Page 26 - FCW, June 2017

NOTE TO THE WHITE HOUSE:
WALL STREET IS WATCHING
Concerns about budget cuts and government staffing levels are starting to show up in contractors’ communications with investors
BY ADAM MAZMANIAN
After signing an appropriations bill that funds the federal government through the end of September, President Don- ald Trump released his administra- tion’s budget request for fiscal 2018 on May 23. As forecasted in the “skinny budget,” that request tilts away from domestic spending and foreign aid and toward more spending on defense, homeland security and services for veterans.
At the same time, the pace of sub- Cabinet appointments and confirma- tions trails that of other modern presi- dential administrations, leaving some agencies without decision-makers in key roles. Taken together, the combina- tion of empty seats and uncertain pri- orities is starting to trouble federal con- tractors — to the point that it’s being
raised in corporate earnings calls. Leidos Chairman and CEO Roger Krone alluded to the risks in a May 4 call. Leidos has become the largest player in the federal IT space since its combination with the IT business of Lockheed Martin, and the new com- pany has customers across the federal
market.
“We have seen more slowness than
we expected in the acquisition organi- zations of our customers, due in part to the slow pace of executive leader appointments and budget uncertainty,” Krone said.
“This has had two primary impacts, in our view,” he added. “First is a delay in the procurement process. Award decisions and procurement deadlines have been slipping to the right. Sec-
20 June 2017 FCW.COM
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