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.
Gil Smith is Senior Director of Business Development at YRCI, and told us what he expects in 2013, calling it a challenging year for government personnel:
“2013 will be a challenging year in Government and for those who serve government. At this writing as we back away from the “fiscal cliff” what government will look like in 2013 remains unknown, and here we are in 2013 ready to deal with it and hopefully, have made plans to be successful.
The reality is that whatever this solution and those to come bring, companies will face higher costs. These costs derive from many sources; the affordable care act, higher taxes due to lower thresholds for the higher income independent companies and other direct cost impact. Increasing price sensitivity is and has been a reality as the government funding and the physical profile of government shrinks. The government contractors coping mechanism in this environment will be developing strategies that allow us to manage overhead while preserving and even compressing price points. The market advantage will go to more agile, mid-size, emerging large, and low overhead/low infrastructure contractors. Large infrastructure laden contractors will have difficulty moving to the new price points and even more difficulty partnering.
And partnering will be required. Acquisition strategies across government are actively and aggressively moving to set-aside competitions or direct awards to socio-economic classed businesses. Program offices and contracting offices are seeing these strategies as quick access to market while preserving requirements for competition. Known vendors have advantages, and specialists will have further advantage as customers seek risk-mitigated access to solutions providers. Success in 2013 will go to those agile companies that have strong channel partners to access government through set-asides, and strong established small businesses with past-performance and socio-economic markers. Large enterprises will struggle in this environment to compress price, shed overhead to be price competitive, and will likely restructure in order to shield divisions from overhead. A risk averse tightly funded government will make penetrating a new customer base in 2013 extremely difficult for any size company in any service area.
Government is also feeling pressure to reduce footprint. This will drive government to closer collaboration with industry in developing remote solutions like shared service centers, remote servicing, on-call or hoteling of contractors in shared space, telework and cloud based solutions. The need to collaborate, combined with space constraints will drive government to a more distributed services model. Contractors serving government at arms-length will become a more frequently sought after solution. This will create a business scenario where contractors are trying to shed overhead but to be competitive must provide off-site, contractor hosted solutions. Achieving this balance may drive industry to spin off sub-corporate entities or new-CO’s that can carry distributed services and infrastructure while still being able to be competitive on price, all while mitigating perceived performance risk. In this type of market, the known, capable, agile company will be a strong market force.
YRCI is well positioned in the coming year to be successful in this environment. We have a broad base of customers that stand by our human capital and acquisition management services. We have a defined skill set and industry expertise that is recognized throughout the federal civilian marketplace. We are fortunate to have deep set of capable channel partners across the socio-economic spectrum. Notably, operating a shared service center is not new to us and we are prepared to serve government in whatever solutions approach desired. When supported by our great brand, a decade long history of sustained positive performance, and the ability to bring the best and brightest experts to customers, we are ready to compete and win in this challenging market. YRCI is ahead of the curve in positioning ourselves in the new era of contracting and we are actively helping our clients move to new delivery models across the federal civilian space.”