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DoD Contracting Cuts Less Severe than Feared?

Photo: defense.gov

Deputy Secretary of Defense William J. Lynn told a delegation of Virginia lawmakers this week not to expect the worst in terms of proposed cuts to contracting.

Cutting service contractors was one part of Defense Secretary Robert M. Gates’ strategy for finding efficiencies within DoD. The original plan, announced in August, called for annual cuts of 10 percent for support services contracts through 2013.

However, according to various media reports, the lawmakers were told by Pentagon officials those cuts will come from a smaller segment of DoD contractors than originally thought.

Upon hearing DoD’s new explanations, Gerry Connolly (D-Va.), a Northern Virginia Congressman whose constituents include many government contractors, offered cautious praise for it.

“While I am still concerned about the effect of these defense contractor cuts on the economy of Northern Virginia and the Washington area, we are making progress,” he said in a statement. “The impact will be less than was originally thought when Secretary Gates announced his plan last summer.”

Why will the impact be less?

Connolly said DoD officials told him the cuts would only come from spending on administrative support contractors, which totals about $4.3 billion a year. A 10 percent reduction in that amount would mean efficiencies of about$400-$430 million a year, not the dreaded cuts of as much as $14.3 billion per year.

The confusion swirling around the proposed cuts had caused “enormous turmoil,” for defense contracting firms ever since the proposal was first laid out, Government Executive reports.

Many in industry are now heaving sighs of relief.

“We now have a better understanding of what their goal is, and it’s somewhat of a relief that it’s not going to be quite as draconian as we thought it was,” Bobbie Kilberg, president of the Northern Virginia Technology Council, told Federal News Radio.

Virginia would likely have faced strong effects from across-the-board contractor cuts. According to Gov Exec, defense spending accounts for almost 20 percent jobs in Virginia.

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