The Department of Energy is closely examining contracts as the threat looms for sequestration-driven spending cuts March 1, according to a new memo from Daniel Poneman, deputy energy secretary.

It's also considering placing employees on furlough -- a temporary unpaid leave -- or taking other actions to slash personnel costs, the memo said.

Unless Congress amends the law, President Obama is required to issue a sequestration order in three weeks to cut about $85 billion from fiscal 2013 spending.

At Hanford, the cut could range from 7 percent to 10 percent of spending.

The DOE Hanford Richland Operations Office has received no direction for formal action for sequestration, but that could come in the next few weeks, said Jonathan "J.D." Dowell, DOE assistant manager for river and plateau. His comments came Thursday at the Hanford Advisory Board meeting in Richland.

DOE will try to avoid cutting jobs, but budgets already are tight and there are not a lot of options, he told the board.

Any cuts would be to existing environmental cleanup work, because the schedule for required work already has been squeezed as much as possible, he said.

After the meeting, DOE spokesman Cameron Hardy said DOE has become as efficient as possible to get the most cleanup work done by its Hanford contractors with the money available.

Just as spending more money now cuts costs later, delaying work makes cleanup more expensive, he said.

After Hanford received almost $2 billion in Recovery Act money, the annual report showing the cost of Hanford work yet to be completed, cut long-term costs by $4 billion, he said.

The DOE senior leadership team is doing extensive planning to determine how to deal with sequestration, Poneman said in his memo.

In addition to examining contracts, DOE also will look at grants and other spending across the department, according to Poneman.

"In many cases, this could mean making cuts to vital programs or curtailing spending on contracts," he said in the memo.

Other options will include cutting travel, training, facility and supply costs, he said.

If furloughs are needed, employees would be provided at least 30 days notice, he said.

The Obama administration continues to work with Congress to reach agreement on a balanced deficit reduction plan that avoids sequestration cuts, he said.

"Should these cuts occur, they would be harmful not only to our agency, but to critical domestic and defense priorities across the government and across the country," he said in the memo.

Sequestration is the penalty for the failure of a special congressional deficit committee to reach agreement. It was set to start Jan. 2 but was delayed until March through passage of the American Taxpayer Relief Act of 2012.