That's not how the bill was written: agencies were given no discretion at all as to what and where they could cut.
The sequester is part of the Budget Control Act of 2011, but it's not the first time sequestration was used. It was first used in 1985, with the Balanced Budget and Emergency Deficit Control Act.
The Congressional Research Service published a report on the sequester (PDF link) that provides a very good overview of what sequestration means:
"In general, sequestration entails the permanent cancellation of budgetary resources by a uniform percentage. Moreover, this uniform percentage reduction is applied to all programs, projects, and activities within a budget account."
Sequestration is as across-the-board as you can get. Every "program, project and activity" that's not exempt from the sequester gets cut by an equal percentage. That's the way the bill was written, and that's the bill that was passed by Congress and signed into law by the President.
Sequestration was meant to be as blunt and distasteful an alternative as possible, to give the supercommittee (remember them?) and Congress incentive to come up with a deal.