Contractors Hold Onto Their Desks as Sequestration Looms

Monica Mayk Parham, Marketing Director, Market Connections, Inc.

The Professional Services Council (PSC) recently hosted an event on the topic of sequestration and, for many, it was a sobering reminder that challenging times lay ahead – even if sequestration never comes to light.

So what are contractors doing to prepare for these new budget realities? Are they moving forward with staff reductions or are they staying the course? It turns out to be a mixed bag.

According to a recent Washington Post article, many smaller contractors are riding out the storm and avoiding preemptive layoffs for now, simply because no one really knows how things will shake out. For larger companies, it may be a different story.

Lockheed Martin has been vocal lately about notifying its staff about layoffs potentially happening as early as September or October – keeping with WARN Act that requiring companies to give a 60-day notice to affected employees. On top of this, Lockheed just announced it is cutting 740 jobs from its Mission Systems & Sensors division due to the “budget pressures” facing its customers. Lockheed did not specify whether or not these cuts were a preemptive sequestration measure, but since it was tied to the new budget reality, we can certainly connect the dots.

In addition, Northrop Grumman announced in June that it would be shutting down its Norwalk, Connecticut site that assembles and tests military radar systems, which employs 315 people.

With the election coming up, many believe Congress won’t make any adjustments until after election day, though this looming uncertainty may prompt larger contractors to begin staff reductions as the Presidential campaign winds down.

So how should contractors deal with this new business climate? We recently highlighted the recommendations from the PSC event, but would like to remind our readers about the findings from Market Connections’ recent 2012 Government Contractor Study.

Be sure to check out the full FedConnects post here.