UNCERTAINTY LIES AHEAD FOR CONTRACTORS
In addition to delays in appropriations contractors can also expect uncertainty from now until at least the January 20th presidential inauguration. Multiple factors are contributing to the haze. One is the FY’25 Defense Authorization Act. That bill is expected to pass prior to the end of the calendar year, but what types of acquisition riders will be attached to it is still unknown. Several bills streamlining procurement or requiring less duplication in software acquisitions have made significant progress and could end up being attached to the NDAA. What this means for contractors depends on which provisions make it. Second is the impact of increased oversight and initiatives to cut costs. As one experienced observer recently noted, a little movement in each of these can go a long way, while more than a little can end up having the opposite effect, especially in DOD. The Pentagon has a reputation for becoming more conservative and traditional in its acquisition approaches if they feel like “too much” advice and attention are being paid to how they currently conduct business. This could lead to frustration for contractors that are trying not only to get things done, but to provide the innovative solutions their customers say they want. Third, is attention on contractors themselves. The Washington Post ran an article on December 6th stating that trimming the government contractor workforce could bring more savings than reducing the number of federal jobs. Congress has previously delved into this area and will likely do so again in the next session. Contractors should be prepared to clearly show their value propositions, government-needed expertise, and how they provide fair and reasonable prices to government customers. There are still many unknowns about the incoming administration as well. All of this adds up to a less than clear business outlook which means that companies may want to proceed with caution.