OMB Expands Sequestration Guidance, Increasing Scrutiny of Expenses

With just a day to go before the onset of sequestration, the Office of Management and Budget on Wednesday evening supplied federal agency heads with expanded guidance on how to begin implementing across-the-board spending cuts.

Unless Congress and the president achieve a new budget deal by Friday, wrote Controller Danny Werfel in a Feb. 27 memorandum, agencies must now execute $85 billion in cuts over seven months, which translates to about 9 percent for nondefense programs and 13 percent for defense programs. “These reductions will result in significant and harmful impacts to national security and domestic priorities,” he said.

Detailed instructions addressed processes for planning, communication, adjustments to acquisition, protecting recipients of financial aid and “increased scrutiny of certain activities.” That last category directs managers to employ “risk management strategies and internal controls” to scrutinize spending on hiring new personnel; issuing “discretionary monetary awards to employees, which should occur only if legally required until further notice;” and incurring obligations for new training, conferences, and travel (including agency-paid travel for non-agency personnel).

In light of reduced funding, Werfel wrote, managers should be “actively and continuously communicating with affected stakeholders -- including states, localities, tribal governments, federal contractors, federal grant recipients and federal employees."

Agencies should “identify any major contracts that they plan to cancel, re-scope or delay as well as any grants that they plan to cancel, delay, or for which they plan to change the payment amount,” the memo said. “Agencies should only enter into new contracts or exercise options when they support high-priority initiatives or where failure to do so would expose the government to significantly greater costs in the future. Agencies may also consider de-scoping or terminating for convenience contracts that are no longer affordable within the funds available.”

-Charles S. Clark, GovExec.com
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