Pending federal budgets cuts are causing some federal agencies and civilian end users to scale back or freeze altogether spending initiatives, including for security projects. photo: ©istockphoto.com
WASHINGTON — For electronic security industry stakeholders warily tracking the threat of massive federal spending cuts, tensions only intensified after congressional leaders and the White House failed to reach a deal on March 1 to avert sequestration.
At press time, President Obama and Republicans said they would back legislation that keeps the government operating at the lower levels of the sequester past late March, when a stopgap measure funding federal operations expires. That would mean a government shutdown is less likely, yet deep budget cuts will remain for the foreseeable future.
The protracted haggling in Washington over $85 billion in across-the-board spending cuts has already taken a toll on some security industry vendors and service providers, says Marcus Dunn, director of government relations for the Security Industry Association (SIA).
“In these months leading up to the sequestration deadline, we have heard a few members say the uncertainty has already had an impact on their federal business activities,” he says. “If sequestration is allowed to take effect, there will absolutely be a ‘hold your nose moment’ while the new landscape unfolds. As with other associations, whose members will be affected, SIA will help with the navigational duties.”
SIA reported in an installment of its Fiscal Year Informer publication that some analysts have suggested agencies on average could experience cuts between 8% and 12%. Other agencies and budget areas could see as much as 30% reductions. No matter how the austerity measures are ultimately decided, it is a forgone conclusion there will be cuts in federal spending and government programs.
That could result in significant impact to the bottom lines of businesses that supply products and services to the federal government, says John Santisteban, director of government solutions for HID Global. In many cases it will boil down to whether or not mandated funding exists for a particular technology or service, such as logical and physical access control under Homeland Security Presidential Directive 12 (HSPD-12).
“Since these mandates and requirements are driving the requirements for solutions that support FIPS 201 for both physical and logical access, I do not expect that the cuts resulting from sequestration will have a significant adverse impact,” Santisteban says.
Lynn de Seve, president of GSA Schedules Inc., represents a number of major security manufacturers, as well as large and small systems integrators as their GSA consultant. She has queried numerous integrators to find out if their current government contracts and projects are being impacted. Although GSA sales are trending downward, she reports existing projects through the end of the fiscal year are not likely to be impacted. Beyond that timeframe, however, uncertainty reigns.
“The government can really only obligate for 12 months so that  money is likely already in place. The impact seems to be related more to people and staff being cut as an immediate impact,” de Seve says.
John Gaydos, vice president of the federal systems division at Tyco Integrated Security (TycoIS), is also observing a great deal of uncertainty among agencies throughout the government vertical. Other than emergency spending, many agencies have all but shut down on new procurements. “As far as upgrading facilities or expanding, if it is coming out of this year’s budget, they are not spending. It is a dramatic freeze,” he says.
Funding cuts that force federal agencies and civilian end users to scale back their organizations represent an opportunity for systems integrators to leverage existing relationships with clients to help them mitigate budget paring. “When they finally do get their budgets we can help them adapt and perhaps provide solutions to some of their problems as far as maybe expanding their resources,” Gaydos says.
As an example, Gaydos suggested a scenario of a Navy installation that is forced to lay off many patrol guards. The integrator is in a position to bring solutions to the end user that may help extend the value of their security program. For instance, installing IP cameras on an IT network to eliminate cable runs and thereby providing similar protection even with the loss of the guards.
“Bringing that consultative value is important, it’s what our job is all about,” Gaydos says.