WashingtonExec 2013 Government Contracting Outlook Series:
The new year brings big changes for the Federal IT industry, and WashingtonExec is back with its Government Contracting Industry Outlook Series.
We are giving local executives the opportunity to share their thoughts on where they see our industry headed this year and beyond. Leaders were asked a series of questions focused on cloud computing, healthcare IT, defense, mobility, and more.
Dick Stieglitz, co-author of Leadership Conversations, and former founder and CEO of a government services firm, told us what he expects in 2013:
“Uncertainty will make 2013 more of a downhill drift than a Himalayan cliff. While unique opportunities abound, the prospects for most contractors are bleak. On the good side, 2013 could easily be a growth year for companies whose leaders have formed effective customer relationships in strategic areas. For example, agencies will continue to invest heavily in health care IT, cybersecurity, mobile apps, and big data – but only when the solution reduces costs and resolves core issues. In order to maintain revenue, profit and share price, the industry’s giant firms will curtail subcontracts and acquire businesses in strategic areas. That means the M&A market will remain active. Owners of well-situated small and mid-tier companies can expect ardent suitors, although multipliers are likely to decline.
Budget cuts will be more threatened than real as Congress and the President argue about stop-gap measures that prolong the problem. In that environment, government executives will be reluctant to initiate major new starts and the contracting process will be even more sluggish than in 2012 – if you can imagine that. Contractors will suffer from the uncertainty as agencies protect government workers against real and imagined budget cuts – especially bad news for the Capital region’s overall economy. Companies whose business is staff augmentation – even in the IC – will be hit especially hard. What should leaders of small and mid-tier companies do to prosper in 2013: (1) focus on strategic offerings to key agencies, (2) trim the fat now – eliminate initiatives that have questionable short-term value, and (3) groom your operations to get a top multiplier in an M&A transaction. But those are good recommendations in any market condition.”
