President Barack Obama won a second term, defeating Republican Mitt Romney and setting the stage for a possible “grand bargain” on sequestration and on the expiration of the Bush tax cuts.

Before the election, Obama said he would pursue a bipartisan deal to avert the automatic severe spending cuts set to go into effect in January under the 2011 debt ceiling agreement. GOP leaders have been pressing to extend the tax cuts as a top priority.

With the GOP controlling the House and Democrats, the Senate, as before, there could be a move toward bipartisanship, or a return to gridlock. Whether a formal sequestration happens or not, there is growing agreement that a “soft sequestration” already is underway in the form of delays, slowdowns and reduced opportunities for federal contractors as a result of ongoing uncertainty about the budget.

Federal contracting specialists have noticed that the pace of contracting awards has become sluggish, especially since Oct. 1 when the fiscal 2013 year began, following a spending rush in the final weeks of fiscal 2012.

It’s possible the slowdown began even earlier, with some observers saying it’s been happening for many months and others noticing it more recently and saying it was exacerbated by the uncertainty of the presidential and congressional elections.

But with $109 billion in an automatic budget cut set to go into effect in January unless Congress and the White House can come to an agreement on how to avert it, the prolonged uncertainty is taking a toll.

“There clearly is a slowdown,” Stan Soloway, president of the Professional Services Council, told Set-Aside Alert. “We have seen long delays in making awards. The agencies are husbanding their money until they figure out what they can commit.”

“We have seen RFPs delayed and awards delayed because of the uncertainty over funding,” said Tom Petruska, president of Contracts Unlimited consulting firm.

Set-Aside Alert also has noticed the trend in its 12-page biweekly limited edition of Federal Business Opportunities postings of small business set-asides. In July, typically the 12 pages could be filled from a single day’s worth of set-aside postings from FBO.gov. In October, it was taking three to four days to fill the 12 pages.

Furthermore, there is fear that small contractors are more likely being hit by soft sequestration because they have less flexibility and fewer resources to avoid or mitigate negative impacts, according to a recent article by the Washington Post. (http://goo.gl/G7uOC)

The article described federal contracts “slowing to a trickle” because federal agencies are unsure of how much money they will have for fiscal 2013, a trend referred to as “soft sequestration.”

With work harder to come by, competition has become fierce.

“The threat of dramatic federal spending cuts at the start of next year is already taking a toll on small defense contractors, who say they’ve been grappling for months with a major slowdown in the awarding of contracts and steeper competition from large firms,” the Washington Post said.

One sign of heightened competition is that some federal vendors have slashed their prices to fire-sale levels to win a bid, Petruska and Soloway said.

“They have no choice but to cut deep,” Soloway says. “It is about survival.”

Another worry is that, as in times past during the most severe budget crunches, competition may become hardball with some larger businesses possibly applying tactics and terms that may take advantage of smaller and less experienced firms.

“When so many people are going after the same work, it can become...I hate to use the word ‘cutthroat,’ but that’s it,” Petruska said.

However, both Petruska and Soloway said they had seen no pattern of such tactics yet in the current slowdown.