August 5 2011 Copyright 2011 Business Research Services Inc. 301-229-5561 All rights reserved.

Features:
Defense Contract Awards
Procurement Watch
Links to Prior Issues
Teaming Opportunities
Recently Certified 8(a)s
Recent 8(a) Contract Awards
Washington Insider
Calendar of Events
Return to Front Page

Ahead: A Year of Uncertainty, A Decade of Belt-Tightening

The eleventh-hour deal to raise the federal debt limit means procurement budgets will shrink—or grow very little—for the next decade.

The agreement that allows President Obama to raise the debt ceiling mandates more than $900 billion in spending cuts over the next 10 years. What programs will be cut? To be determined.

The White House says only that the reductions will be “balanced between defense and non-defense spending.” The White House fact sheet boasts that the agreement calls for the first cuts in the base defense budget since the 1990s and a reduction in non-defense discretionary spending to its lowest level since Dwight Eisenhower was president more than 50 years ago. 

“Make no mistake, this is a change in behavior from spend, spend, spend to cut, cut, cut,” said Senator Lamar Alexander, R-TN.

The agreement creates a super-committee of Congress—evenly divided between Republicans and Democrats—that will recommend a further $1.5 billion in deficit reduction over the next decade, possibly including tax increases and cuts in entitlement programs such as Social Security and Medicare. The committee will report on the day before Thanksgiving. If it reaches an agreement on how to cut the deficit, Congress is required to vote it up or down before Christmas. If there is no agreement, automatic cuts would take effect.

All these ifs add up to a longer period of uncertainty about how much the government will spend and how it will spend it.

So, while agencies still have money to spend between now and Sept. 30, the end of the fiscal year, they probably will not start any new programs or expand existing ones because they cannot predict future appropriations.


*For more information about Set-Aside Alert, the leading newsletter
about Federal contracting for small, minority and woman-owned businesses,
contact the publisher Business Research Services in Washington DC at 800-845-8420