PSC: Contractors Are Not “Immune” to Sequestration Cuts - (Archived)

There is a perception that government contractors are in a better position to deal with budget cuts than agencies themselves, who face the possibility of putting their employees on furlough.

According to the Professional Services Council (PSC), this is the furthest from reality, as highlighted in its recent white paper titled “The (Workforce) Realities of Austerity.”

According to the white paper, spending on government services contracts dropped more than $5 billion between 2011 and 2012.  This translated into the elimination of tens of thousands of contractor positions across the nation.

The white paper points out that many government executives believe that contractors are immune from the realities of austerity and will continue to draw “lavish” salaries no matter what happens.

PSC points out that fiscal guidance from the Office of Management and Budget and the Defense Department to reduce work performed by contractors proves that nobody is immune to the cuts.

In addition, the paper addresses that contractors live and work in a competitive talent marketplace in which compensation is tied directly to what the marketplace determines as being worthy, and that government compensation lags behind.

The PSC also discusses how “the ability to manage and execute their missions in the most efficient and effective manner possible in the face of enormous fiscal challenges” is the single most important need that agencies face today.   As such, federal agencies will find themselves dealing with a talent gap that needs to be filled by the private sector.

As we highlighted last week, the broader impact of the sequester on the already shaky economy will have a major impact on the Washington, DC metropolitan area.  Some estimate that 155,000 jobs could be lost in the region.

The bottom-line is that nobody is immune and we are all on shaky ground together.  Let’s hope that a budget resolution is passed that does not further dampen the Washington Metro economy and causes government to make serious compromises when it comes to fulfilling the mission.


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