DOD to Consider Program Cancellations under Sequester, Kendall Says

Sequestration should have a more significant impact on defense contractors next year as many of the short-term accommodations taken by officials won’t be available in fiscal 2014, according to the Pentagon’s top acquisition official.

“We’re not going to be able to do what we did this year,” Frank Kendall, undersecretary of defense for acquisition, technology and logistics, told the Washington Post last week. “We’re going to have to make the assumption that sequestration’s here to stay, at least through ’14, and act accordingly.”

As a consequence, Kendall says officials are being prudent, delaying some spending and preparing to cancel programs in the coming weeks if necessary.

“I don’t know what’s going to happen next year, and I don’t want to make major commitments to contracts that we may terminate once we get into ’14,” he said. “We’re going to have to make some hard choices, I think, in the next few weeks about what we do with some of our programs.”

In turn, Kendall said, further industry consolidation is likely. “Industry to some degree is sort of waiting to see,” he told the Post. “At some point, people will start to make moves.”

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