Budget Sequestration is Real even if it is not…

Yes, I know the data is old but bear with me on this. According to a 2003 Brookings study on Public Service, the U.S. Federal Government is composed of 3,900 political appointees, 2.7 million civilian personnel, 1.5 million uniformed personnel, and 5.6 million federal contract workers. This means that the federal contractor workforce is greater than the political appointees, civilian and uniformed personnel combined. I will let this sink in for a while…

As time progresses, the number of federal contract workers is only going to increase over time. These federal contractors are not only the big boys as found on the top 100 federal contracts list but also small companies who may only have one or two contracts with a federal government agency. For an almost complete list of the number of federal contractors visit here. OK, what this means in terms of the ground reality is that when the sequester hits, it will affect the federal contractors community first as it will result in cancellation of contracts, non-renewal of projects and no-issuance of new task orders which will cause hiring freezes and federal contractors looking into other sources of revenue to stay afloat. While the sequester will most definitely affect the small businesses but it will also affect the large federal contractors as well due to the uncertainty caused by lack of appropriate action.

You may ask why we should care about this right now since the sequestration has not happened yet and it will be decided in March if it goes ahead or not. This is where I come in to inform you that even though sequestration has not started officially but just the threat of it has forced federal agencies to unofficially start cutting their budgets and some federal contractors have already frozen hiring somewhat. In my conversation with a federal contractor, they indicated that “we never planned for this.”

So now, let’s connect the dots…simply put sequestration (or threat of sequestration) is resulting in hiring freezes. Since people cannot find higher-paying good jobs with the federal contractors, people have cut down on the consumption of products, services and delayed purchase of any large items.  Since 70% of the U.S. economy is based on consumerism, you can image what long-lasting effects sequestration is having and will continue to have directly within the DC Metropolitan areas but also across the nation.

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