Consultants Feel Ripple Effects of Defense Budget Uncertainty

Through boom-and-bust cycles, defense industry consultants have enjoyed relative job security in a sector where insider contacts and knowledge of how the system works are worth hefty fees.
But the policy and budget gridlock in Washington, D.C., has put consulting firms in the unfamiliar position of having to persuade clients that their expert advice should not be viewed as an expendable commodity.
“We are in the direct line of fire in all of this uncertainty,” said Marvin Sambur, a former assistant secretary of the U.S. Air Force for acquisitions, who recently became president and chief executive officer of Burdeshaw Associates Ltd., a professional services firm in Bethesda, Md.
In an interview, Sambur spoke of the current business environment as “difficult” for professional services firms because of the foggy business climate. Defense and aerospace companies that do business with the government, which make up the bulk of Burdeshaw’s client base, are sitting on the sidelines as they wait for Congress and the next administration to strike a budget deal so federal agencies can begin to make spending and contracting decisions.
Defense contractors, particularly, are fretting over looming budget cuts — mandated by the 2011 Budget Control Act — that could slice more than $50 billion from next year’s Pentagon budget. Lawmakers have hinted that they might find a way to avert or delay the cuts over the lame-duck session after the November election. Since the BCA passed more than a year ago, contractors have scaled back hiring and spending on everything from marketing to outside consultants.
“Today, we see a paralysis,” said Sambur. “Companies are not sure which way to go.” As a result, the “safest bet right now is to not hire consultants,” he added. “Clients are frightened about spending money without knowing which direction the Defense Department is going to go.”
As he takes over Burdeshaw, whose former CEO was retired Army Gen. William Hartzog, Sambur said he is confident the company will not just weather the fiscal storm but also will see its business grow once companies realize that they need “honest brokers” to help them through the uncertain times.
Sambur’s marketing strategy for BAL is to convince clients that they “need consultants more than ever,” he said. “Unquestionably, these are highly stressed times for companies working in the government marketplace,” he said. As a result, “companies need to be focused on keeping their programs sold … they need to rapidly identify opportunities and strengthen their pursuit and capture of programs, while simultaneously being astute in planning for future realities,” he said.
Sambur insisted that defense contractors need outside help from experts who understand "how the building works," he said. Contractors will be challenged as Defense Department buyers contemplate whether to cancel or curtail procurements of new equipment, said Sambur. “It’s not enough to say a program is important but you also have to present options to mitigate risk and cost.”
Photo Credit: iStockphoto

Topics: Business Trends, Business Development, Doing Business with the Government, Defense Department, DOD Budget