ORLANDO, Fla. — Under pressure from defense budget cuts, the Army's high-tech training contracts agency in Orlando is undergoing a major restructuring that has cast some uncertainty on the future of the region's training and simulation industry.
The agency has lost more than two dozen jobs — including 40 percent of its contracting officers — as a result of a hiring freeze and deficit-reduction cuts in military spending, officials say. The critical positions, many of them paying more than $80,000 a year, are gone indefinitely.
A senior Army official in Washington cited the Orlando agency's reduced staff in a briefing this week to explain why the agency recently canceled the competition for a multibillion-dollar education contract that would have broadened its work.
Now the agency is refocusing on its "core" simulation training programs for the Army, according to its top executive in Orlando. Other work will be taken over by Army operations elsewhere as the military consolidates to deal with deepening budget cuts.
"Our Army faces complex, and even unknown, threats in a dramatically austere fiscal environment," Maj. Gen. Jon Maddux said at a recent industry event in Orlando. "This requires [our agency] —- just like nearly every other Department of Defense and Army organization — to make some tough choices."
Maddux's first tough choice after taking over this month was terminating the competition for the so-called TEACH program. TEACH contracts — worth at least $5 billion over the next 10 years — would have provided classroom instruction, courseware and other educational services for the Army.
Although the Army will continue to buy such services, the procurement will eventually be done by another agency, Maddux said.
The Army's local operation — known as the Army Program Executive Office for Simulation, Training and Instrumentation, or PEO-STRI — is the largest of the military's training contracting agencies. It has 1,200 employees at Central Florida Research Park. Simulation training accounts for 30,000 direct and indirect jobs in Central Florida and $5 billion in annual revenue.
Any loss of business by PEO-STRI is seen as the beginning of a domino effect that could undermine an industry that has been built largely because of the agency's presence in Orlando, along with other, similar agencies of the Navy, Marine Corps and Air Force.
Maddux has assured industry leaders that much of PEO-STRI's $3 billion in annual contract awards will remain intact. The restructuring, he said, will accomplish several goals, such as creating new bidding opportunities for small business and ultimately saving taxpayers money.
"I can assure you that PEO-STRI will continue to remain an integral partner in the Central Florida modeling and simulation community," Maddux said Friday in a letter to the Sentinel. "The PEO-STRI personnel who were to handle the TEACH procurement will remain in Orlando to support the transition of the contracting responsibility, and will eventually be realigned to support other PEO-STRI priorities."
Still, recent developments have unnerved industry leaders and many companies that had invested in staff and bid proposals related to the TEACH competition.
"We all know the military is dealing with billions of dollars in spending cuts," said Waymon Armstrong, president of Engineering & Computer Simulations Inc. and chairman of a regional task force that advocates for the simulation industry. "And when you see contracts suddenly canceled like TEACH, it does tend undermine your confidence about the direction things are going in."
U.S. Rep. John Mica said Friday that Heidi Shyu, the Army's senior acquisitions official in Washington, assured him this week that there are no plans to make massive changes at PEO-STRI.
"She said there's absolutely no intent here to dismantle PEO-STRI or any of the training operations in Central Florida," said Mica, R-Winter Park. "But she said there was a sort of clog in the pipeline of getting contracts out through PEO-STRI — she cited their decreased staffing as a reason — and she needed to get that process done more efficiently."
In addition to TEACH, several other programs now managed by the Army's Orlando agency will be taken over by the Army Contracting Command in Huntsville, Ala., by 2017, Maddux said.
It is unclear, however, how many employees and how much work the Army's local agency would ultimately lose in the restructuring.
"We believe the new head of PEO-STRI has the right priorities," said Armstrong, the industry executive. "And we'll give him every benefit of the doubt as he manages the agency's portfolio of programs."