By Kevin Brancato and Anne Laurent
Contractors probably will bear more than a third of $85.3 billion in automatic government budget cuts due March 1, according to data compiled by Bloomberg Government.
Half of the reduction will come from defense, the other half from nondefense budgets. The defense cut will be 7.3 percent, nondefense, 5.3 percent. Reduced contract spending will account for $30.8 billion, or 36 percent, of the $85.3 billion sequester, according to Bloomberg Government calculations.
Congress has appropriated only enough funding for half the fiscal year under a continuing resolution that runs through March 27, so fiscal 2013 sequestration is on an installment plan. BGOV estimates that $44.9 billion of the total — $23.6 billion in defense and $21.3 billion in nondefense funds — will be cut on March 1. The remaining $40.4 billion will be cut — $19.2 billion more from defense and $21.3 billion more from nondefense budgets — when additional fiscal 2013 funds are appropriated.
Uneven Contractor Burden
The Pentagon’s share of the $85.3 billion full-year sequester is $40.8 billion. About $23.1 billion, or 57 percent, of the $40.8 billion will come from reduced contract spending if the cuts are made evenly across all defense accounts.
Contractors face a $1.66 billion cut at the Energy Department. That’s about 93 percent of the $1.77 billion discretionary sequester faced by Energy. Energy is funded from defense and nondefense accounts, so it faces a 6.5 percent sequester rather than the 5.3 percent hitting most civilian agencies.
The Health and Human Services Department will take the third-largest contract spending cut, $1.03 billion. That’s 24 percent of the department’s $4.3 billion discretionary sequester. Medicare will lose $11.2 billion to sequestration.
Contractors face hits of $851 million at the Homeland Security Department and $820 million at NASA. NASA spent about 77 percent of its fiscal 2012 budget on contracts; DHS about 27 percent. Because DHS’ discretionary budget is so much larger than NASA’s, the reduction to DHS contract spending will be $31 million larger than NASA’s.
To learn more about the potential impact of sequestration on federal contractors, or to learn more about Bloomberg Government, please contact us here.