Secretary Gates DoD cuts and what they mean to Government Contractors

As most of us are aware of now, Defense Secretary Gates make sweeping proposals to cut overhead spending in the Defense Department over the next 5 years (reference our blog from Sept. 10, 2010).  The goal is to find $100 billion over the next 5 years by improving efficiencies and cutting unnecessary overhead.  So what does this mean to the average government contractor?   I listened to Rich Wilkinson, government contracts Vice President at Deltek, Inc, last week as he accessed this question.  Secretary Gates' proposal includes trimming 10% of the funding for service support contractors each year for the next three years.  Rich's point is that this could mean serious re-adjustment for small to medium sized businesses that are supplying what is known as Professional, Administrative & Management Support Services (or PAMS).   It could result in the elimination of close to $4.5 B in PAMS spending.  Obviously other areas will be cut such as the closing of the JFCOM in Virginia.  If you are a small business supporting this area of the Department of Defense you need evaluate your business model immediately in order to survive over the next 3 years.  Now, more than ever, is the time for strategic planning for the future.  Rich has some recommendations in his paper and we can help you here at Tech Biz evaluate your business model as well.  I think everybody that has enjoyed supplying the Department of Defense with products and/or services over the last 10 years needs to be proactive right now in order to survive in the future.


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