The government plans to cut $2.4 Trillion from the budget over the next 10 years, beginning in the 2012 budget. It is expected that up to $900 Billion in cuts could be included in the 2012 budget. The Defense department could see over $28 Billion in cuts in 2012 with an expected $350 Billion over the next 10 years. Federal agencies and departments are "running scared". Contractors should be too as many current programs either will not exist or may exist in a reduced form in the next budget. The Federal Budget is a large pendulum that swings from one extreme to the other. We have enjoyed almost 10 years now of increased spending that can only be viewed as a boom. Now there is a correction. Sometime in the future the pendulum will swing back, we need to survive in the meantime. Here are 5 strategies that small businesses can use to help mitigate their risk in this uncertain time;
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What is wrong with the way we are currently operating our government? The government operates on a budget year from Oct. 1 to Sept. 30. Theoretically the budget for the fiscal year should be established and approved prior to the start of the year. Right now, the budget is not approved! What? That's right, the budget is operating on what is called a "continuing resolution" authorized by congress. This means uncertainty, it means inefficiency and it means slow actions by the acquisition arm of the government (since they are not sure of funding, whether it will be approved, reduced, increased, eliminated, etc). Undersecretary of Defense Aston Carter describes the problems well. This short video allows some of his views of the problem.
Defense Contractors: Now is the time to tell the DOD how changes in policy can save you money! In 2010, the Undersecretary of Defense for Acquisition, Ashton Carter, launched the DOD’s Better Buying Power Initiative. The purpose of the program was to get feedback from contracting industry officials on what guidelines instituted by the DOD were causing overhead and other costs to increase for defense contractors, while realizing little or no actual gain or increase of value to overall work. The DOD is fully aware that many current regulations do just this, either needlessly hurting contractors (by lowering efficiency & productivity) or adding un-needed expense to what the government buys. In an effort to cut over 100 billion dollars from the DoD budget in the next 5 years (starting FY 2012), this initiative is a good start to reducing waste and increasing efficiency not only in industry, but within the management of the DOD itself. Given the economic reality of today’s shrinking budgets and rising competition among contractors, it is crucial to take this opportunity to give the government a piece of your mind about what rules and regulations drive up your costs. Under the DOD’s Initiative, contractors still have until March 31st to submit ideas and concerns to the DOD. Click the following link to submit your ideas to the DOD:
There is currently a lot of debate about the cuts in defense spending that are being proposed by both the President as well as the efficiency programs proposed by Secretary Gates. You may hear some comments that this will weaken the United States. You may hear other comments that we can't afford to be the world's police force and we should spend more on programs at home. What is right? President Eisenhower's fairwell speech on January 17, 1961 offers some insight.