With the 2012 presidential election months away, government agencies and contractors continue to speculate about the possible effects of sequestration. Whether sequestration will actually occur is unknown, as Congressional legislation and presidential approval of alternative deficit reductions could dramatically curb, if not eliminate, the effects of sequestration. If sequestration does occur, however, the Congressional Budget Office estimates that eligible defense programs will be cut by 10% and eligible non-defense programs will be cut by 8.5% in fiscal year 2013. Consequently, contractors should commence preparations for the possibility of drastic cuts in federal spending and position themselves to navigate in an environment of tighter budgets and increased competition.

This client alert provides a background on sequestration, outlines the possible impacts on government contractors and the procurement process, and identifies key steps government contractors can take to prepare for sequestration.

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