Legal Alert - SEQUESTRATION: Preparing Government Contractors for Uncertainty, Cut-Backs and Contract Terminations
by Brett W. Johnson
Current reports from Congress suggest that “sequestration” will likely take effect as early as March 1, 2013. The sequestration is a key part of the Budget Control Act of 2011, which requires the federal government to immediately cut at least $85 billion from the budget. The cuts will be split equally between the defense and domestic spending budgets. Although the president and Congress are negotiating a possible alternative to sequestration, it is clear that any future solution will result in very large reductions in federal government spending. Because substantial budget cuts will occur in some form, companies that provide goods and services to government entities should have a strategy to ensure that the government meets its contractual and statutory obligations.