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Research Firm: Contract Spending Could Decline Next Year

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Federal contract spending could be in a for a slight decline, market research firm FedSources revealed at its annual federal outlook conference.

The government spent about $773 billion for contracted work in the last fiscal year, Federal Times reports. But President Barack Obama’s 2012 budget of $752 billion for contracted goods and services amounts to a 1 percent drop, FedSources Senior Vice President Ray Bjorklund said

And that’s even before Congress — which could be following shifting political winds toward deeper cuts — gets involved.

According to the Federal Times report, Bjorklund said Congress could propose reductions — down to $698 billion,  a 5 percent drop.

Amid all the gloomy talk of cuts, Bjorklund also described potential areas for growth for contractors: Student aid and disaster loan programs, Army construction and professional services in the area of financial oversight.

In February, Office of Management and Budget officials announced for the first time since 1997, spending on federal contracting had declined.

The decline in contract spending followed a pledge Obama made shortly after taking office in 2009 to realize a 7 percent reduction in baseline contracting spending.

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