Posted: February 20, 2013

Inside Business Staff Blogs by Jared Council

Sequestration has been the buzz word lately, but there’s a concurrent federal budget issue that’s also irking federal contractors called the “continuing resolution.”

Sequestration denotes $1.2 trillion in federal budget cuts over 10 years slated to take effect March 1 under the 2011 Budget Reduction Act. The continuing resolution is essentially a stopgap federal budget enacted in lieu of a full-year 2013 budget.

That resolution runs through March 27.

“If I had an appropriations bill and it was approved for 2013 and it said that I had this money to spend,” Virginia Ship Repair Association President Bill Crow said about ship repair contractors, “then I know I can go spend it … .

“We don’t have that. We haven’t had that for the last three years. It’s been, ‘Well, we’ll give you a little bit now, and we’ll give you a little bit later on.’”

Congress has until March 27 to decide to keep 2012 spending levels in place or alter them. For the Navy, 2012 spending levels means it will have to cut $4.6 billion from its budget between then and Sept. 30.

BAE Systems Plc announced this week that of the 5,000 employees in its ship repair division nationally, some 3,500 could be laid off due to the continuing resolution.

“We received some guidance from the Navy on Friday, Feb. 15, on what their plans could potentially be,” said BAE Systems Norfolk Ship Repair spokesman John Measell. “And as a result of that we thought it was prudent to inform our workforce that the potential exists for layoffs.”

Measell said most of the potential layoffs would come at its San Diego and Norfolk shipyards. Though things may change over the next several weeks, he said, all 1,628 Norfolk employees will receive layoff warning letters.