Government contractors will share in the sacrifices leading to a smaller federal government and it will happen sooner rather than later, Deltek FedSources SVP and Chief Knowledge Officer Ray Bjorklund said Wednesday morning at the company’s 26th Annual Federal Outlook Conference at the McLean Hilton.
Bjorklund says that the budget war over the 2011 fiscal year budget brought cuts that were so extensive that new 2012 fiscal year programs are now at risk as administration-planned cuts in FY12 are happening now.
“The situation going forward is murky at best, but it seems that contractors may take the larger share in burdens of cuts,” Bjorklund said.
A few quick takeaways from Bjorklund:
- Leon Panetta, who was announced this morning to be the next Secretary of Defense, will carry on the legacy of the kind of cuts Secretary Gates started that could severely affect contractors for years to come.
- The contractor-addressable market continues to decline and will be flat at best.
- Uncertainties in the future of controlling government spending affects program definition and scope as existing and planned programs will need to be restructured and deals will be pushed further away and descoped.
- Cash flow for both government and contractors will be tighter.
- With so much money still at play there will still be opportunities, mostly associated with crafting a leaner government.
- The next few years are expected to be mainly flat with hopes of turning upward again in three to four years depending on the political environment.
Afterwards, we talked with Bjorklund for a segment for FedScoop Radio where he expanded on the budget’s impact for federal IT.