2014 – WashingtonExec Annual Market Outlook Series
As we turn the page on 2013, we look forward to a new year and new opportunities for innovation and growth in the government contracting community. This past year we experienced budget sequestration, a 16-day-long government shutdown, and a perpetually increasing focus on cyber security and healthcare IT.
WashingtonExec reached out to those most knowledgeable and experienced individuals in the federal contracting space. We asked executives in and around the beltway for insight regarding where they see the government contracting community headed in 2014. Topics discussed include M&A activity, cloud computing, healthcare IT, defense, mobility, and more.
Dave West, Director at Wolf Den Associates, LLC:
Looking forward to 2014.
Taking share will be the name of the game, with individual company “alpha” performance and ability to compete dominating macro budget “beta.” The real action will continue to be in the procurement shops and proposal “tanks” not on Capitol Hill. Young – and serial – entrepreneurs will continue to start disruptive firms as large incumbents struggle to retain work and talent. Small Business procurement mandates and “protest extortion” will continue to challenge all participants.
Mergers & Acquisitions.
M&A deal volume will rebound off of 2013 levels with continued bifurcation in valuations at the high and low ends. Chaff will be more-carefully separated from wheat given uneven Seller company quality. Financial sponsor platforms and strategic buyers continue to leverage inexpensive capital and high free cash flow currency to grow and reposition. Seasoned PE platforms from pre-crisis fund vintage years will also look toward the exits, with some generalist funds leaving the Federal market and many others pivoting toward new platforms to ride the next cycle.
Industry and Government Collaboration.
The current austerity era is consumer-driven, with government customers embracing the commercial paradigm and rippling through procurement processes and legacy IT infrastructures. Lean, nimble contractors will drive more efficient procurement processes leveraging agile development and rapid prototyping to find better, faster, cheaper solutions to mission pain points.
