As the Department of Defense looks for ways to reduce spending, local contracting firms are forced to look for ways to stay afloat.In some cases, that has meant lowering costs for doing business — and their own paychecks — exploring new areas of expertise and, when all else fails, laying off workers or watching them leave for employment elsewhere.“You just see this drain down here of senior people,” said Dorothy Hammond, CEO of Holmes-Tucker International Inc., a small defense contracting business that offers information technology and engineering support.From her Lexington Park office, she said it seems that government contracts now make less allowance for seasoned technology professionals. “The very experienced executives are too expensive,” she said.Hammond said she and her team have done everything they can to retain their workforce, including emptying their own trash at the office and cutting back on benefits. Some of the most senior workers have taken voluntary pay cuts. That, she hopes, will make it fiscally possible to attract and keep young talent. But, she’s had to let some of her best go.“It got real personal when it caused my layoff,” said one man who wished to remain anonymous because he is working in the area for another firm, and unsure about the long-term security of that work.“Holmes-Tucker moved heaven and earth to try to get me to stay,” he said. The company paid him out of pocket, rather than through a government contract, and he worked on other projects to try and generate alternative revenue. At 54, he says he’s more at risk for layoffs than his counterparts because of his peak earnings record in what is now a more austere time for federal government contractors. But, with a master’s degree in his field and 30 years’ experience, he said his contributions should be worth the expense.Holmes-Tucker laid him off after seven years. After less than a year with another firm, he was laid off again, after having to lay off the team working with him. Now, he’s with a third firm, where he’s been writing software. In the past, he was a manager.Small businesses are losing contracts that are their “bread and butter,” said St. Mary’s County Commissioner Todd Morgan (R). In some cases government is hiring out those firms’ best talent. And because lowest-cost bids often seem to be the only ones that win, “small businesses get into this cutthroat competition,” Morgan said.“The cream will rise to the top eventually,” he said, explaining that the county is working to expand its business base beyond federal military contracts. “It’ll just take longer than a lot of people will expect.”“There’s a lot of pressure on the government to cut cost,” said Bob Wirt, a defense industry consultant, who also has been hired to support the Southern Maryland Navy Alliance. The current fiscal environment “makes things very difficult for the government to do what they need to do,” he said. “But at the same time you’ve got people around here who do have that senior experience and would like to be compensated accordingly.”The impact of sequestration, which imposed across-the-board spending cuts to the Pentagon and other federal agencies, and other spending reductions have affected contracting firms differently, Wirt said, in part based on the services they provide and the number of senior staffers they have. The upside is that these changes present new opportunities to attract fresh talent to the region, especially at a time when Southern Maryland has been working to diversify its economy and lessen its dependency on federal dollars, Wirt said. He hopes that the proposed University of Maryland-led engineering research center, informally called “the third building” at the Southern Maryland Higher Education Center, will attract new business, as will a growing focus on cyber technology here.Meanwhile, there is a chance that the Navy here may re-evaluate some practices that have forced out senior industry workers. Communications in that area, he said, “are just beginning to open up.”It couldn’t happen soon enough for the engineer laid off from Holmes-Tucker. He lost 25 percent of his $138,000 salary at a time when he was the main income earner for a five-member family. His three daughters had college tuition bills. And he had to refinance his home to cover mounting debt. With the housing bust, all he ended up doing was reducing his interest rate. His wife works part time, earning about $10 an hour. He’s exhausted his savings. And, an adult child and her husband had temporarily moved back home during that time due to job loss in their family.People who have lost jobs, in many cases, “have given up on the area,” he said. He’d once thought of retiring here, but now expects to move farther south if he can afford it someday.“Nobody can make plans. Nobody can have a future if things are so unstable,” he said. “Look at [Route] 235. All those people are going to work, today. All those people are scared what’s going to happen tomorrow. And we’ve been scared for about 18 months.”firstname.lastname@example.org
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