Kendall: Sequestration Likely to Continue into 2014

WASHINGTON, June 4, 2013 – Sequestration spending cuts could continue into 2014, and the impact of the deep cuts will fall disproportionately on small business, the Pentagon’s top acquisition official told a Navy industry forum today.

“It’s a reasonable possibility that we will go into 2014 with sequestration still underway,” said Frank Kendall, undersecretary of defense for acquisition, technology and logistics. “A lot of things we planned on doing we won’t be able to do.”

Last month, Defense Secretary Chuck Hagel told Defense Department employees he could not guarantee that the budget situation would ease next year.

Kendall’s comments to the 2013 Navy Opportunity Forum in Arlington, Va., come three months into a budget sequester that is taking $41 billion out of the Pentagon budget this fiscal year, leading to cuts across the military in everything from operations and deployments to training and readiness. Furloughs are set to begin in July for about 85 percent of the Defense Department’s 767,000 civilian employees.

In the sequestration environment, Kendall said, the department needs to be more proactive in taking care of the small businesses that contract with the military.

“The cuts we are going to experience potentially will fall on small businesses,” more than on large military contractors, he said, adding that cuts in research and development worry him as well. “Potential adversaries are modernizing at a rate which makes me nervous,” he told the group, which included representatives of companies that produce advanced technologies funded by Navy programs.

Kendall said the department is about to conclude its strategic choices and management review, which Hagel ordered to provide department leaders with options given the current budget environment as well as the prospect of future spending cuts.

“What would we have to do at the department if we had to take $50 billion a year out over the long term? That would be pretty devastating,” Kendall said, mentioning one such scenario being considered by the review.