Sequester Would Bring Deep Cuts for IT Vendors

If the sequester is implemented on Jan. 2, government information technology vendors can look forward to a world of pain, including terminated or restructured contracts, a redefinition by government agencies of critical programs, and an increase in disputes, including monetary claims by agencies against contractors, according to Elizabeth Ferrell, a Washington lawyer specializing in federal procurement.

The numbers are stark. The White House Office of Management and Budget is charged with implementing $54.7 billion in non-defense budget cuts for fiscal year 2013 in the event Congress does not find a way to stave off sequestration. "All agencies are planning," she said, "but they're planning behind closed doors and they're not telling people." Government contractors, Ferrell said, are "frustrated at the lack of detailed information on how sequestration will be implemented." Her advice for tech companies doing business with the government is to determine the status of their funding. Projects that are fully funded won't be clawed back under sequestration, but just about everything else that isn't funded or protected as exempt, like Veterans Affairs' programs, will face drastic cuts as agencies squeeze 8.2 percent in annualized funding reductions into three fiscal quarters.