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EADS North America’s Sean O’Keefe Discusses Sequestration and Impact on Government Contracting at Titans Breakfast

On Tuesday, Feb. 5, nearly 500 attendees gathered at The Ritz-Carlton, Tysons Corner for an NVTC Titans breakfast featuring EADS North America Chairman of the Board and CEO Sean O’Keefe . During the event, O’Keefe shared his insights on sequestration and its impact on the future of government procurement.

EADS North America's Chairman and CEO Sean O'Keefe at the Tuesday, Feb. 5 Titans breakfast.
EADS North America Chairman of the Board and CEO Sean O'Keefe addresses the audience at NVTC's Feb. 5 Titans breakfast.

O’Keefe began his remarks by sharing the origins of sequestration in the Gramm-Rudman-Hollings Balanced Budget Act of 1985, stating that the procedure was meant to be so extreme that no one would choose to use it. He explained that the current situation is a result of politicians’ inability to compromise in today’s political climate, calling sequestration “a self-inflicted wound of epic proportions.”

While many of the consequences of sequestration and continuing resolutions could have been predicted, according to O’Keefe, the uncertainty has created a few unexpected anomalies. In particular, he highlighted the $2 trillion in cash reserves being held by U.S. corporations and individuals. O’Keefe stated his belief that eliminating the current uncertainty would unleash into the economy an extraordinary reserve of investment, which would be greater and more effective than any government stimulus package.

O’Keefe also addressed how he hopes sequestration and budget negotiations have created an environment where policymakers can debate real changes to how the government does business, particularly in contract pricing. He is optimistic that the federal government’s use of cost-plus contracts will motivate industry to think more innovatively and focus on efficiency, which will reduce risks and increase the probability of a contract being successful.

When asked what advice he would give government leaders addressing sequestration and other budget cuts, O’Keefe suggested that department and agency leaders should be asked to outline their priorities and propose cuts instead of handing down across-the-board cuts. He also urged leaders to begin a dialogue on how contracting can lower the government’s cost of doing business and to address rules and regulations that impede them from doing their jobs efficiently and effectively.