Scott Rothstein/

Contractors Protest Continuing Bad News on Sequestration

‘Time is up,’ says Professional Services Council, as Pentagon slows payments.

A top contractors group on Tuesday published an open letter declaring that “time is up” and imploring President Obama and Congress to hurry toward a new budget compromise to head off automatic spending cuts before they begin on Friday.

A Pentagon official cited looming sequestration in explaining a decision to begin slowing payments to prime contractors to increase on-hand cash, according to a report in the Federal Times. Contractors will be notified in the next few days, an unnamed official said, and Defense accounts will gain about $1 billion in available funds.

The executive board of the Arlington, Va.-based Professional Services Council, in a letter to the White House and all congressional offices, said the group’s 360 member companies “urge you in the strongest terms to act quickly and collaboratively to avoid the threatened sequestration and finally address the fiscal uncertainty that is undermining the government’s ability to execute its many and complex missions.”

After 18 months of anticipating sequestration, the contractors blasted political leaders for having “failed to act to stop this manufactured component of the fiscal crisis.”

PSC President and CEO Stan Soloway said, “Our association’s leaders, like many others in the business community, believe strongly that the health of our economy, including jobs creation and retention, mandates a combination of strong government leadership, collaboration with affected companies and balanced compromise.”

The 18 months contractors have spent seeking to avoid sequestration have included significant political investing in lobbying, noted a new study released on Monday by the nonprofit Sunlight Foundation. It estimated that 10 companies might lose $13.6 billion in contracts affected by sequestration and put those companies’ investment in Washington lobbying at $115 million. At a 125-to-one return, that “starts to look like a bargain,” wrote Sunlight analyst Lee Drutman.

He suggested that the companies are not spending more because “they haven’t figured out how to solve the collective action problem and are instead under- investing because they’d rather somebody else bear the burden of convincing stubborn members of Congress to avoid sequester.”

PSC’s Soloway said the industry “understands the necessity and inevitability of federal spending reductions and accepts that it will feel its share of the associated pain. But in making those reductions, agencies should have the flexibility to do so strategically, collaboratively and holistically so as not to hurt mission execution.”

The group’s letter laid out two principles for cutting agency budgets. “Reductions must be made strategically and collaboratively,” it said. “You must direct the government’s agencies and their critical stakeholders, including federal employees, contractors, nonprofits and others, to work together to jointly identify meaningful, sustainable efficiencies and/or alternative means of service delivery.”

Secondly, the challenge of cutting “must be viewed holistically,” the contractors wrote, “from the perspective of the ‘whole of government.’ Arbitrarily cutting federal employee positions is no more strategic or likely to result in success than arbitrarily cutting spending on contracted services, university or nonprofit support.”

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