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Experts: D.C. region's businesses must brace for massive federal cuts

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Local,DC,Liz Farmer

Much-feared federal spending cuts are looming, and experts said Tuesday that the Washington region's businesses should toss any lingering hope that Congress will mitigate their effect.

There has been much hope among Washington's business community that Congress will step in before January to delay the cuts or to reshape the package. Nearly $79 billion in federal procurement dollars are spent annually in the region, making greater Washington's economy the most vulnerable region in the country to a slowdown in federal agency spending.

But as 2013 nears, more experts are starting to believe that Congress will take a back seat.

"I would count on it at this point," said John Hillen, president and CEO of the intelligence firm Sotora Defense Solutions, adding that the only action Congress has taken has been to complain about the cuts.

"They have found a way to save a trillion, and I think they're all willing to live with that having expressed their outrage about how against it they were," he said.

The comments were made at a seminar hosted by the Greater Washington Board of Trade on how businesses should prepare for the planned cuts.

But other than bracing for the fact that there will be cuts next year, experts said the lack of information about exactly how agencies will slash spending makes it difficult for the region's contracting community to prepare.

Kevin Brancato, a defense analyst for Bloomberg Government, said "we've heard nothing" about how federal agencies will temper spending in 2013.

"One contract could be terminated while the other one is left unharmed and could even grow," he said. "So it really is uncertain how these organizations will respond to these cuts."

Jim Dinegar, the board of trade's CEO, noted that federal employees are generally safe from being part of the cuts because it is easier for agencies to cut contracting spending than cut personnel.

Still, cuts in contracting when the region's top 10 federal procurement companies employ more than 112,00 people alone, will have a trickle-down effect on the Washington economy, said Dinegar.

"You have less people coming in to buy cars, less people spending money during the holidays, less people going out to restaurants," he said. "Less of the government strength that we have here spending the money that they've been spending."

lfarmer@washingtonexaminer.com

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