Despite Biden Administration rhetoric to the contrary, the year-end federal market is shaping up to be one that is dominated by larger, experienced government contractors.  There are several reasons why this is the case, but these three should be on anyone’s list:

1.  A Slew of New Rules:  This newsletter highlights the addition of new acquisition rules and focus areas nearly every week.  Whether it’s a new rule on cybersecurity, environmental preference policies, increased Buy American standards, or vaccination requirements, the fact is that government contractors today are saddled with more burdens than they were two years ago.  Is it any wonder, therefore, that small businesses have left the market and are turning out to be tougher to attract?  While established contractors may not like new burdens, they are better able to adopt and adapt than small or new market entries.

2.  Established Contractors Are the Only Ones That Can Meet the Rules:  It’s not just that rules are costly for industry to implement, they limit the options available to federal buyers.  Buyers must ensure that contractors comply with Section 889 Part A & B telecommunications restrictions, have proper supply chain security mechanisms, source from approved countries, have approved affirmative action plans, and meet myriad other government-only requirements.  Risk-averse buyers routinely turn to companies that have experience in meeting specialized government mandates.  Innovation may have its place in parts of the market, but most buying is conducted with low-risk contractors that already have experience in adapting to government-only rules.

3. A Compressed Fiscal Year:  Congress did federal agencies no favors this year by essentially cutting the fiscal year in half.  A shortened fiscal year means that agencies must commit a sizeable amount of money quickly.  To whom do they turn?  Established companies who they know have the contracts and experience to respond quickly to RFP’s and RFQ’s.  There is little time this year to coach a new market entry on how to do business with the government.  Real missions have to be supported and critical new projects must be launched by the end of September.  Reliable, experienced partners are an obvious choice when time is tight.  While there will no doubt be small business success stories this year, as there are every year, market conditions this year undeniably favor larger, traditional contractors.