Feb. 21 (Bloomberg) -- The Pentagon’s top weapons buyer directed program managers to keep defense companies and academic institutions apprised of plans to implement automatic U.S. spending cuts that are about to take effect.
“It is important to keep industry informed” and “involved in our decision-making to the maximum extent possible, particularly when ongoing or upcoming contract awards may be affected,” Frank Kendall, undersecretary for acquisition, said today in a memo.
While Kendall said “there is still hope” that the automatic cuts will be averted, he said “engaging in this dialogue will allow industry to more productively make their own internal business plans.”
Unless lawmakers and President Barack Obama can agree on an alternative, the across-the-board spending reductions, known as sequestration, will begin March 1. About half the cuts will affect defense spending, requiring about $46 billion in reductions in the seven remaining months of this fiscal year and about $500 billion over a decade.
The Pentagon and military services also face the financial constraints of a stopgap fiscal 2013 spending measure that expires March 27 and may be extended for the year.
The measure, which extended fiscal 2012 funding, concentrates money in weapons accounts and is less than what the Pentagon says is needed in accounts that pay for troop training, maintenance and readiness.
The co-called continuing resolution “has the money in the wrong places,” Pentagon Comptroller Robert Hale said yesterday. “There are too many dollars in the investment accounts and too few in operations and maintenance.”
Hale told reporters that if sequestration happens, “I don’t anticipate that we will cancel many, if any contracts, because we’d incur substantial costs.”
“We will not pick up options” and “we may not start or delay starting new contracts, but I wouldn’t expect that we will terminate existing contracts,” he said.
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