NVTC Participates in Meeting with Deputy Secretary of Defense
William Lynn on Proposed DoD Contracting Cuts

Impact of Proposed Cuts to be Narrower than Previously Feared

Deputy Secretary of Defense Bill Lynn hosted a meeting yesterday at the Pentagon on the issue of DoD's proposed contracting cuts of 10 percent a year for the next three years. As Chair of Governor McDonnell's Commission on Military and National Security Facilities, former Congressman Tom Davis was joined at the meeting by Congressmen Jim Moran and Frank Wolf and technology business leaders, including NVTC CEO Bobbie Kilberg. Deputy Secretary Lynn was joined by Robert Rangel, Chief of Staff for Secretary Gates, and Christine Fox, Director of Cost Assessment and Program Evaluation. Tuesday's meeting was a follow-up to a November meeting at which Secretary Gates promised Governor Bob McDonnell to create a work group to study the proposed cuts to service support contracting. NVTC and many Virginia political and technology leaders viewed these cuts as draconian and arbitrary.

During the meeting, the three Defense officials stated that, when the proposed cuts were announced in August, they did not have the data to support them. Since then, the Defense Department has produced a data analysis and rationale, which has resulted in a reduced scope for the proposed cuts. These results were presented by Deputy Secretary Lynn to the meeting attendees.

According to the DoD analysis, All Services Contracts consisted of $143 billion in FY2009. Within that amount, the Knowledge Based Services Portfolio Group accounted for $53.1 billion and Advisory and Assistance Services accounted for $10.2 billion. Of the $10.2 billion, Service Support Contracts constituted $4.3 billion, which represents 3 percent of the total All Services Contracts. This $4.3 billion is the amount targeted for the 10x3 cuts and DoD states that the reduction amounts to less than 1 percent in overall contract funding.

Deputy Secretary Lynn explained that the cuts are focused on contracted personnel who provide staff augmentation support for government employees, i.e. personnel that are subject to the direction of a government official and function as a staff/action officer. Examples provided by Christine Fox as service support contractors are:

  • Contractors that come into a headquarters building each day and have a desk, phone number, and/or computer account
  • Contractors that perform duties such as writing memoranda or preparing routine briefings.

Examples that are NOT considered service support contractors are:

  • Contractors that orchestrate range control and monitoring at training ranges
  • Contractors that provide highly specialized technical assistance for weapons systems
  • Contractors that provide IT support or maintain landscaping.

"From the beginning, NVTC and other members of the contractor community wanted a seat at the table and this is a good start," said Kilberg. "Being part of a collaborative relationship moving forward will allow us to help moderate what we feared would be a disproportionate impact on Virginia and its technology businesses, particularly small companies."

In addition to Davis, Moran, Wolf and Kilberg, attendees at the meeting included: NVTC Board Member Kevin Parker of Deltek; Jay Killeen of NVTC Board member company SAIC; Gene Procknow of NVTC Board member company Deloitte; George Pedersen of NVTC member company ManTech; Stan Soloway of the Professional Services Council; Mike Melo of ITA International; Mark Brunner from the Office of Senator Mark Warner; Dan Scandling and Craig Whitham from the Office of Congressman Frank Wolf; and James Walkinshaw from the Office of Congressman Gerry Connolly.

One of the concerns strongly expressed by the technology business leaders at the meeting is that there is a disconnect between the goals and intent of senior DoD officials and what actually happens down the acquisition chain of command. For example, a number of companies have been told by their Defense contract officers to cut 10% off their contracts but deliver the same work product.

While the DoD cuts are part of the FY2012 budget submission, the implications extend into FY2011 and DoD is starting to apply the cuts now. NVTC will monitor developments and is interested in the experiences of our NVTC member companies as these cuts unfold. We want to hear from you so we can inform Deputy Secretary Lynn about any problems that arise. If you have concerns, please email Katie Mickelson at kmickelson@nvtc.org.

Thank you and Happy Holidays!

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