Top executives at four of the nation’s biggest government services firms have publicly griped in calls with investors about the slow pace at which key federal leadership positions are being filled, saying the vacancies are causing a slowdown in the pace of contract awards and making it difficult to plan for the future.
They alternately blamed the White House for failing to offer up candidates and Congress for failing to approve those who have been appointed.
Science Applications International chief executive Anthony Moraco sounded the alarm on March 30, when he told investors that his Reston, Va.-based business was being negatively affected by “award delays due to ongoing administration transitions.” Leidos chief executive Roger Krone, whose Reston company employs 33,000 people and services $6.8 billion in federal IT contracts, raised the issue in early May when he said his company was seeing “more slowness than expected in the acquisition organizations of our [government] customers.”
General Dynamics chief executive Phebe Novakovic said July 26 that she has seen “very slow execution” on contracts in some agencies. And L3 Technologies chief financial officer Ralph D’Ambrosio said the vacancies have “definitely resulted in a slowdown” even at the Defense Department.
The comments come as federal contractors face an uncertain future. Many saw their stock prices soar when Donald Trump prevailed on Election Day, as the prospect of Republicans controlling both the White House and Congress raised expectations for a defense buildup.
Since then, the GOP-led coalition has struggled. An early effort to repeal and replace the Affordable Care Act revealed deep rifts among lawmakers, and some industry officials worry that approaching deadlines to deal with the debt and budget could lead to another government shutdown.
Meanwhile, Trump lags behind the previous three administrations in getting qualified candidates appointed and confirmed for key government jobs, according to data maintained by The Washington Post and the Partnership for Public Service.
As of Friday, only 15 Defense Department appointments had been filled, half of which were confirmed by the Senate within the last few weeks. That’s compared with 22 and 33 at the same point in the Barack Obama and George W. Bush presidencies, respectively.
Appointments at other agencies are behind even more: Only 9 percent of political appointments at the Energy Department have been filled; 8 percent at the Agriculture Department; 13 percent at the Education Department; and 18 percent at the State Department.
In the meantime, the work is generally being picked up by interim managers who are filling in on a temporary basis. Business executives praised their hard work but expressed concern that the stand-ins tend to lack the agenda-setting authority more permanent political appointees have.
“Without the political appointee in position to drive reform, it just doesn’t happen,” said Dan Stohr, a spokesman for the Aerospace Industry Association, which lobbies on behalf of aerospace and defense manufacturers.
Former government managers echoed that concern. Frank Kendall, who was the undersecretary of defense for acquisition, technology and logistics in the Obama administration, said temporary Defense Department managers are less likely to reverse initiatives begun by their predecessors.
“They will keep the trains running,” Kendall said. “Appropriately, however, they will generally not make major policy changes nor proceed with questionable programs that new politically appointed leadership might reverse.”
The result, some say, is a slower contracting process.
“Without these appointments, it is difficult to process contracts and get authorized and appropriated funds obligated to contracts,” General Dynamics’ Novakovic told investors last month. “At this juncture, both are proceeding more slowly than we thought would happen.”
When pressed by analysts on why revenue at her Fairfax County, Va., company’s IT business unit declined $111 million compared with the same quarter last year, Novakovic blamed an unpredictable policy environment.
“We had very slow execution on programs in several civilian agencies primarily driven by uncertainty and, in some cases, reduction in funding levels,” Novakovic said, without identifying the agencies having problems.
David J. Berteau, chief executive of the contractors’ trade group Professional Services Council, said final approvals are harder to come by these days compared with past years.
Agencies “may be starting just as many contracts, but they aren’t finishing as many, and only the assigned contracts count,” Berteau said.
An earlier version incorrectly identified L3 Technologies chief financial officer Ralph D’Ambrosio as chief executive. The story has been updated.