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.
Tom Anderson spoke with us about what he thinks is coming up for 2013.
WashingtonExec: What will 2013 for for Government Contracting?
Tom Anderson: 2013 will be a difficult year for the contractor community supporting government. For many months, we heard about the anticipated significant program cuts. As 2012 drew to a conclusion we observed a “deal” that was reached by the lawmakers resulting in a partial answer to the fiscal problem. We all know that the only way to effectively deal with the budget deficit and the overall $17 trillion dollar national debt is to cut expenses and raise taxes. In the coming months, we will understand the program cuts effective in 2013. I expect to see many IT programs eliminated entirely and others will be reduced in scope. Programs, including IT and the associated science and engineering programs will survive based on their substantiated importance. Contractors will respond by adjusting staffing, benefits and compensation. I expect that these changes will equally affect government employees associated with these programs.
WashingtonExec: More M&A Activity?
Tom Anderson: Once the budgets cuts are announced and implemented, some small to mid-sized companies will be deeply impacted and may seek premature exits. Large companies have two things in their favor – they are big enough to withstand these budget cuts. Secondly, they have a lot of cash on their balance sheets and can easily acquire under-valued assets. I expect 2013 to be the beginning of a 3-5 year period of increased M&A activity and an overall consolidation of the contractor community. Government agencies will continue to support small business goals and will protect associated programs. In my opinion, only the graduated small businesses with real differentiators and key strengths will be candidates for acquisition.
WashingtonExec: What shape will collaboration take between industry and government in addressing tough issues: Healthcare, Defense, Big Data, Mobility, Cloud, etc?
Tom Anderson: From the perspective of business leadership, the toughest issues facing the industry involve the challenges with the procurement process, finding avenues to support open collaboration with government leaders, forced pressure to under-price LPTA procurements and delayed awards. What happened to the days when we were able to meet openly with a government customer and discuss programmatic needs? Let’s face it, the procurement system is broken and must be addressed. The lifecycle length of a procurement is too long creating significant cost impacts to government and industry. This is the time to get industry leadership to bridge with government to rework the system. Industry organizations such as TechAmerica, ACT/IAC and PSC are well positioned to facilitate solutions that our industry could support. What if we were to bring the combined strengths of these organizations and their associated memberships to work these issues? That approach has real potential.