Federal News Countdown: How will sequestration impact government operations?

On a special edition of the Federal News Countdown, Jeff Neal, senior vice president at ICF International and the former chief human capital officer at the Homeland Security Department, discusses the potential effects of sequestration on government operations.

Click the audio player to hear the full show and below find Neal’s commentary on potential sequestration impacts.

  1. Sequester effects on the efficiency of government programs. The sequester has the potential to affect programs across government in ways that will harm those programs for years. When an agency has to suspend or reduce contracts, delay implementation of critical programs, buy “half a loaf” when they need far more, or simply not start new projects, the effectiveness of government operations will suffer. Many costs are fixed and cannot be altered, so cuts that would be applied to them will have to be applied elsewhere. For example, the cost of commercial rent is fixed in long-term leases. In the long run, if the sequester continues, it will actually increase some program costs. For example, deferred maintenance on ships, aircraft and even buildings, can lead to substantially higher costs when the deferred maintenance is finally completed. The effect of the sequester will be amplified and the number of affected programs will grow.
  2. Sequester effects on the federal workforce. One of the most immediate effects of sequestration will be on the workforce. Recruiting is already suspended in many agencies. The government’s ability to recruit new talent could be devastated. The long-term effect of stopping hiring can be seen in the unforeseen impact of the Reinventing Government-era reductions in the human resources and procurement workforce. For several years many agencies did not hire entry level HR and procurement staff. Today’s shortages of talent for senior professionals in those fields can be tied directly to the “missing generation” in the workforce. A more immediate problem is the potential loss of many of the those in the federal workforce who are eligible to retire. With more and more federal employees reaching retirement age, sequester is likely to drive the out the door. Looking only at cash flow, an employee with 32 years of service under CSRS who is facing a furlough that will cut pay by 20% may do the math and see that retirement will produce roughly the same cash flow. How?? The employee will get 60% of high three. For most, their current salary will be their high three because of the pay freeze. Take out the contributions to CSRS and TSP, reduced tax burden, the tax exemption of CSRS contributions, and the costs of commuting, and the gap between 80% and 60% disappears and retirement looks like a great deal.
  3. Sequester effects on services to the public. Furloughs of federal employees, as much as one day per week for most of the remainder of FY 2013, combined with potential contractor reductions, will make fewer people available to provide vital services. DHS, for example, will most likely have to reduce hours for Transportation Security Officers, Border Patrol Agents, and other front-line employees. Other agencies will have less staff resources to review and approve benefits applications, student loans, grants, and other services that directly affect the public. Given the limited flexibility sequestration provides, departments and agencies will be unable to direct the cuts to where they might do less harm and will have insufficient planning time to implement them. There is simply no way such draconian cuts can be made immediately without direct impact to programs that are vital to the public.