Government spending cuts last year contributed to the fourth straight annual decline in federal contracting, the longest stretch since Ronald Reagan was president, statistics show.
The value of contracts to companies such as Boeing Co. and Northrop Grumman Corp. fell 11 percent in the year ended Sept. 30 from the previous period. It is the biggest annual decline since records began in 1984, according to data compiled by Bloomberg Industries analyst Brian Friel.
The reductions led contractors to shed jobs and could spur another round of defense industry consolidation. Analysts tied most of the drop to across-the-board spending cuts under a process known as sequestration, including $85 billion that started March 1 for fiscal 2013. A congressional budget accord relieved the Pentagon of $22.3 billion in cuts set for this fiscal year.
“This is not a case of government functions being moved from federal employees to contractors or vice versa,” said Dan Gordon, associate dean for procurement law at George Washington University Law School in Washington and former top procurement official for President Barack Obama. “This is the government spending less.”
The value of unclassified federal prime contracts, publicly announced deals of at least $3,000, in the 12 months ended Sept. 30 fell to $456.2 billion from $512.8 billion in the previous fiscal year. The totals exclude intelligence projects or awards to subcontractors.
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