONTRACTING

Perhaps the Sequester Wasn't So Bad After All
 

Four months into the sequester, have you noticed any impact? A new report says the answer might be no.

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It was billed as the end of the world as we knew it -- but most of us feel fine.

On March 1, the automatic government spending cuts collectively known as the sequester went into effect, immediately dropping $85 billion from the federal budget. The Obama administration called the cuts "harmful," and said they would "threaten hundreds of thousands of jobs, and cut vital services for children, seniors, people with mental illness and our men and women in uniform."

But a funny thing happened on the way to the budget apocalypse. Four months into sequester, The Washington Post has examined the results. While the budget crunch has been painful in some respects, the overall outcome has been nowhere near as dire as opponents predicted (emphasis ours):

"The $85 billion budget cut has caused real reductions in many federal programs that people depend on. But it has not produced what the Obama administration predicted: widespread breakdowns in crucial government services. Just 11 [of 48 of the administration's dire predictions] have come true, and some effects are worse than forecast. But 24 predictions have not come to pass. In 13 cases, agencies said it is too soon to know."

Effect on Poorest Citizens

First the bad news. Of the cuts that have gone into effect, the government says they've affected some of the poorest citizens most.

For example, the Labor Department says unemployment benefits have been cut. At the Social Security Administration, the wait to talk with a representative has doubled. And 15,000 very low income Americans who depend on rental assistance from the Department of Agriculture, for example, aren't going to get it.

Beyond that, some of the federal agencies that provide the most services to poorer Americans, such as the Department of Health and Human Services, weren't yet able to provide answers on how the cuts have affected services. So we'll have to wait a while longer to hear whether predictions that "70,000 children would lose access to Head Start" and "school systems [would lay off] over 14,000 teachers ... and other staff" will come to pass.

Furloughs and Layoffs

Elsewhere, the predictions of doom have been met with mixed accuracy. Many federal agencies, such as the Department of Housing and Urban Development and the Internal Revenue Service, for example, have furloughed employees. Some Defense Department civilian employees are set to begin serving 11 days of unpaid leave on July 8, although originally they were projected to take off 22 days without pay.

Other agencies--the FBI and Bureau of Prisons, for example--have found ways to avoid furloughs, mostly by shifting money from other programs to payroll. 

(While the Department of Justice says it is too early to tell whether federal prosecutors will handle fewer cases, attorneys on the other side of the courtroom--the Federal Public Defender's office--have been obliged to take up to 15 days of unpaid leave.)

Problems Averted

The government had predicted dire results in terms of fewer government inspections of food, workplaces, and other safety concerns. One prediction was that the Agriculture Department would have fewer meat and poultry inspectors on duty and that the Mine Safety and Health Administration wouldn't have enough people on duty to complete its work.

In the end, Congress "transferred $55 million" to keep the meat and poultry inspectors on the job, and the mine inspection agency found a way to keep working. On the other hand, OSHA isn't doing as many inspections -- in part because of the sequester and because the factory explosion in West, Texas and other disasters have required its attention.

Where the cuts impacted the leaders of government itself, the government acted quickly. For example, Congress acted to put more flight controllers on duty when sequester-prompted airport delays meant that members were spending more time on the tarmac as they went to and from their home districts.

Government Contracts

The Washington Post reported that while the administration had predicted it would have to cut $35 million in contracts through the National Science Foundation, for example, Congress acted to restore the money.

Of course $35 million is a drop in the federal budget bucket. Elsewhere, I've seen reports that the government was slower than usual in paying its contractors, but that's just anecdotal evidence. Some have argued that the government's budget cuts a year ago have had more effects on contracting.

As of this writing, however, there were more than 29,300 contracting opportunities listed on "Fed Biz Opps," the government's contracting database.

This is the piece of the puzzle that's probably most interesting to many entrepreneurs, but the data is incomplete to say the least.

Like this post? Check out Bill's weekly email.

Last updated: Jul 2, 2013

BILL MURPHY JR. is a journalist, ghostwriter, and entrepreneur. He is the author of Breakthrough Entrepreneurship (with Jon Burgstone) and is a former reporter for The Washington Post.
@BillMurphyJr




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