Bob Kipps 2012 Outlook: GovCon Game Is A Lot Like Football

Bob Kipps, Kipps DeSanto

2012 is fast approaching, and with it comes big changes in the Federal IT industry.  WashingtonExec is giving local executives the opportunity to share their thoughts on where they see the government contracting industry headed.  Leaders of the industry were asked a series of predictions questions focused on challenging issues such as cloud computing, healthcare IT, defense and so forth.

Managing Director of KippsDeSanto & Co, Bob Kipps, used a football analogy to describe where he sees the government contracting market in 2012:

“Unfortunately, most of 2012 for Government Contractors will feel like 2011. Given recent Congressional behavior and typical election year inactivity, Government customers–outside of perhaps those focused on Cyber or Health initiatives–will continue to operate through 2012 in the dark without confidence as to future programmatic or budget directions.  That uncertainty regarding the exact magnitude and specifics of future cuts has hampered procurement/business activity throughout 2011 as Government Customers presume the worst while they await the other shoe to drop and prepare for a more austere operating environment.

In the meantime, Government Contractors know full well the game has changed (at least for the short to medium-term).  To use a football analogy, Government Contractor executives will need to decide whether they are trying to make a playoff run on their own or whether they should be looking for a winning team to join for their “post-season” strategy.   The larger industry firms have already begun and will continue to prepare for their post-season by aggressively looking to add superstar free agents (i.e., via expensive acquisitions) and jettisoning underperforming divisions.  With increasing market difficulty and the expectation for higher taxes, many owners will choose the selling/partnering strategy.  For the premier market leaders and pure-play Security, Health IT, Cloud/Mobility, Analytics and C4ISR free agents, the bidding frenzy will likely continue through at least the first half of 2012.  However, with a finite (albeit different) set buyers and investors, future holiday seasons may unfortunately be less cheerful for the non-marquee market players…”

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