Federal Budget Ax Threatens Contractors, but Could Also Be an Opportunity
The New York Times
By cutting federal employees, the Trump administration may increase its reliance on firms that take in billions through government contracts.
A contracting firm called Leidos took in more than $16 billion in revenue last year, most of it through contracts with federal agencies like the Department of Veterans Affairs.
So when the Trump administration’s budget cutters took aim at the V.A. last month, it seemed like bad news not just for the department’s employees but also for Leidos and dozens of other private-sector firms.
“No more paying consultants to do things like make Power Point slides and write meeting minutes!” the department’s secretary, Doug Collins, wrote on X. Overall, the department said, it was canceling more than 850 contracts worth nearly $2 billion.
But shortly after Mr. Collins’s announcement, the outlook for some of the V.A.’s contractors seemed to brighten. The department put the cancellations on pause, saying it needed to review the contracts to avoid “eliminating any benefits or services” to veterans or V.A. beneficiaries. It later narrowed the list of canceled contracts by a few hundred.
And experts on government contracting said cuts to the agency, which announced last week that it was seeking to trim 80,000 of its roughly 480,000 employees, could even lead to increased spending on federal contracts.
These experts noted that cutting employees without reining in a government function — like providing health care and benefits to veterans, work in which Leidos plays a key role — typically means the job will fall more heavily on contractors.
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