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2011 budget: Cuts keep check on hiring, contracts

Apr. 18, 2011 - 02:28PM   |  

After more than a half-year of holding back on hiring, travel, large-scale projects and contracts, agencies finally have a 2011 budget in hand and are anxious to resume normal operations.

But that's not likely to happen.

That's because the $39 billion in cuts embedded in the 2011 spending bill coupled with the expectation of deeper cuts in 2012 will likely temper any urge to splurge.

Federal agencies in the Dallas-Forth Worth region, for example, are laying the groundwork for a possible hiring boom by organizing job fairs and encouraging college students to consider federal careers.

But managers there fear that 2011 budget cuts and 2012 cuts that are expected to be even steeper will prompt their headquarters to be tighter with funds and give regional offices less money to fill vacant positions, said Gladean Butler, executive director of the Dallas-Fort Worth Federal Executive Board.

"We've lost a lot of staff, just like most of the government, to attrition and retirements," Butler said. "But everything depends on Washington. Until they get the final go-ahead from headquarters, it may not happen. And very often, that's the end result: We don't see it happening."

Michael Hager, former acting director of the Office of Personnel Management, said agencies will probably have more freedom to replace employees who quit or retire. But with members of both parties looking to cut spending further and some proposing drastic cuts in the federal workforce most offices should forget about adding new positions.

Hager said he expects overdue promotions will finally go through. But he said agencies should be conservative about the raises accompanying such promotions.

But the Congressional Budget Office said last week the actual reduction in spending would be much less than anticipated. CBO said nonemergency outlays would shrink by $352 million this year less than 1 percent of the advertised reductions.

Randy Erwin, legislative director for the National Federation of Federal Employees, called the spending bill "a double-edged sword with regard to hiring." Having a budget for the rest of the year will allow agencies to fill critical vacancies, he said, but the billions of dollars in cuts will likely mean more cuts in staffing.

"The cuts in this bill will create more staffing problems for federal agencies than it alleviates," Erwin said. "Without a budget for the first half of the fiscal year, federal agencies' hands were tied in terms of addressing immediate staffing needs."

Witold Skwierczynski, president of the American Federation of Government Employees council representing Social Security Administration (SSA) field office employees, said he doubts the agency will be able to restore overtime or end a freeze with the budget cuts included in the bill.

"I'm seeing an agency that's tightening down the screws as much as possible," Skwierczynski said. "I think the commissioner is trying to avoid any furlough. But it's very tight times."

SSA spokeswoman Kia Green would not comment on whether the agency will be able to avoid furloughs or offer regular overtime. SSA stopped mailing yearly earnings and benefit statements to millions of Americans last month as a cost-cutting measure, and Green said that will continue at least through September.

Programs, contracts disrupted

Many agencies will get basically what they received in funding last year, in some cases dashing hopes for increases sought by the Obama administration. Others will see their budgets cut from 2010 levels.

The National Oceanic and Atmospheric Administration (NOAA), for example, is in line for about one-third of the nearly $1.1 billion requested this year for its next-generation Joint Polar Satellite System (JPSS). The first satellite was supposed to launch in 2016 to replace one expected to be out of commission by then. That launch date has been pushed back to early 2018, likely leaving at least an 18-month data gap that will have "very serious consequences" for NOAA's weather forecasting ability, administrator Jane Lubchenco told a Senate panel last week.

And for every dollar saved on JPSS this year, she said, NOAA will spend $3 to $5 down the road.

"We have to cancel the contracts. We have to let people go," she said. "These are very sophisticated, skilled workers, and then you need to bring the programs back up."

Foreign aid administrators face similar challenges. Budgets for the State Department and foreign operations were cut more than a half-billion dollars compared to last year's levels. At the U.S. Agency for International Development, officials were still trying to gauge the effects, administrator Rajiv Shah told the Senate last week.

For agencies with budget cuts to contend with, the impact will be magnified because the cuts come so late in the fiscal year, said Relmond van Daniker, executive director of the Association of Government Accountants.

Federal contractors are relieved a shutdown was averted, but they are unsure what the future holds. Sandra Rosenau, a senior consultant with CPS Human Resource Services, said agencies have been hesitant to issue new contracts without approved budgets.

"Agencies don't know how they're going to be impacted, and what's going to be cut," Rosenau said.

But some contractors expect to begin working again soon, now that a budget is passed. The Navy stopped repairs to the coastal patrol ship USS Thunderbolt and 28 other ships during the funding dispute. But Tom Epley, president of MHI Ship Repair and Services, which was working on the Thunderbolt, said work will resume soon.

Even so, Epley may still have to lay off some of his 400 employees.

"In this industry, you always have peaks and valleys," he said. "When it comes down to a funding crisis to the magnitude that just went down, that's hard to predict."

Pent-up demand for IT

Another area that has been in standby mode for the last half-year is information technology, with countless projects on hold.

"You can definitely see statistically where they have been throttling back their spending, and now there is pent-up demand," said Ray Bjorklund, senior vice president and chief knowledge officer at the market research firm FedSources, which analyzes federal IT spending. "I think agencies are going to breathe a little sigh of relief."

But less than half a year doesn't leave agencies much time to spend their funds, especially on new and large IT projects, he said. He said he expects a larger number of small IT projects, like modernizing existing technology, that can be done in a short time frame.

At the Securities and Exchange Commission, tight budgets have squeezed plans to roll out new IT tools for its staff to oversee Wall Street activities, as required by the Dodd-Frank Act passed last year. The SEC received a $74 million increase in funding for the rest of 2011.

In contrast, the 2011 budget dealt a $14 million cut to one of the largest IT projects at the National Archives and Records Administration (NARA): the Electronic Records Archive. Spokesman David Lake said this may force NARA to scale back enhancements.

Other IT projects were also cut, including Customs and Border Protection's security fencing and technology funding, which was cut by $226 million.

Funding for the General Services Administration's (GSA) e-government fund was slashed from $34 million to $8 million. That fund pays for websites that make federal databases available to the public, such as and, said Daniel Schuman, policy counsel for the Sunlight Foundation.

The administration is facing "triage" over which sites will have to be scaled back or turned off, Schuman said.

Federal Chief Information Officer Vivek Kundra told a congressional panel that tough decisions lie ahead but that the administration is still evaluating the implications.

Construction cuts

Federal construction projects will be cut by more than $8 billion. About $6.2 billion of those cuts are for the military, and another $414 million will come from Army Corps of Engineers projects.

GSA, which oversees about 9,000 federal properties, will lose more than $971 million in construction, maintenance and building operation funds. David Winstead, GSA's former public buildings commissioner, said this may force the agency to skip renovating underutilized buildings in favor of busier buildings. Question">Sarah Chacko, Question">Nicole Blake Johnson, Question">STEPHEN LOSEY, Question">Andy Medici and Question">Sean Reilly contributed to this story.

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