— A long-running dispute over a balanced federal budget has defense contractors with operations in Cambria County in a holding pattern – forcing them to look for ways to make sharp cuts should a compromise not be reached and military appropriations drop significantly.

“I think everybody, not just in Johnstown, is concerned,” said Bill Polacek, founder and chief executive officer of JWF Industries, JWF Defense Systems LLC and Johnstown Machining and Fabrication.

At issue is sequestration, a big word for plans Congress has to take back money already authorized in reaction to the debt-limit law passed in 2011.

The threat of sequestration is in response to the federal deficit subcommittee failure to agree on a package to cut the deficit.

Sequestration, which, without congressional intervention, will automatically kick in on Jan. 2, will trigger $1.2 trillion in spending cuts. Half will be chopped from the military and the other half from domestic programs.

“Unless you have a contract right now that you’re working on, you’re not spending any money,” Polacek said.

The threat of losing more defense-targeted appropriations, on top of the $50 billion already cut, has defense contractors nervous. Many are looking for markets unrelated to the U.S. military.

“We’re going after a broader market share,” the Johnstown businessman said.

Navigating the federal defense market has been a challenge for some time, said Mary Bevan, director of corporate communications and brand marketing for Concurrent Technologies Corp. in Richland Township.

“The federal market has been a challenge for the past 18 months, including award delays and procurement changes, and we’ve had to negotiate through them, including some staff cuts,” she said.

The area already has felt the impact of cuts in defense spending, including the layoff of about 50 employees at Lockheed Martin in Richland Township this summer after demand for a military transport plane was reduced.

Concerns have surfaced regarding the Northrop Grumman facility at the Greater Johnstown Tech Park on Franklin Street after word spread last week that it is facing a December closing impacting about 25 employees.

Northrop Grumman has neither denied nor confirmed what is being heard on the street.

“We do not comment publicly on our future planning relative to employee matters and we have made no comments on Northrop Grumman’s presence in Johnstown,” Brandon Belote III, the company’s vice president of strategic communications, said in an email.

To CTC, sequestration would mean one account with the Navy, now funded at $18.9 million for 2013, would be cut by $1.8 million: “Which will likely have an impact on several programs of importance to CTC,” Bevan said.

Lockheed Martin spokeswoman Jennifer Allen said it’s a waiting game to see what will happen at the congressional level, but concerns persist that domestic and national security operations will be damaged if sequestration is allowed to kick in.

“We don’t know how sequestration will affect any individual program or facility,” Allen said.

If it does occur, Lockheed Martin will follow the law in regards to sequestration and the WARN Act, she said.

WARN stands for the Worker Adjustment and Retraining Notification Act, the federal law requiring 60-day notices of plant closings and mass layoffs by employers of 100 or more workers.

Meanwhile, U.S. Sen. Bob Casey, D-Pa., offers some hope that sequestration will be avoided.

He is confident that Republicans and Democrats will come together to avoid “The adverse impact of arbitrary cuts imposed by sequestration,” Casey spokesman John Rizzo said.

Casey has already supported $1 trillion in cuts and believes even more must be made while maintaining investments in commerce, the economy and national security, Rizzo said.

The region’s two congressmen are staying uncommitted when speaking of any resolution to the budget before sequestration kicks in.

As a member of the House Armed Services Committee, U.S. Rep. Mark Critz, D-Johns-

town, called for leaders to find a responsible and balanced solution to avoid sequestration.

“We cannot solve sequestration by simply cutting domestic programs that provide support to millions of low-income and middle-class Americans,” he said. “Nor can we solve it by slashing our nation’s defense.”

U.S. Rep. Bill Shuster, R-Hollidaysburg, said the Republican-controlled House has passed responsible legislation that protects troops and reduces the deficit by replacing the president’s (initiative.)

The president and the Democratic-controlled Senate have refused to put forth an alternative that would protect the troops, national security and the economy, Shuster said.

CTC and others are striving to keep the issue of sequestration in perspective.

The federal market for research and development alone is huge, about $150 billion, Bevan said. CTC’s share is less than $300 million.

“We continue to refine our business development approach with a focus on being highly competitive,” she said.

“Therefore we continue to believe that there are opportunities in the long term.”

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