With all the pressure on the Federal Budget the past couple of years, it is clear to see that the way of government spending is changing. The implications of how it changes is very different from what we have seen before. Or is it? One of the clear changes is that spending is being cut. Sequestration calls for cuts if congress cannot decide what to trim from the budget. There have been several band-aids put on the FY2014 budget but the general consensus is that the budget will be trimmed significantly in coming fiscal years. This may mean creative ways to trim expenses in certain departments, like the DoD, and will result in a more competitive environment for those bidding on the remaining work.
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In the world of government contracting there are always issues with the way contractors do their accounting. It's not good enough to do it like a normal business and the Federal Government instills lots of additional requirements. These requirements all are based in a logic that helps protect the government from fraud and helps insure the government gets a good value for what they are paying for. Sometimes these requirements can be not only intimidating but they can cause confusion and even inadvertant miscues. It is not easy to run a compliant accounting system as a government contractor.
The Federal Government released their 2013 report on the Defense Acquisition System. This 126 page report looks at the performance of the purchasing system in the Government's largest arm and points out many of the reasons we have such budget problems that ultimately cause issues such as Sequestration. In a recent issue of National Defense magazine, NDIA president Lawrence Farrell Jr.'s article indicated that now may be a perfect opportunity for the DoD to clean up their purchasing habits. With all the pressure on the Federal budget, especially on the military component, this should be a perfect time to make changes that would result in better acquisition, saving billions of dollars in the process.
Well, we avoided going over the fiscal cliff on January 1st but the issue with sequestration of the budget was only postponed. Congress, as they have become accustomed to doing recently, pushed the deadline for sequestration of the budget down the road by a couple of months. But recent actions from the Department of Defense indicate that this department is bracing for sequestration. Secretary Panetta recently questioned the ability to manage the department if sequestration goes into effect: