Government contractors brace for spending cuts

Some companies have built successful businesses on government funding. Now, as Washington gets ready to begin automatic budget cuts, these firms are taking stock.

Logistics Systems: New contracts slowing

government contract LSI
  • Revenue: $25 million
  • # of employees: 175
  • Based in: Washington, D.C.

When former Army officer Lawrence Wilkerson founded LSI, he only wanted to do business with the government.

It was right in his wheelhouse. Wilkerson had developed expertise in information technology and business logistics during his military career. He knew what the government needed. A decade later, 100% of LSI's business comes from the government.

The firm works for a variety of agencies, including the military and the departments of health, education and labor, said Henry Jennings, LSI's vice president of business development.

Still, with the government as the lifeblood of the firm, Jennings said he can't ignore the impact that budget cuts could have on business.

It's already happening. "The pace of new government contracts has slowed. This has affected about 5% of our business," he said. Jennings said the firm is diversifying to commercial clients to mitigate the risk.

"We were already thinking about this move. The looming cuts are an incentive to do it quickly," he said.

  @CNNMoney - Last updated March 12 2013 11:55 AM ET