At least 300,000 jobs in industries
including computer services, tourism, package delivery and meat
processing may be lost if Congress doesn’t avert $1.2 trillion
in automatic federal spending cuts starting next year.

Across-the-board reductions in non-defense spending will
have a ripple effect over the next two years on companies that
aren’t government contractors, according to the Bipartisan
Policy Center in Washington, which made the forecast. Hundreds
of thousands more jobs are at risk from additional Defense
Department reductions, amid an 8.2 percent jobless rate in May.

“You are going to see reductions, frankly, in every area
of the American economy,” Dov Zakheim, a former Defense
Department comptroller who worked with the policy center, said
in an interview.

The cuts are part of $1.2 trillion in reductions to
domestic and defense programs that will start in 2013 if
Congress doesn’t act. They were required after talks failed last
year on a bipartisan plan to curb the U.S. deficit. The Defense
Department will bear half of the reductions and other government
agencies will share the rest, starting with about $55 billion in
2013.

Farm Subsidies

About $16.2 billion of that would come from mandatory
programs such as Medicare and farm subsidies, according to the
Center on Budget and Policy Priorities, a Washington group that
advocates for programs for lower-income and middle-class
Americans.

“I don’t like across-the-board meat-ax cuts,” Senator
Susan Collins, a Maine Republican, said in an interview. “We
should be making decisions.”

The reductions are a “swiftly ticking time bomb,” Scott Lilly, a senior fellow at the Center for American Progress,
wrote on the Washington group’s website that says it promotes
“progressive ideas.”

Air Traffic

The Federal Aviation Administration may close air traffic
towers in smaller communities or reduce the number of air
traffic controllers as the result of a potential $1.5 billion
spending decline, Lilly said in a telephone interview. That may
lead package-delivery services, such as FedEx Corp. (FDX) (FDX) and United
Parcel Service Inc. (UPS) (UPS), to reduce flights, he said.

“FAA cuts would have deleterious impacts on operations,”
Danny Werfel, the controller at the Office of Management and
Budget, told the House Budget Committee in April. He also said
about 300 national parks would be fully or partially closed.

Cuts to the National Park Service budget may delay the
start of the summer season at Yellowstone National Park in
Wyoming for weeks, leaving hotels and restaurants without the
business tourists would bring, Lilly said.

While officials at Lockheed Martin Corp. (LMT) (LMT), the world’s
largest defense contractor, say it and other companies will stop
hiring and investing as the automatic changes near, many non-
defense companies are keeping quiet publicly.

‘Only Certainty’

“It would be premature to discuss specific impacts on our
business from any change in federal spending, given that options
are still being discussed by all sides,” Maury Donahue, manager
of regulatory and public affairs communications at Memphis,
Tennessee-based FedEx, said in an e-mail. Kara Ross, spokeswoman
for Atlanta-based UPS, said the company had no immediate
comment.

Companies have so many questions about the automatic cuts
“that the uncertainty is the only certainty right now for
everybody,” Stan Soloway, president of the Professional
Services Council, said in a telephone interview. The trade
group, located outside Washington in Arlington, Virginia,
represents the government professional and technical services
industry.

Fewer Hirings

The spending reductions may lead to a loss of 1 million
defense and non-defense jobs in 2013 and 2014 through fewer
hirings, along with attrition and layoffs, said Steve Bell,
senior director of the Bipartisan Policy Center’s economic
policy project. Of that number, at least 300,000 are unrelated
to defense, according to Bell and Zakheim. The group was created
in 2007 by four Republican and Democratic former Senate majority
leaders.

The U.S. economic recovery and job creation has become a
significant part of the debate in the presidential and
congressional elections. The Labor Department tomorrow will
issue its monthly employment report.

Guidance to Agencies

The White House Office of Management and Budget hasn’t
issued guidance to federal agencies on how to put the automatic
cuts in place. The Senate voted in June to seek reports from the
OMB on the reductions’ effect, and from President Barack Obama
on how the government would implement them. The House hasn’t
adopted similar measures.

To the extent that government agencies can decide what to
eliminate, “anything expendable will be at high risk,” said
Daniel Gordon, associate dean for government procurement law at
George Washington University Law School in Washington. “That
would include, in particular, professional services and
consultants, but also anything that involves investing in the
future,” such as information-technology improvements.

Hewlett-Packard Co. (HPQ) (HPQ), with $3.1 billion in government
contracts in 2011, and Dell Inc. (DELL) (DELL) with $1.4 billion, are among
the government’s top 50 contractors, according to a ranking of
200 federal industry leaders by Bloomberg Government. Neither
company responded to requests for comment.

Support Activities

Support activities that aren’t critical to a government
agency’s missions won’t “be a pleasant business to be in,”
said Rob Guerra, a partner at Guerra Kiviat Inc., a business
development company for federal contractors in Potomac,
Maryland. Help-desk positions, such as resetting computer
passwords, and companies with supplemental labor contracts for
receptionists or guards are “more susceptible,” he said.

The U.S. government spent about $540 billion in 2010 and
2011 on contractors, including all goods and services bought by
contract such as Air Force fighter planes and lawn-mowing
services in national parks, according to Gordon.

New Commitments

“Both the government and its contractors will be reluctant
to make new commitments in the months leading up to” January
when the automatic cuts start taking effect, Gordon said in an
e-mail. “I’d expect the government and contractors to do less
hiring than normal in October, November and December. I’d also
expect the federal agencies to delay decisions that commit them
to spend money, whether by hiring, contracts, or grants.”

The spending reductions will affect “everything you can
imagine,” Senator Mark Begich, an Alaska Democrat, said in an
interview.

The FAA may have to trim $900 million in salaries for air
traffic controllers, for a 10 percent to 12 percent loss of
their working hours, forcing some reductions in takeoffs and
landings, Lilly wrote on the Center for American Progress
website on June 18.

‘Major’ Hubs

“The FAA is going to do everything to avoid cutting back
services to the major hubs — if they do that then they will
devastate the rest of the country,” Lilly said in a telephone
interview. “I am from Springfield, Missouri — if they decide
to do that, it basically loses its airport.”

Commercial airlines may raise fares to make up for fewer
flights, passing on the hurt to travelers, Lilly said.

The U.S. Occupational Safety and Health Administration, as
part of the Labor Department, would conduct fewer workplace
inspections, “leading to diminished protection for workers,”
said Werfel, the federal controller.

The Food Safety Inspection Service has a budget of about $1
billion and a workforce of about 10,000. The 1906 Federal Meat
Inspection Act requires a federal inspector on the premises when
slaughterhouses, packing plants and poultry processing
facilities are in operation, according to Lilly.

Furlough Employees

“The agency may well have to furlough employees for about
20 million hours between Jan. 1 and Sept. 30, 2013,” Lilly
wrote on the center’s website. That may force companies such as
Hormel Foods Corp. (HRL) (HRL), Smithfield Foods Inc. (SFD) (SFD), Perdue Farms Inc.,
and Tyson Foods Inc. (TSN) (TSN) to suspend operations for certain periods
each week, he said.

“In the past, meat inspection has always been deemed to be
an essential service and not subject to furlough,” said Janet Riley, a spokeswoman for the Washington-based American Meat
Institute, whose members include Tyson, Hormel and Smithfield.

Tom Super, spokesman for the National Chicken Council,
which represents Perdue and other poultry companies, said in an
e-mail that the organization “would urge the administration
once again to classify meat and poultry inspectors as essential
personnel who are not subject to work stoppage due to a budget
impasse or budget cuts.”

Implementing Changes

Even as government agencies haven’t spelled out how they
would implement the automatic changes and companies are
reluctant to share their planning, the arm of Congress that
makes cost estimates for legislation and analyzes the budget is
feeling the pinch.

The Congressional Budget Office is “a very small piece of
the federal government, but our own decisions about whether to
replace people who leave is affected by the uncertainty of what
our funding will be next year,” CBO Director Doug Elmendorf
said last month. “That must play out in a much, much larger
scale with more significant enterprises than ours.”

To contact the reporter on this story:
Roxana Tiron in Washington at
rtiron@bloomberg.net

To contact the editor responsible for this story:
Jodi Schneider at
jschneider50@bloomberg.net

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Coastal Staffing, with its new office in the East Avon Plaza, is the latest entrant into a growing local field of temporary employment agencies.

Branch manager Tammy Underhill says the company specializes in arranging short-term staffing for manufacturers and warehouses — as well hiring clerical workers, general laborers and custodians.

“What happens is a company approaches us and says, ‘We have a really busy month coming up and we can’t do it with our permanent employees,’” explained Underhill.

“It’s then my job to look through the temps we have on file and send them some workers,” she said. “We do all the interviewing, and all the paperwork — including tax forms, payroll and worker’s compensation. The company doesn’t worry about anything.”

Coastal Staffing also brokers for various professional employee associations which handle “employee leasing.” According to Underhill, these arrangements allow companies to offer employment and benefits while keeping costs low.

Coastal Staffing is part of a chain of temp agencies founded by Ken Tencza in 1997, with other offices in Buffalo, Orchard Park, Ithaca and Naples, Fla.

Underhill has a background in sales and business management. She was owner of the Curves gym, located next door to the new Coastal Staffing office. Temp employment is a family specialty, says Underhill, as her mother has worked in the business for over 25 years.

She has found that temp employment offers a lifestyle some people come to prefer. “They like to pick and choose when they want to work. A lot of people are wives with kids in school who are then not available during the summer.”

Underhill says Coastal Staffing has many competitors in Livingston County and Greater Rochester, but she works to make her business stand apart by offering a “personal touch” in her dealings with employees and clients.

“A lot of companies will ask employees to complete an online application. We want to interview the person face-to-face and get to know them.”

Also, because Coastal Staffing does not have a franchise agreement with a national company, “we are able to accommodate a more diverse customer base and keep costs to a minimum.”

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It’s been a little more than a year since former federal Chief Information Officer Vivek Kundra first broached the subject of a bring-your-own-device (BYOD) strategy for mobile technology in federal agencies, but many federal technology leaders are already picking up the idea and running with it even as they wrestle through the security, privacy and policy issues that will make those strategies work.

The government’s much-anticipated digital services strategy, released in May, promised to deliver governmentwide guidance and best practices on BYOD through a yet-to-be-convened interagency advisory panel. In the meantime, some agencies have moved quickly to embrace the idea, hoping to realize at least two potential benefits: reduced IT costs and the idea that employees will be happier and more productive if they’re working on devices they actually like.

A February survey by the IT company CDW-G found 62 percent of agencies already are letting employees use personal devices for work purposes, and that 40 percent of employees who are allowed to bring their own devices are doing so.

Swapping government equipment for personal devices

The General Services Administration is one agency that’s enthusiastically embraced the idea of giving workers the choice of turning in their government-furnished equipment and using their own technology. GSA recently finished putting together a code of conduct for personally owned devices and is about six months into the implementation of a BYOD program.

“Going to BYOD has been pretty simple for GSA from a business standpoint,” said Perryn Ashmore, who works in the CIO’s office at GSA’s Federal Acquisition Service, during a recent ACT-IAC panel discussion moderated by Federal News Radio’s Jason Miller. “And from a mobility standpoint, it’s imperative. You cannot conduct business on a Blackberry, but you can on a tablet. I run the portfolio of acquisition applications, and all of those applications are being built with the view toward a tablet user. It’s a big push. The challenges are the idea of creating a world of haves and have-nots, and the question of how much support you give the end-user.”

GSA is in the middle of a transformation project that’s structured in part around the idea that employees should be able to do their work on any device at any time.

Accordingly, new office space the agency is building in Washington has office seating for about 3,000 employees — only about a third of the total employee base who would normally call the facility home during a workday.

The rest will be mobile workers or teleworkers, said Dan Reece, the director of the continuous process improvement program at GSA’s headquarters.

“Right now the challenge is transforming our culture from what’s been the federal norm, where you show up and you have your desk and do you work, to doing your work wherever you need to as you need to,” he said. “For us, that means going to different office locations and using a hoteling station for a couple hours. In other instances, it’s going to a café or a restaurant or other venue. We don’t have to be bound to an assigned workspace. We really can be mobile and adapt to our customer requirements as we need to.”

GSA is supporting Apple, Android and Blackberry devices. When users bring their technology onto GSA’s network, they digitally sign a set of rules of behavior and agree to allow the agency to install security software and policy rules that govern certain features of their device. They also assent to GSA remotely wiping the device of all data if it’s lost or otherwise compromised.

Ashmore said GSA employees have willingly accepted that deal, though there has been pushback when the agency has found it necessary to enforce the rules and actually wipe a device.

“One of the things we’ve done to mitigate that is to back up the contents of the device to the GSA infrastructure,” he said. “But when you want to download personal apps onto your device, which is totally legit, the only restriction we have is that we lock you to the registered marketplaces like the iTunes marketplace.”

EEOC experiments with BYOD

The Equal Employment Opportunity Commission is also experimenting with BYOD. The agency has just begun a pilot program within the last few weeks, but the push came more from budget pressure than user demand.

EEOC CIO Kimberly Hancher said the small agency was faced with a sudden 15 percent reduction in its IT budget for 2012, and it didn’t appear at first that there was much fat to cut out.

“I had to cut my Blackberry budget in half in order to make this budget,” she said. “I talked with EEOC leadership, and we talked about various approaches. We could wait six months and then eliminate all Blackberrys, or we could take them away from half of our employees right away. Those were not popular options.”

So Hancher said they decided to do some research into how EEOC employees were using those devices and came up with a few surprises.

“Seventy-five percent of our users never made phone calls from their Blackberrys,” she said. “Email is the killer app. They either used the phone on their desk or they used their personal cell phone to make calls because it’s just easier. We also found there were a number of zero-use devices. People have them parked in their desk drawer, and the only time they use it is when they travel.”

By restructuring their plans with mobile service providers, switching to a shared pool of voice minutes and cancelling service to completely idle devices, EEOC cut its Blackberry costs by 30 percent.

The next step is BYOD, and Hancher said at least for now, personal devices are the only mobility option for new employees at EEOC.

“Because we’re in a budget crunch, if a new employee comes and ask for a Blackberry, I say, ‘Oh, I’m so sorry, I don’t have any at the moment. But we are doing a BYOD pilot if you’d like to participate. And if we get some Blackberrys returned, I’ll be happy to give you that used Blackberry.’”

Rob Burton, a former OMB official who now works as an attorney at the Venable law firm, worries that agencies are rushing into BYOD before all the necessary privacy and security considerations have been thought through and put on paper. Because of that, any potential cost savings might turn out to be illusory.

He said that what his firm’s private sector clients have found out.

“One reason is because of all these legal things roaming around,” he said. “Procedures have to be put in place and enforcement and compliance with these procedures is huge, and it’s costly. So the idea that this is going to save tons of money is a big question mark in the long run. But the train is gone. The train is moving at a very fast speed. So for industry and for government, it’s not a matter of whether we should do this, it’s a matter of how we do this and how we do it effectively.”

Burton said one thing agencies need to make sure of is that they have documented rules for what employees can and can’t do with government data on personally-owned devices, and that employees agree to let agencies examine those devices should it become necessary.

“You also better have a waiver where the employee holds the organization harmless,” he said. “Companies are doing this. It’s better do to it than not, and lawyers can then have debates over whether or not the waiver is enforceable. But if you don’t have one, there’s no debate. Training is absolutely critical too, and we’re not seeing companies doing much training on the security ramifications and procedures to protect sensitive corporate data, and I think some of the same challenges exist for the government in that regard.”

Establishing a BYOD policy

Hancher said her agency has done its homework. EEOC is currently on draft number eight of its acceptable behavior policy for personal devices, a document she developed as part of a working group with the agency’s legal counsel and HR staff.

“We wrote it out in black and white, so that as people opted in to BYOD, they could choose not to opt-in if they had a problem with it,” she said. “We wrote another document for use of government-provided mobile devices, and they’re very different in terms of expectations of privacy. We’re now at the point where we’re giving every Blackberry user a choice. We tell them we’d like them to do this because it helps us to get through our budget crunch, it gives them choice, we think they’ll be more productive using their device of choice. But we also tell them that if they really can’t give up their Blackberry, keep it.

Choice and letting employees opt-in to BYOD is also key at GSA, Ashmore said. It’s a somewhat different model than the one initially suggested by Kundra last year when he floated the idea of giving all employees a stipend to buy their own equipment rather than having government-furnished mobile devices at all. Ashmore said it’s difficult to see how that would work in practice.

“In the public service, I just don’t even know how you begin to say, ‘I’m going to give you money to go buy devices.’ I just don’t know how you get there,” he said. “I think that conversation should not be had. The choice is simply whether you’re going to use the equipment I’ve issued you, or, if you’re going to take care of it yourself, show me [that you can comply with policy]. We’re catching up with the training. We work every day on taking people who’ve been at a desk for 30 years and training them on these technologies. Let’s just say it’s interesting.”

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Kundra pushes employee-owned mobile devices for work

Security community eyes BYOD plans

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Agency CIOs coveted new digital, shared services strategies

Tags:
technology,
mobile computing,
mobility,
BYOD,
Bring your own device,
ACT/IAC,
GSA,
EEOC,
Venable,
Perryn Ashmore,
Kimberly Hancher,
Dan Reece,
Rob Burton,
Jared Serbu

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