After years of declining contract values, 2014 might bring back large programs

February 23

Fiscal 2014 may provide more high-dollar opportunities for federal contractors, after a recent slide in the value of new solicitations.

Deltek analyzed solicitations released each quarter from fiscal 2010 through 2013 as well as the same data for the first quarter of fiscal 2014 and anticipated solicitations for the remainder of the year.

The decreases in federal spending since fiscal 2011 have been mimicked in the combined dollar value of solicitations. Deltek saw a decline in solicitation values to $302.4 billion in fiscal 2013, down from a peak of $376.2 billion in 2011.

In contrast, the number of released solicitations has increased. The total of 6,325 solicitations released in 2013 is slightly less than the 6,700 in 2012, but represents a 32 percent increase from 2011. The average solicitation value in 2013 was $47.8 million, down from an average of $78.4 million two years earlier.

These changes illustrate a shift in federal procurement toward programs that are smaller in scope and dollar value, making it easier for agencies to gain approval to move forward.

The first quarter of 2014 follows this trend with a total value of $36.2 billion and 1,085 solicitations, down from $136.5 billion and over 650 solicitations in the first quarter of 2010.

For the rest of fiscal 2014, Deltek has identified more than 5,700 pre-requests for proposal opportunities with a total combined value of $391.7 billion. These numbers do not include Deltek’s forecast opportunities for the year, which are considered to be less certain opportunities.

The average solicitation value for the rest of fiscal 2014 is $73.3 million, higher than the averages of 2010 and 2011 ($55.7 million and $47.8 million respectively).

Though it’s impossible to know until next fiscal year how many of these solicitations will be released, there is potential for 2014 to buck the trend.

The combination of slightly increased levels of discretionary spending included in 2014 appropriations, unusual optimism about the upcoming president’s budget request for 2015 and progress on bellwether high-dollar value opportunities could overturn the smaller-value trend.

Here are five upcoming contracts that could support a return to higher solicitation values:

S32G R24G

The Army’s consolidated Strategic Services Sourcing 2nd Generation Rapid Response 4th Generation, which could have a value of $30 billion or more, is in the early phases of procurement. The contract will provide support services in areas such as intelligence, surveillance and reconnaissance. Deltek estimates market research to begin in March or April and a solicitation in September.

ITES 2S

The follow-on to the Army’s popular Information Technology Enterprise Solutions 3 Services has a value of up to $25 billion, and is anticipated for release in June. The contract is meant to offer IT services to the Army that help it manage its infrastructure.

AFCAP IV

The worldwide civil engineering and services program Air Force Contract Augmentation Program IV, with a value of up to $10 billion, has a draft solicitation expected before the end of March and a final solicitation planned for release in late May. The contract will cover work from construction during military operations to repairing bases following attacks.

TEACH

The Army’s $5.4 billion Train, Educate and Coach solicitation is planned for release during the first week of July. The program will provide instruction and education services to the Army.

RMADA

The Research, Measurement, Assessment, Design, and Analysis Health and Human Services solicitation, which supports the Affordable Care Act and Health Care Reform Act, has a ceiling value of $7 billion and was released in November. Awards are expected in March. The contract is meant to cover design, implementation and evaluation of research that will test the potential of programs like Medicare and Medicaid to cut costs while maintaining or improving care.

Jennifer Sakole is principal research analyst at Herndon-based Deltek, which analyzes the government contracting market and can be found at www.deltek.com.

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