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Sequestration: Impacts on Federal Agencies

On March 1, the first round of automatic spending cuts known as sequestration took effect, requiring federal agencies to cut $85 billion between now and the end of the fiscal year in September.

An AIA analysis released in October found that sequestration could reduce federal spending on design and construction by more than $2 billion, with potential job losses in the industry of up to 60,000.

As agencies begin to outline their plans to reduce spending, the AIA is tracking how those reductions will impact programs that relate to the built environment. This list will be updated as agencies make more information available.

Commerce. The Commerce Department has indicated that the National Institute of Standards and Technology will reduce grants, contracts, and equipment purchase, and defer maintenance and repair of NIST facilities.

Defense. The Pentagon has announced that the majority of its 780,000 civilian employees will be furloughed for up to 14 days this fiscal year; Air Force and Army personnel deployed in combat zones, non-appropriated funds employees, and foreign nations will be exempt.

EPA. The Environmental protection Agency has indicated that it may need to furlough its employees for up to 13 days between April and September. The Agency may require four furlough days per employee prior to June 1 and then reevaluate to see if further furloughs are necessary.

HUD. The Department of Housing and Urban Development has announced that it will close on seven days between May and September (May 10, May 24, June 14, July 5, July 22, Aug. 16 and Aug. 30), and approximately 9000 employees at its DC headquarters and all 80 field offices will be furloughed on those days. All HUD offices will shut down on furlough days except for the Ginnie Mae and the inspector general’s office

IRS. The Internal Revenue Service is planning to require staff to take a total of five to seven furlough days by the end of the fiscal year on September 30. It is not clear what if any impact this will have on the processing of tax returns.

Medicare. The Department of Health and Human Services is required under the sequestration to reduce payments to providers and hospitals by 2 percent. Although these cuts do not directly impact design and construction, the AIA has been made aware of instances where hospitals are cutting back on facility projects.

NASA. The National Aeronautics and Space Administration has said that 20,000 contractors could lose their jobs due to sequestration.

National Park Service. The Service has indicated that it will close or reduce the hours of visitors’ centers and reducing spending on park maintenance. In addition, the Service has said that furloughs are not yet required for NPS staff but furloughs may be implemented if other cost-saving measures prove inadequate

National Science Foundation. The NSF has said that it may terminate approximately $35 million in contracts.

Small Business Administration. The SBA has said it plans to avoid furloughs by implementing staff cuts made through early retirements in 2012.

Smithsonian. The Smithsonian Institution has said that it will defer maintenance and repairs on facilities instead of furloughing employees.

State Department. State Department personnel are not expected to be furloughed, at least through June 30.

Last update: April 30, 2013

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