Golden age of federal contracting is over.

• Author: Erwin, Sandra I.
• Position: Defense Watch

The political paralysis in Washington has dealt crushing blows to the national security establishment. There are no predictable budgets for the Pentagon to map out its weapons wish list, or for contractors to project their future business.

The gridlock has created a policy vacuum, not just in defense but also in energy, immigration and other key areas. This in turn has upended deeply held assumptions of the government-industrial complex. Pentagon leaders and CEOs of federal contractors are perplexed and outraged that issues like national security can't seem to rise above partisan bickering. The way they see it, the world is falling apart. Congress is only interested in getting reelected in November, and the administration would prefer to keep the country focused on domestic concerns rather than on the geopolitical chaos.

Steep cuts to government discretionary spending began in 2012 and are expected to continue, although nobody can predict what will happen in this topsy-turvy political environment. The Defense Department has a "president's budget," which is billions of dollars more than the "sequestration budget" that complies with the spending caps mandated by the 2011 Budget Control Act. No agency has pleaded for relief from the BCA as eagerly as the Defense Department, the largest spender of discretionary federal dollars.

The Pentagon's top generals are still in disbelief that their push to overturn sequestration has been fruitless. Not helping their cause either are the Obama administration's latest troubles dealing with world crises and deciding what role the armed forces should play. The military is drawing down based on an administration policy to not engage with boots on the ground unless we absolutely, no kidding, have to, points out former Army budget director Ed Stanton, a retired lieutenant general and now vice president of the consulting firm LMI. The military says it can't meet the current defense strategy with BCA-level budgets, hut it is not dear what the strategy is, he says. "As a nation, we are at a standstill."

The partisan war over government spending has wreaked havoc on the Pentagon's highly structured planning process that can't cope with unpredictability. And it has caused turmoil across the vast contracting industry that also seems unable to handle Washington's fiscal fickleness.

After three years of dysfunction, it might be time for government contractors to admit the business will never be the same.

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