On March 1, 2013, the sequester provided for in the Budget Control Act of 2011 went into effect due to the failure of the Administration and Congress to agree on legislation to reduce the federal budget deficit. Last fall, the Office of Management & Budget (OMB) reported to Congress the across-the-board spending cuts that would take effect as part of the sequester.

One of the programs listed in the OMB report is the Treasury Section 1603 cash grant program. While the OMB report initially provided for a 7.6 percent reduction in Section 1603 grant awards, the Treasury staff overseeing the Section 1603 grant program provided guidance on Monday, March 4, 2013, that every Section 1603 award made on or after March 1, 2013, through September 30, 2013, will be reduced by 8.7 percent, without regard to when the application for the grant was received by Treasury.

In this context, “award” means the final decision by Treasury to pay a claim as evidenced by a Section 1603 Award Letter and effective the date of the letter. The sequestration rate is subject to change after September 30, 2013. The Treasury guidance can be found HERE.

A Troutman Sanders advisory on the potential impact of the sequester on government contracting officers insisting on strict compliance with the Assignment of Claims Act can be found HERE.


Craig M. Kline Practice Group Leader, Project Development and Finance, 212.704.6150

David B. Weisblat Partner, Tax and Project Development and Finance, 202.662.2072

Craig Stearns Of Counsel, Project Development and Finance, 202.704.6051