On March 1, sequestration required by the Budget Control Act (BCA) of 2011, as amended by the American Taxpayer Relief Act (ATRA) of 2013, legally took effect. Late Friday, President Obama signed an order to trigger $85 billion in spending cuts for fiscal 2013. Following the President’s order, the Office of Management and Budget (OMB) Deputy Director for Management, Jeffrey D. Zients, issued a memo to federal agency heads announcing the order and the final percentage reductions in non-exempt spending (M-13-06). According to the memo, the sequester order requires a 5 percent cut in discretionary domestic spending, a 5.1 percent cut in domestic mandatory spending, a 7.8 percent cut in discretionary defense spending,  and a 2 percent cut to Medicare spending. These final percentage reductions were similar to the estimates reported last month by the Congressional Budget Office (CBO). In addition, as required by law, OMB submitted a report to Congress detailing the calculations of the amounts and percentages by which agency budgetary resources are required to be reduced. The report also specifies the reductions required for each non-exempt budget account, and explains that the cuts must be applied uniformly at the program, project and activity levels within each budget account, as required by law.

On Friday, OMB also issued a supplemental bulletin to federal agency heads regarding the apportionment of the Continuing Resolution for fiscal 2013 (OMB Bulletin No. 12-02, Supplement 1). Earlier last week, OMB posted new guidance outlining the responsibilities of federal agencies for the implementation of the sequester (M-13-05). The memo, signed by OMB Controller Danny Werfel, directs agencies to exercise increased scrutiny in hiring new personnel, issuing awards or bonuses to employees and incurring new obligations for training, conferences and travel as they prepare for the cuts. In addition, the memo provides guidance to federal agencies on reducing the costs of acquisition and the distribution of grants, loans and other financial assistance.

Links: President’s Sequester Order; OMB Sequester Report; OMB M-13-06; OMB Bulletin No. 12-02, Supplement 1; OMB M-13-05