Wednesday, July 10, 2013

DoD Civilian Furloughs Have Begun

Starting this week, about 650 thousand Defense Department civilians are taking their furlough days. At one time, DoD projected that its employees would have to take 22 furlough days. Now, its down to 11 days; one day a week for the next eleven weeks. DoD estimates that this will save almost $2 billion between now and the end of the fiscal year (September 30th).

There are a lot of stories, articles and blogs warning of dire consequences resulting from these furloughs. With respect to Government procurement, companies might see delays in contract negotiations and contract awards. Contractors might get slower responses (it that's possible) from their contract administrators (DCMA). The auditors will still prioritize demand work (e.g. proposal evaluations) and that means that they'll slip that much further behind in beating down their incurred cost audit backlog. Billings should not be significantly affected because of the prompt payment act but you might see payments pushed back closer to the 30 day maximum instead of the customary 15 or 20 days.

We think that the impact on performance will be much greater than the eleven furlough days. We've gone through these before. The memos, staff meetings, and water cooler discussions that precede furlough days eat into productive time. Feeling overworked yet very under-appreciated wears on ones psyche. You don't really want to start something when you come back from a furlough day because you know the next one is coming up.

Last month, DoD issued a memo warning against "borrowing" military manpower to perform civilian duties. The memo also warned against using contractors to fill civilian roles.

Unless Congress acts to remove the sequestration, future years will be similarly impacted. Already DoD is warning Congress of the impact on the fiscal year 2014 budget. Additional furlough days in fiscal year 2014 is already being touted as a way of dealing with sequestration-based shortfalls.

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