If you ask government contractors to talk about what affects their business, it takes less than a minute before you hear the familiar refrains of budget cuts, sequestration, and political gridlock. Those issues may be at the top of everyone’s minds now, but for those who do business with the government, a long-term vision is essential for surviving Washington’s ongoing crises.
Capital Business asked local executives to take a step back and name one issue that will be a game-changer for contracting over the next decade.
From the threat of terrorism to the inexperience of a younger government workforce, here’s what they said:
Chief executive of CACI International, a large services contracto r
Now, more than almost any time I can recall, the world is a very dangerous place in many dimensions.
The global terrorism threat seems to be persistent. The complexity with which it’s increasing is scary — in the sense that it has the potential to affect a lot of people’s everyday lives. For a business such as ours, it’s going to take a lot of collaboration at many levels between industry and government, and that’s going to have a profound influence on the intelligence sector.
Thinking about how I position my business to help our customers, I think that [the threat of terrorism] transcends any short-term or medium-term issues. It’ll take some complex thinking to put a hold to this threat.
But we go through cycles like these, and I’m an optimist any day of the week.
Defense analyst and consultant to local companies including Lockheed Martin, General Dynamics and BAE Systems
F or the balance of the decade, the federal contracting sector will probably be constrained by congressional efforts to limit the government’s borrowing. 2015 looks like the lowest year for federal deficits during this decade, and yet the government is still borrowing.
I think federal contracting is not going to be a growth industry anytime soon.
The problem for the industry is that Washington is very good at ignoring threats that aren’t convenient — that could very well happen again in this decade.
When it comes to the [repeal of] the Budget Control Act, it’s possible that there could be a major amendment of the law after 2016, but that will depend on who’s in the White House.
Also, many of the new technologies that visionaries think will transform the federal sector — drones, cloud computing and autonomous vehicles — are not going to have that much impact.
Chief executive of Citizant, a mid-size IT systems integrator
The thing that’s really changed the most in the last couple of years and I feel is going to be a contributing factor to how we support the [government’s] mission is the nature of procurements.
The government used to have a larger variety of tools [for acquisitions] in its tool kit. But now, the percentage of work that is being put out for competition under task orders has increased significantly. [A 2014 Deltek report showed this trend had increased for IT contractors in particular.]
As budgets continue to tighten, it’s a financially viable solution for the government. It’s less resource-intensive on their side, and for a workforce that is less experienced, it’s less complex to issue a task order and possibly mitigate the risk of bid protests.
From the business of serving government, this is a change from the past. It’s caused us to rethink our priorities and shift the level of importance we placed on our acquisition vehicles. We started prioritizing [getting on] these vehicles as much as individual contracts.
President of the federal division at Maximus, a large health services company
I think there is a convergence of two events that is going to drive behavioral change in contracting: Budget pressures on agencies and the retirement wave of experienced workers with the ability to manage large, complex programs.
There’s a realization that the government has to simplify the way they contract and get more value for the money they spend.
Instead of hiring multiple contractors and trying to put themselves into the role of integrator, they’re more open to hiring a company that will do everything and get paid on the outcomes.
With less resources to do integration, a move to outcome-based contracting allows agencies to get their mission accomplished with less funding.