Lawmakers last week grilled TSA’s Deputy Administrator John Halinski over decisions recently made – including a $50 million contract for new uniforms — around the same time TSA claimed that it faced severe cuts from the government sequester.
Fourteen of the U.S. government’s 20 largest pending contract awards have been delayed as a result of across the board federal spending cuts. The total value of those contracts has fallen nearly 40 percent from the 2012 fiscal year.
The Washington, D.C. market research firm Deltek reported the drop in value is a result of federal agencies’ efforts to avoid duplicative contracts as their budget allocations are reduced. Their report shows the Army delaying six contracts worth up to $22 billion combined.
Deltek writes that the Army alone scaled back an $8 billion war fighter training contract award from June 2013 to March 2014 and another potential $4.9 billion space and missile technology contract from April to August.
The Air Force owns the largest contract on Deltek’s survey, a potential $10-year, $20.9 billion award for training systems. Deltek expects the Air Force to issue an award in June 2014, one year later than it previously expected.
Government Accountability Office figures show 2012 fiscal year with the most bid protests (contractor objections) filed since 2008. There was a 5-percent increase in overall cases from 2011 to 2012. The number of sustained (winning) protests also rose from 67 cases in 2011 to 106.
Among the possible results of the budget cuts on contract awards are government cancellations or terminations, scale-back changes, options not being exercised and work going back to government agencies instead of being procured out. This would lead to many possible outcomes of losses to contractors that have remedies in federal procurement law under the federal acquisition regulations (FAR) and defense regulations (DFAR). Considering the way that government agencies are drawing attention to the cutbacks through public outcry, expect more government action to negatively affect many federal government contractors.
James Y. Rayis is part of the Business Practice Group of Giarmarco, Mullins and Horton, P.C., with special expertise in governmental contracting and international business transactions. For more information, you may contact him directly at (248) 457-7173 or firstname.lastname@example.org.