Training-simulation industry frets as furloughs loom at Fla. military agencies
ORLANDO — Fallout from the federal government's deficit-busting "sequester" spending cuts is gradually descending on Central Florida's military-training agencies, which award billions of dollars in contracts annually and employ more than 2,000 workers.
Local defense contractors are watching nervously as the cuts take hold on a military complex that has been a linchpin of the region's multibillion-dollar high-technology industry.
With the federal-budget sequester now officially the law of the land, Army and Navy officials are contemplating one-day-a-week furloughs for nearly 1,800 civilian employees at their military installation in east Orange County's Central Florida Research Park. That would mean 22 fewer work days and a 20 percent pay cut through the end of the federal fiscal year in September.
Although that may not seem like a dramatic move, a 20 percent reduction in hours worked by the civilian employees could have far-reaching effects on the agencies and local military contractors, said Angela Salva, a contractor and vice chairman of the National Center for Simulation, an industry trade group based in Orlando.
"You're looking at fewer work hours and days, less productivity and the likelihood of contract delays," said Salva, president of Simetri Inc. in Winter Park. "It's going to have a domino effect leading to a general slowdown. And that's not good for them or the industry."
The local military agencies say they expect to hear this week from Washington about whether to implement civilian furloughs starting next month. If such orders are given, employees will be told as soon as possible, they said.
No civilian employee is immune — not even Dr. James Blake, chief of the Army's local simulation-training contract agency. Blake in 2005 became the first civilian to lead the Army Program Executive Office for Simulation, Training & Instrumentation, the area's largest military agency.
"We have 809 civilian employees, and all of them will be affected by the furlough if it occurs," said Kristen McCullough, an agency spokeswoman. "We will notify our civilian employees [this] week of a potential administrative furlough that would begin April 26."
About 60 percent of the Army agency's work force would be affected, while more than 90 percent — or about 970 civilian employees — would be furloughed at the Navy's local training-systems agency. Spokesman Brian Roscoe said the Naval Air Warfare Center's Training Systems Division will act once it receives orders from Washington.
"Of course, we are hoping Congress will agree on a balanced deficit-reduction plan the president will sign, and potential furloughs would be averted," he said in an email.
Nationwide, about 800,000 civilian workers would be furloughed by the military, according to the U.S. Defense Department's current plan. Pentagon officials calculated that plan based on the defense budget's share of the sequester cuts — $47 billion this year — and on Congress' continuing resolution to fund the government, which freezes defense spending at fiscal 2012 levels.
Local military agencies began preparing for the budget cuts last month by enacting hiring freezes, caps on travel budgets and other measures ahead of the March 1 deadline. Since the sequester took effect on March 8, the agencies have made more cost-cutting moves, in some cases suspending work on building renovations, canceling professional-development activities, and offering early-retirement buyouts to eligible workers.
So far, the local agencies have not throttled back the pace of their contract awards — in the past, nearly $3 billion a year for the Army office and nearly $1 billion a year for the Navy's — though the agencies said they have not ruled that out.
"Delaying awards or obligations is certainly a possibility, and we are assessing the potential impacts now," said Brian Roscoe, the Navy agency's spokesman. "Any decisions will be based on requirements, and any changes will be addressed by bilateral agreements with the contractors."
So far, defense contractors have seen little or no change in their dealings with the local military-training agencies, said Ken Kelly, an industry consultant and former chairman of the National Center for Simulation.
"We've seen no immediate impact from the sequester," he said. "I think we're still waiting for it to trickle down to the programs that we are working on here in Central Florida."
Industry experts say training-simulation systems typically do very well during slowdowns in defense spending because they offer less-expensive alternatives to live training as the military strives to maintain readiness with fewer dollars. But the across-the-board cuts imposed by the 2011 deficit-reduction law leave no program unscathed, Kelly noted.
"At this point, we don't know what programs are going to be cut, though we know that Congress is working on a bill that would give the Pentagon more discretion over what programs to cut," he said. "But if they don't come up with something, essentially all programs would take an across-the-board hit."