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.
Veeral A. Majmudar, President & CEO of Savan Group, spoke with us about what 2013 holds:
WashingtonExec: What will next year hold for Government Contracting?
Veeral A. Majmudar: There is and will continue to be uncertainty regarding the Government contracting market. Beyond the immediate threat of sequestration, Congress and the President have committed themselves to reduce federal spending over the next several years. In addition, there has been a general trend in recent years to consolidate task awards and requirements into larger, blanket purchase agreements or other large contract vehicles in order to more cost-effectively manage contractors and their services. As a result, those firms – large or small – that cannot demonstrate a clear and distinct value proposition to government clients will be pushed out of the market and increasingly, the barriers to entry will continue to rise. Firms who are interested in working with the government must find new ways to demonstrate their value in terms of cost-effectiveness and the impact their services can have on their client’s mission. On a positive note, I do believe 2013 will be a banner year for firms who have positive and existing relationships with clients and those contractors who have established past performance with measurable results.
WashingtonExec: More M&A Activity? More IT budget cuts?
Veeral A. Majmudar: I believe you will see significant M&A activity for two reasons. First, I do believe larger firms are considering alternative methods to expand or maintain their footprints with specific clients. Acquiring smaller yet established firms can be an option for those firms, particularly if contract opportunities themselves start to diminish. On the other hand, you may see small firms join forces to create more qualified teams with a broader array of skills and expertise. M&A options will be viewed as strategic options for those who are seeking alternatives to traditional growth paths. Although IT budget cuts have been a key talking point for many in the government, the reliance on IT will continue to drive the need for IT support services despite targeted budget cuts. Hence, I believe IT spending will remain essentially flat.
WashingtonExec: What shape will collaboration take between industry and government in addressing tough issues: Healthcare, Defense, Big Data, Mobility, Cloud, etc?
Veeral A. Majmudar: Increasingly, government clients will look to contractors to bring forward innovative ideas on how best to deal with the larger, structural issues of healthcare, defense, big data, mobility, etc. This can only be achieved if there is full engagement and cooperation on both sides – the client and industry. Too often, there is a negative perception of contractors presenting “pie-in-the-sky” ideas that are cost prohibitive or not pragmatic in terms of implementation success. Contractors can alleviate that negative perception by focusing on solutions and services that are based on incremental improvement, driven by pragmatism and incorporate a full understanding of the client environment including resource constraints in the form of budgets and human capital. If contractors can demonstrate measurable improvement in a client’s condition through collaborative and sensible solutions and services, many of the larger issues will and can be addressed but it will take a commitment from both sides.
