DoD Sees Four Sequestration Scenarios

August 1, 2012

Increasingly concerned that time is running out for Congress to avoid $500 billion in automatic defense cuts, the Pentagon is assessing all options, including the possible implications of a one-year, $100 billion, governmentwide, “mini-sequester” deficit-reduction deal, Defense Department and industry sources said.

Obama administration officials are adamant they are not planning for sequestration and continue to urge lawmakers to pass a long-term debt-reduction deal that would avoid automatic cuts entirely, but worries are mounting that lawmakers will be unable to strike a deal to cut revenues while increasing taxes before the November elections.

During a closed-door July 23 meeting with two dozen defense CEOs and other executives, Defense Secretary Leon Panetta detailed four possible scenarios facing the department in the latest in a series of high-level meetings between DoD’s top official and industry leaders. He was joined by Frank Kendall, the Pentagon’s acquisition chief; Bob Hale, comptroller; and Brett Lambert, the industrial policy chief.

At the meeting, Panetta said he would rather see a more comprehensive, long-term deficit-reduction deal but suggested the most politically practical solution may be a short-term agreement of one or two years, according to participants.

The four scenarios they’re considering are:

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