With the sequestration deadline looming, government contractors are split on whether the pending sequestration budget cuts will occur.

According to survey findings released today by Market Connections, Inc., a leading government market research firm, 36% of government contractors believe sequestration is unlikely to happen, while 34% believe the budget cuts are somewhat likely.

Meanwhile, a quarter of contractors believe sequestration is very likely to occur, with 5% believing it won’t happen at all.

When asked how they are preparing for sequestration, nearly half (46%) of contractors said that they doing nothing until the budget issue is resolved, while just over a quarter are cutting costs and reducing overhead.

In addition, 15% of survey participants said they are decreasing their investment in the federal market, instead developing strategies and opportunities in other markets.

“The large proportion of contractors reporting they are adopting a ‘wait and see’ strategy clearly signals how much uncertainty this issue is causing in the marketplace,” said Lisa Dezzutti, president and CEO of Market Connections.

“Whether or not sequestration occurs, the contracting industry and government agencies are facing the possibility of unprecedented austerity measures that could change the way we do business. Both the government and its suppliers need to be prepared to operate in a new reality.”

The online poll, taken by over 100 government contractors during November, showed that those contractors seeking opportunities in adjacent markets are focusing on: Health (38%), state and local government (29%), international markets (29%) and energy (20%).

Respondents also cited the top five areas of opportunity over the next 12 months as healthcare IT (41%), mobile workforce (36%), cloud computing (34%), big data data analytics (31%) and cybersecurity (29%).