Written by Jim Reinertsen, VP of Federal Sales, North America
The fiscal cliff has turned into the sequestration slope, as the negotiations on January 1st have averted tax hikes and kicked the budget-cutting can further down the road. But, in just two months, Congress and the federal government will be right back where they were—wondering about the extent of sequestration. The Department of Defense provides a window into the budget situation facing many agencies in this new normal.
Even though few in Congress can agree on budget priorities, most representatives have come together on the importance of supporting our troops. But recent news out of the DoD highlights the full extent of this new budget paradigm: if sequestration takes place, the military will have to cut $45 billion from its budget this year alone. Just how much is that?
To put it in perspective, the largest, most advanced warships ever built are the Nimitz-class aircraft carriers. Each carrier costs $4.5 billion to procure and the U.S. Navy operates 10 ships—so the sequestration reduction would be equal to the cost of the entire Nimitz-class carrier fleet. Finding cuts equal to that scale will be incredibly difficult.
Further complicating the matter is the fact that putting off the decision on sequestration doesn’t put off the timeframe for the budget cuts. With the government fiscal year having begun in October, this means that if sequestration takes place, the DoD has only seven months to reduce its budget by an entire carrier fleet.
There are a few things that all agencies can learn from this:
- Don’t expect budget issues to be resolved in one deadline or one piece of legislation. Today’s budget climate is likely to persist. Consider that agencies are still operating under a continuing resolution (CR) after Congress failed to enact appropriations bills for 2013.
- Make efforts to communicate the size and real-world consequences of budget reductions to your program and the agency mission. As Pentagon Press Secretary George E. Little said, “This is not about cells in an Excel spreadsheet.”
- Build out long-term plans for responsible budget reduction that include a menu of short-term budget-saving options that can demonstrate immediate cost savings to top agency executives and members of Congress.
- Technology managers should resist the temptation to cut new investments since modernization efforts can often yield real savings in the short term and significant savings in the long-term.
While the government has a responsibility to the citizen to spend conscientiously, it also has a responsibility to deliver on its mission. As federal agencies prepare for more budget battles down the road, they should work hard to find savings not only by reducing services, but improving efficiency.
If you have mainframe-based systems, we may be able to help you create significant cost savings in year one while concurrently modernizing the mainframe environment. Contact me for more information, like us on Facebook or follow us on Twitter.