Money & Business

Survey: Sequester Puts National Security Activities at Risk

By / Jul 3, 2013 (iStockphoto/Thinkstock)

A majority of surveyed homeland and national security contracting companies believe their federal clients’ ability to carry out their missions will be affected by reduced government spending, according to a new association report.

Sequestration is leaving a mark on homeland and national security contractors, according to a report by the Government Technology and Services Coalition [PDF].

In GTSC’s “Survey on Sequestration and Budget Cuts,” 54 percent of the 224 contracting companies that participated reported their federal clients’ missions will be affected by the mandatory budget cuts. About 30 percent of respondents also reported they will not, or there is a probability they will not, survive sequestration.

“This survey shows that the risk of sequestration and budget cuts is two-fold: You have a number of companies that may not survive, and you have numerous mission-critical agencies that are at risk as well,” Kristina Tanasichuk, CEO of GTSC, said in a statement. “Now more than ever we need the government and industry working together to assure mission success to find convergence points where we can make strategic cuts and still protect the nation.”

GTSC, an association of company CEOs working in the federal homeland and national security sectors, found that 75 percent of respondents are actively preparing for the impact of sequestration, mostly by cutting marketing and public relations budgets.

Twenty-six percent of the companies surveyed also reported laying off staff; 19 percent are cutting services; and about 19 percent are leaving the federal market for commercial markets.

Mid-sized companies, those with an annual revenue between $15 million and $1 billion, were the most likely to lay off staff, while smaller companies are leaving the federal market. Smaller companies are also more likely to believe they will not survive sequestration. Large companies, with annual revenues of more than $1 billion, are cutting their marketing budgets and existing services and are laying off roughly 20 percent of their staffs.

Fifty-six percent of respondents believe nothing positive will stem from the budget cuts, and most reported the potential long-term implications will include weakened national security and preparedness as well as a loss of skills and experience in critical missions.

Katie Bascuas

Katie Bascuas is associate editor of Associations Now. More »

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