Tags: contractors | govt | jobs | sequestration

Washington Times: Government Contractors Getting 'Fat'

By    |   Friday, 21 June 2013 08:02 AM

While government agencies, such as Department of Defense, are struggling with budget cuts, government contractors have grown increasingly 'fat' sopping up taxpayer dollars, according to The Washington Times.

Government contractors have been very vocal about the threats sequestration pose to their businesses. Many claim profit margins from government contracts are already lower than those from private contracts. In reality, for many contractors, Uncle Sam is their top client, and it seems business has been good.

According to The Times, the combined profits of 59 publicly traded federal contractors have steadily risen over the past three years, from $33 billion in 2010 to $36 billion in 2012.

Editor's Note:
How to Pay Zero Taxes . . . Legally

"You can't blame federal contractors for seizing business opportunities," Scott Amey, general counsel at the Project on Government Oversight, told The Times

"Outsourcing has caused an over-reliance on contractors, and defense industry consolidation has stifled competition, which places contractors in a very powerful position."

Now that the sequestration has kicked in, these companies express concerns that the spending cuts will put significant pressure on their businesses, and in some cases force them to cut jobs.

Although businesses cannot be blamed for wanting to protect their bottom lines, there are suggestions that these companies' financial situations are not as fragile as they portray.

Demos, a public policy organization, recently released a report, titled "Underwriting Bad Jobs: How Our Tax Dollars Are Fueling Low Wage Work and Fueling Inequality," that shows that nearly 2 million private sector employees are working on America's behalf but earning $12 per hour or less.

Defense contractors were called out for employing over half million low-wage workers. A prominent offender was Lockheed Martin, which Demos estimated has 15 percent of the low-wage contract labor pool.

Yet, according to The Times, the company just reported its most profitable quarter ever although sales declined. Lockheed Martin has laid off 650 employees and is threatening furloughs in response to sequestration, but the company gave its former CEO a $2 million raise, the paper said.

Another contractor, Agilent Technologies, reportedly has seen its net income nearly double over the past two years. The company, which holds over $2 billion in assets overseas, didn't even pay taxes last year, but rather received a $110 million benefit.

Meanwhile, government agencies and their employees have already started to feel the squeeze, slashing their budgets and furloughing workers. Reuters reported that a budget shortfall has forced the Pentagon to cut back on the investigations used to update security clearances for defense contractors.

But the companies that employ those and other contractors have been largely insulated from the effects of budget cuts because of their long-term contracts.

And if contracting companies do foresee a pinch in their pockets, they are expected to pass the pain along.

"If cuts are forthcoming, I would expect to see contractor employees and small-business subcontractors suffer the most — well before we see the bottom line shrink for the top defense contractors," Amey told The Times.

Editor's Note: How to Pay Zero Taxes . . . Legally

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Economy
While government agencies, such as Department of Defense, are struggling with budget cuts, government contractors have grown increasingly 'fat' sopping up taxpayer dollars, according to The Washington Times.
contractors,govt,jobs,sequestration
512
2013-02-21
Friday, 21 June 2013 08:02 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved