The Defense Finance and Accounting Service will implement significant cost-cutting measures next week to prepare for the possibility of automatic spending cuts due to hit government in March.

DFAS plans to freeze most hiring, reduce travel and overtime, and temporarily halt new employee performance awards “until we have a stronger handle on our budget uncertainties,” DFAS Director Terri McKay said in an email message to DFAS staff last week.

Further steps, such as furloughs, may be necessary in a “worst-case situation,” McKay said, such as sequestration or the expiration of a short-term continuing resolution that’s currently funding government operations.

Unless Congress intervenes, sequestration is set to take a 9 percent cut from the defense budget beginning March 1.

McKay’s message follows broader Defense Department guidelines issued by Deputy Defense Secretary Ashton Carter Jan. 10, which called on DoD components to begin tailoring plans for dealing with the budget uncertainty, including by freezing civilian hiring and terminating temporary employees.

McKay said the DFAS cost-cutting measures were discussed at the agency’s labor-management forum where union leaders agreed the steps were “reasonable and responsible.”

Still, the American Federation of Government Employees has criticized what it called the “disproportionate sacrifice” shouldered by federal workers in the Pentagon’s budget guidance.

“Hiring freezes, firing of temporary and term employees, incentives for civilian personnel to retire, and extensive furloughs of in-house staff constitute big hits on the civilian workforce,” said AFGE National President J. David Cox in a letter to Frederick Vollrath, the acting assistant secretary of defense for readiness and force management. “In contrast, service contractors emerge relatively unscathed.”

The Professional Services Council, an industry group that represents defense contractors, called AFGE’s contention “divisive and parochial.”

A number of other DoD components, such as the Air Force and the Army, have also issued service-specific cost-cutting guidance.

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