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.
Richard Pineda, co-founder and CEO of Spear, Inc., spoke with us about what he sees ahead for the new year:
“The continued budgetary uncertainty, taxpayers and citizens demanding more out of our government’s workforce, processes, and existing technologies will certainly make it challenging for the Government Contractors in our industry that are seeking significant YoY growth.
Federal Government Contracting business flow for many will start out slow given the budget constraints. The deferred sequestration by the American Taxpayer Relief Act and Continuing Resolution thru March 2013 will be the leading causes to drive the slower than normal cadence in Q1. Assuming we were to prevail out of both and once spending levels, i.e.budgets, are finally approved, contracts and funding should begin to flow in an ultra-competitive nature.
In order to succeed in accomplishing their respective mission, every Government and Contractor C-Level executive must deploy Cost-Take-Out (CTO) methodologies in order to align spend with lowered budgets and preserve funding for key investments with high returns.
All that said, the following are my top predictions for 2013.
Prediction #1: The Continuing Resolution (CR) for FY2013 which is funded at an annualized rate of $1.047 trillion will be extended past March 27, 2013 and perhaps could be in effect to the end of the fiscal year.
Prediction #2: Contractors’ investments that drive innovative solutions to help agencies do more with less will prevail. Big Bets and spend will continue in areas that solve challenges in:
– Big Data, Data Analytics & How Data is Intelligently Managed;
– Cybersecurity & Identity Management;
– Mobile Devices & Next Generation Computing;
– Human Capital Management
Prediction #3: The government-wide performance for the 24 CFO-Act Agencies to achieve small business award goals will be key for small businesses in 2013. These goals will inevitably increase “small” prime contract awards or collaboration with a large to engage small businesses as a preferred subcontractor. Either as prime or subs on recompetes or new initiatives, small businesses have much to gain in 2013.
Prediction #4: For some agencies and government contractors, an enterprise-wide back to basics management and execution reset should be deployed and management consulting solutions will blossom. While investment may be heavier than expected, the benefits to be reaped in years to follow will yield great outcomes for the respective organization.
Prediction #5: Given the economic uncertainty and slow government spend; the entire government contracting industry will be tested. Large government contractors will have challenges on how to “right-size” their organizations to remain competitive. More layoffs, leadership changes, and telecommuting trends to reduce facility costs will increase. Conversely, small and mid-size contractors will be faced with their timing on when to make an investment and will they have the backing to sustain it. Actions within this prediction can be summed best by the title of a book given to me by one of my mentors… “It’s Not the Big That Eat the Small…It’s the Fast That Eat the Slow.”
Prediction #6: Challenges in acquisition and the drive to lowest price, technically acceptable evaluation criteria on certain types of contracts awards will unfortunately continue. To break this trend, more active communication from both government and contractor communities must effectively collaborate on the pros and cons, and adjust as required to derive the best outcome.
Prediction #7: Due to the aforementioned budget uncertainty, a “large” contractor’s playbook will have a heightened level of M&A activity. The earlier in 2013 these occur, the more impact it should have when niche “smalls” can expand their portfolio via customer set or competency offering through via an acquisition.”
