At last weeks Federal Facilities event at the AGC Building in Seattle Jimmy Christianson AGC of America Federal Construction Director described construction cuts in the looming sequestration process and the impact these cuts would have on existing and future contracts. He expressed AGC of Americas desire for Congress to put off the massive cuts until a more thoughtful approach to deficit reduction could be implemented and this idea was seconded by retiring Congressman Norm Dicks who was honored at the event.
Click here to see Christiansons powerpoint presentation about sequestration cuts and their effects on federal contractors.
Sequestration refers to the $1 trillion in spending cuts that will take place on Jan. 2 2013 unless the lame-duck Congress does something to avoid them. The automatic cuts were part of last years budget deal which said that if Congress failed to enact comprehensive deficit reduction measures these automatic cuts would occur. Congress did not pass a comprehensive plan so the mostly across-the-board cuts are set to happen.
The cuts are split 50-50 between defense and non-defense programs but major entitlement programs like Social Security food stamps and veterans benefits are exempt. The cuts as Christianson describes are indiscriminate with no rhyme nor reason regarding the relative importance of the programs cut. Military construction alone takes a $1.6 billion hit in FY2012 but USDOT also gets significant cuts.
Christianson said there are a variety of ways the cuts could affect current contracts including “De-scoping” work pursuant to the contract — the government might temporarily suspend stretch-out or reduce required contract performance. Firms with contracts with grantees including local and state governments receiving federal funds for large mass-transit projects may be able to recoup money improperly denied them by the Sequestration through litigation but it would be tough sledding. Plus the number of best-value contracts will likely be reduced as low price will reign.
Congressman Dicks the retiring long-time champion of military construction particularly for JBLM and Naval Base Kitsap spoke of his efforts to convince congressional leaders to postpone sequestration and described why there needs to be a balanced approach to long-term deficit reduction that focuses on economic growth and job creation that does no harm to our economic recovery.
Top photo: AGC of Washington honored Rep. Dicks for his 36 years in Congress and support for Washington State during his years on the House Appropriations Committee. We very much appreciate your outstanding leadership and dedication in promoting economic development and opportunity AGG Federal Facilities Committee Chairman Jake Jacobson of Osborne Construction told Rep. Dicks. We value your patience and persistence in working with diverse constituencies for the protection of the United States of America the betterment of the people of Washington State and your continued support of men and women of Washington States commercial construction industry.
Bottom photo: Jimmy Christianson AGC of America Federal Construction Director.