Many in the region are waiting to hear if sequestration will be going into effect in March and local businesses are trying to do what they can to prepare.
Danny Vargas, president of VARCom Solutions, said the economy in Northern Virginia relies more heavily on government contracting and defense than any other part of the country, and his concern is making sure that businesses have prepared for sequestration.
VARCom, a marketing, communications and public relations firm based in Herndon, works with numerous industries and has both government and commercial clients.
Vargas said his company isn’t completely reliant on federal spending, but even VARCom’s non-government clients who work with government contracts may have to cut back spending elsewhere.
Additionally, the uncertainty in future federal spending has been impacting area businesses for months.
Vargas said some government programs that he and his customers began bidding on in October and November have been delayed since then, and they aren’t coming through.
Some businesses are being hurt because they had already built up the resources necessary to work on those contracts, but with the contracts on hold it becomes more difficult to keep those resources on the bench and waiting, Vargas said.
This issue is impacting both revenue and costs, Vargas said. “It’s virtually impossible to manage.”
Vargas said in Washington, legislators manufacture crises and then wait until the last minute to come up with a solution or kick the can down the road with a temporary fix. Many are expecting the same cycle this time, he said.
Companies that haven’t been actively planning for sequestration that don’t have diversified portfolios may be the hardest hit.
“In our case we have a diversification of clients both commercial and government,” Vargas said. He said as VARCom bid on contracts, the company didn’t hire staff to support them, and was more conservative and tentative. He said he senses this happening to area businesses across the board.
For many companies the uncertainty is worrisome for both the leadership and employees.
"Nothing's happening and no one's doing anything and it creates all of this uncertainty which in turn creates panic," said Staci Redmon, owner of Strategy and Management Services, Inc. (SAMS), a company based in Springfield that provides a broad range of strategy, management and information technology-related services to federal government agencies and commercial clients.
"All of our employees are obviously extremely nervous, and we have certainly seen the concern on their faces and have heard the concern from many of them," she said.
Vargas said there is understanding among the business community that cuts need to be made, but there must also be adult leadership in terms of spending in federal government. He said now is the time for both Republicans and Democrats to come together and find a workable plan.
“Going in with a meat cleaver and just chopping X percent across the board is not a sensible approach to it,” Vargas said.
* Raytevia Evans contributed to this report.
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