2014 Market Outlook: Gil Smith of YRCI Predicts Government to Quickly Abandon LPTA Model

Gil Smith, EVP, YRCI

Gil Smith, EVP, YRCI

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.

Gilbert Smith is the executive vice president of federal services for YRCI — a veteran-owned recruiting and professional services firm. He hinges his market outlook on the “uncharacteristically” more centralized and consolidated tendencies of the current Democratic administration and the way in which such reductions have and will  in the future continue to pressure decision makers to consider collaboration in the form of Big Data, Cloud and shared services:

“After two years of indecision and the impact of a two year budget Government will likely be making more strategic decisions than we have seen in recent history. An administration entering the middle of its last term will be searching for ways to leave a positive legacy behind and will likely maneuver agencies and programs so that they are positioned to remain long after the term comes to a close.

Uncharacteristic of typical Democratic administrations, we’ve recently seen a move to consolidate, centralize, and reduce infrastructure. This will drive decision makers to consider more often answers that include Big Data, Cloud based solutions, centers of excellence, shared services, and more collaborative efforts across agency and departmental boundaries. As the government compresses its footprint, it will begin to rely more on the government contracting industry’s infrastructure. This will be a challenge for contractors as customers sort out funding lines, inter-agency arrangements, and service-level agreements — all while delaying procurement actions and awards. It will also present a challenge for industry as we expand footprint to meet the needs of government while trying to stay price competitive. The consolidation will drive reduced overall investment by government but will yield new contracts and programs that are more lean and segmented.  Because opportunity grows while old delivery models go, balance will be needed.

The government will also start to understand the negative impact of purchasing services through the lowest price technically aceptable (LPTA) model as they notice that inexperienced and undercapitalized vendors consistently underperform or fail to deliver under it.  Frustrated — often rebadged — valuable contracted staff members will leave their customers due to falling wages and disconnected management. Continued brain-drain from government ranks will drive procurement of more services as departments seek the flexibility that contractors offer; we can only hope that they won’t buy LPTA.  Procurement offices that are uderstaffed and at times less experienced  will continue to seek schedule buys and will continue to use blanket purchase agreements and governmentwide acquisition contracts to ease the administrative burden. This will close the market up a bit and favor those who have had the foresight to position themselves accordingly. The administration will continue to push small business goals and programs, to include more hybrid programs focused on more refined socio-economic attributes. This will in turn continue to require partnering, with some M&A to acquire past performance and market share in niche areas or specific procurement vehicles.

YRCI is already positioned in the 2014 market with strong customer relationships and a capable menu of channel partners. We have established shared service models in our specialty areas, and an aggressive pricing strategy. This will lead us to succeed with responsible customers who understand how to purchase sustainable quality professional services. We succeeded even in the tumultuous environment of the past year, and we expect we expect even greater success in what we believe will be a more stable 2014.”

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