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Analysis: Agencies, Contractors Ramp Up Planning For Sequester

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Federal employees and contractors in our area are beginning to see the effects of spending cuts set to go into effect in March if Congress and the White House do not intervene. Federal agencies have been developing plans to handle the cuts for months, but now they appear to be moving forward even before the reductions go into effect. Tom Shoop, editor-in-chief of Government Executive, talks with WAMU's Elliott Francis about the latest. Here are some highlights:

On specific actions agencies are taking: "We're seeing a whole range of things, everything from slowing down spending on contracts to slowing down projects to planning for things like furloughs if the sequestration goes into effect," Shoop says.

Why agencies and contractors are no longer talking about these cuts hypothetically: "As things have gotten closer, they've realized that the time has come to begin some specific planning," Shoop says. "In the Department of Defense, for example, they've implemented a hiring freeze virtually across the whole department, and they've told civilian employees to begin planning for furloughs that could last up to 22 days starting sometime in April."

Whether agencies waited too long to plan for the sequester: "Not really. There has been planning in place for some time now," Shoop says. "It's really an effort at this point to be pragmatic about saying, 'this is what we want to be prepared for,' and to do some things in advance … so they can bank some savings if it goes into effect."

Why everyone's talking about personnel cuts now, when that action is supposed to be a last resort: "Part of reason we're seeing the talk about this now, is that it's … an effort to get the attention of people on Capitol Hill to say, 'these are going to have real effects,' to increase the pressure … on Congress to take action to avoid this kind of thing," Shoop says.

Whether that effort will succeed: "I think they'll get their attention, but a lot of the talk in the past week was from both Democrats and Republicans saying they are willing to accept a sequester going into effect," Shoop says. "That increases the odds that, even with pressure, something like this will happen."

On the impacts of a potential sequester on government contractors: "It's clearly having an effect on some of the major contractors. General Dynamics posted a $2.1 billion loss in the fourth quarter of 2012 and Boeing has announced layoffs," Shoop says. "For the smaller contractors, they're seeing a lot of slowdowns and lack of decisions about future projects."

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