Despite earlier predictions that fiscal year 2019 would be a high-water
mark in terms of government spending, both Senate Republicans and House
Democrats are saying that spending may continue to rise next year. Republican Senate Budget Committee
Chair Mike Enzi (R-WY) said last week that he expects the increase. The reason is that spending increases will likely be
tied to a deal to raise budget caps, as well as a potential increase in the
federal debt ceiling.Without a deal to lift the
caps, defense spending would drop 11% and non-defense discretionary spending
would drop 9%. This differs from a White House
plan to cut defense spending by 14% in 2020 from FY’19 levels, but then add
much of that money back via the budgeting gimmick of adding funding to Overseas
Contingency Operations money. Those
dollars are specifically excluded from counting against federal budget caps. House
Budget Chairman John Yarmuth (D-Ky.) also said that he expects a deal to
increase defense and non-defense discretionary spending by roughly equal
amounts from fiscal 2019 to 2020. This
is generally good news for contractors as it means that opportunities for new
business should continue to develop.
Everything from professional services to cyber to IT enhancements may be
realize increased funding. Emerging
areas such as AI would also likely see increased dollars. No one is asking where the money will
actually come from, but that hasn’t stopped Congress from increasing spending
before. While both Enzi and Yarmuth
support a two year budget deal, most feds and contractors would just settle
for passing spending bills on time.
Surprise! Congress authorizes expanded use
of an innovative, non-regulatory centered method of acquisition. The use of this tool explodes exponentially
so DOD can meet critical missions. With fewer
rules, though, there are fewer data sets to review. This is essentially the finding of a recent
Congressional Research Service report issued on the use of Other Transaction
Authority inside DOD. Oversight
agencies are actually surprised that there is minimal paperwork to review when
examining how OTA’s are used. That,
ahem, was the basic idea. The existing
DOD acquisition system was deemed too burdensome by both Pentagon leaders and
Congress. OTA’s, which until recently
existed at the edge of the federal acquisition universe, moved closer to the
center. CRS estimates that OTA use at DOD
has grown 650% from 2013. That’s
a lot of innovative R&D to help the agency maintain its technology
edge. More OTA use is on the way,
with the Navy recently announcing plans on where and how this acquisition tool
will be used. We’re not suggesting that
everything is perfect on the OTA front, but no one can really criticize a
streamlined, fast acquisition method for acting like a streamlined, fast
acquisition method. Make sure OTA use is a discussion
you have with your customers, even in civilian agencies.
Forty-Two Percent of
the dollars spent on service acquisition in FY’18 went through Tier 1, Tier 2,
or Best in Class (BIC) contracts last year as federal agencies increasingly
followed Category Management guidelines set forth by the Office of Management
and Budget. At the same time, open market
service procurements dropped by 10%. Plus,
small
businesses received 33% of all orders, beating small use goals by 10%. While these numbers are specific to services,
the trend toward consolidating buys among identified BIC contracts is expected
to be similar for IT and other major solutions brought via Indefinite Delivery
Indefinite Quantity contracts. The
bottom line for contractors is: Get on
one of these BIC vehicles, or partner with someone who is, if you want to
maximize your federal business potential. Similarly, the contracts you have today that
aren’t BIC may become worth less and less as agencies drive spending to
BIC vehicles where spend under management can more easily be identified. Federal agencies appear to be serious about
driving business to contracts with competitive pricing where spend analysis
tools exist to assist them in their budgeting and acquisition functions. Still more guidance is expected soon from OMB
on Category Management and, with it, the trend line toward increased use of
preferred contracts is expected to grow further.
Has your company hired new staff to work on your government contracts? Have other people been promoted or assigned to work on contract management? These are all indications you’re your organization is definitely due for training on contract compliance and ethics. Changing contract managers, especially if there is any kind of gap in coverage, is a high risk indicator for non-compliance that could end up costing your company a bundle. Allen Federal can help. We offer training to new, or newly assigned, personnel that can be tailored to your company’s specific needs. Assume that there have been compliance problems if your old manager left in November and your new one is just coming on now. Contact us today at info@allenfederal.com and get back on track!
All federal agencies either have their budget number for FY’19 or will
have it in about a month. As we shift
into the next part of the fiscal year, here are three things to focus on
now: 1.Assisted Acquisition: Does your client’s procurement shop not
understand them? You’re your project require special
acquisition expertise? Whether
you sell IT, professional services, or even other types of solutions,
leveraging the capabilities of assisted acquisition offices can be a good way
to increase your overall business and help customers in a jam.
2. Now is the time to develop
your sales leads and make sure your target agencies know your capabilities. Acquisition actions will start coming when
the weather warms up, so make sure you’re ready by developing the relationships
you need and educating your customers on why your company’s solutions are the
best for them. Don’t try to be everywhere at
once, but definitely don’t spend too much time in your own office. 3. Can
you tell your OTA from a BPA? If not,
you’d better learn fast. If so,
make sure you use this knowledge to your advantage by suggesting innovative
acquisition methods to your client.
Finding a way to make their acquisition easy helps both the customer and
your company. Whether it’s a set-aside,
IDIQ contract, OTA, or other innovative approach, be prepared to recommend the
top 2-3 that you think will work best. This
is the time of the year that you set the table properly so you can eat as much
as you can later. Remember,
forks on the left!