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.
Joe Martore, President & CEO of CALIBRE:
Looking forward to 2014.
The government services market will continue to operate with significant uncertainty in 2014, much the same as in 2013. The Budget Control Act of 2011 set annual spending caps and automatically imposed cuts in virtually every agency and program. What we don’t know is the specifics on the programs, projects, or activities that will be affected. This uncertainty, coupled with the predictions of additional reductions in agency budgets and expenditure levels will continue the challenges already facing companies in the industry. Some of these challenges include tightening margins due to increased competition and the increased use of Lowest Price Technically Acceptable (LPTA) source selection criteria, and the need to increase efficiency of corporate operations. We do know that the Department of Defense will continue to fulfill its Title 10 USC duties – train, sustain, and maintain the force. I believe there are opportunities here, in addition to the hyper markets typically mentioned such as cyber security, analytics, cloud, and health IT. Non-defense agencies will continue to seek industry expertise in mission critical activities. Bottom line, consistent and profitable organic growth will be a challenge.
Industry and Government Collaboration.
Collaboration and finding common ground between industry and government is critical. It is incumbent on industry to have an active dialogue with its customers. Industry should listen and understand the views and challenges of people in departments and agencies. With the implementation of the Affordable Care Act, healthcare will dominate the conversation in 2014. Since healthcare encompasses big data, mobility, cyber security, and cloud, innovative solutions between industry and government will be needed to address this national challenge.
Mergers & Acquisitions.
With the uncertainties in the industry, merger and acquisition activity next year will likely be slow. M&A activity that does occur may result, in part, from sellers seeking to address OCI issues. Acquires may seek to expand into areas of “enduring” needs. These may be “tuck in” acquisitions. Sellers in hyper growth markets will command a premium.