Smiths Detection is a standard defense contractor, but Maryland has plenty of less traditional examples.
CEO Doug Whatley knew someone working for a big contractor, and the contractor needed someone to turn a board game into a computer game.
These days, BreakAway's products — largely instructional — include multiplayer medical training and crisis management games for the Army. But the company, whose customer base was once nearly 100 percent government, has spent the last several years diversifying beyond the feds to prepare for the budget crunch.
"Now … closer to 50 percent is government," Whatley said. "The commercial market is beginning to catch up to the government in terms of using games for training, so it was natural that that market was growing, but the second [reason] is, we all saw this [budget problem] coming several years back."
Amid the worry, there's some hope.
Maryland's economic development officials argue that the state's focus on high-tech contracting and intelligence — the National Security Agency, and other organizations — will help it avoid the deepest cuts.
Defense Secretary Leon E. Panetta told Naval Academy graduates in May that the military would "protect investments in new capabilities" such as cybersecurity and unmanned systems, both of which are Maryland specialties.
Mike Hayes, a retired Marine Corps general, heads the state's office of military and federal affairs.
"If there are significant cuts, we will suffer like everybody else," he said. "But not nearly as significantly as others might."
He's not alone in such optimism. The University of Maryland, Baltimore County's cyber security business incubator has grown from five companies to 25 in the last year and a half.
Now the university is launching a government contracting institute with consultant TargetGov to help those startups — and anyone else — battle for a piece of the increasingly competitive federal budget.
"While all of us in Maryland have some concerns about what will happen with the government budget and government spending, our belief is that cybersecurity is an area where the federal government will continue to spend," said Ellen Hemmerly, executive director of bwtech@UMBC, the university research park that includes the cybersecurity incubator. "The problems are growing; the need is growing."
But for the big government contracting firms, anxiety's the word. They're lobbying Congress. Their trade group, the Aerospace Industries Association, is funding studies forecasting layoffs in every state (115,000 jobs in Maryland alone). There's even an association-designed website urging the public to get their elected officials to "stop the clock" ticking down to Jan. 2.
"We're seeing it across the board in all of the big defense contracting primes," said Whatley of BreakAway Games. "They are expecting just a cold winter coming."
Considering that half the biggest employers in Maryland are either federal agencies or contractors, the state has its own challenges ahead.
Clinch, the University of Baltimore economist, expects jobs to be saved if sequestration is avoided. But with federal spending likely to remain austere in the short- to medium-term, he doesn't foresee strong expansion in the state's economy.
"Maryland's economic growth is entirely dependent going forward on our ability to diversify away from the federal spending that has served us quite well for over two decades," he said.