Venable partner John Cooney was quoted in the January 18, 2012 issue of Government Executive on the impact automatic spending cuts in defense will have on contractors. The automatic spending cuts were triggered last year when the so-called Congressional super committee failed to agree on $1.2 trillion in savings.
Commenting on the impact the cuts will have on federal contractors, Cooney said, “Defense contractors are hostages in the showdown between the president and Congress over funding decisions on taxing and spending.” Cooney noted that a similar process occurred in 1985 with the Gramm-Rudman-Hollings budget act, but contractors “got a free ride” back then. “The only silver lining from Gramm-Rudman,” added Cooney, ”Was that both Congress and the executive branch figured out that the cuts and revenues generated the intellectual capital for the 1986 reform of the tax code.”
If the automatic cuts go into effect next year, Cooney said “The president can put his thumb on the scale” and favor certain programs through line items. Cooney added that this action could alienate Congress saying, “It's highly controversial within agencies. The contracting officers will be told of the cuts' impact relatively late in the process.”
Commenting on the impact the cuts will have on federal contractors, Cooney said, “Defense contractors are hostages in the showdown between the president and Congress over funding decisions on taxing and spending.” Cooney noted that a similar process occurred in 1985 with the Gramm-Rudman-Hollings budget act, but contractors “got a free ride” back then. “The only silver lining from Gramm-Rudman,” added Cooney, ”Was that both Congress and the executive branch figured out that the cuts and revenues generated the intellectual capital for the 1986 reform of the tax code.”
If the automatic cuts go into effect next year, Cooney said “The president can put his thumb on the scale” and favor certain programs through line items. Cooney added that this action could alienate Congress saying, “It's highly controversial within agencies. The contracting officers will be told of the cuts' impact relatively late in the process.”