Where's the gold in the federal market?

 To hear Deltek’s Ray Bjorklund tell it, the federal market might be shrinking a few percentage points, but that doesn’t mean there  isn’t “gold in them thar hills.”

Using a mining analogy to frame his annual Federal Outlook presentation, Bjorklund said that the last decade has seen new opportunities range from abundant to hard to find, which is making winning new business more expensive and difficult.

“As gold gets harder to find, it gets more capital intensive and today we are in the hard rock processing phase,” he said. “You need to get a sense of how hard it will be to dig.”


RELATED STORIES

2013 budget woes spell trouble for contractors

Deltek Clarity survey shows contractors optimistic

Are contractors at risk of a flame-out?


According to Deltek’s analysis of President Obama’s 2013 budget request, contracting dollars are down $60 billion to around $709 billion. There will be few new starts, instead the emphasis is on modernization and maintenance, Bjorklund said.

“But underneath the surface there are some very exciting new opportunities,” he said.

Many of those opportunities fall in familiar areas such as cybersecurity, command and control systems, modernization and sustainment, and IT infrastructure. But other hidden gold can be found in work involving financial institution oversight, export controls and the sale of federal properties.

There also should be opportunities to help agencies think through the policy and process implications of consolidation efforts and other subtle shifts in priorities, he said.

Of course, those are the insights coming from the president’s budget request that still will need to make it through Congress, which Bjorklund and others are giving little chance of happening.

He expects 2013 to start with a continuing resolution that will command agencies to cut 5 percent from their 2012 levels. Sequestration is a threat, but the expectation is that maneuvering between Congress and the White House will delay automatic cuts, if not avoid them all together.

In this environment, contractors should expect procurements to move slowly, which will impact cash flow. Agencies will become more risk averse and will try to use more fixed-price and low price, technically acceptable contracts, Bjorklund said.

Agencies are breaking up contracts into multiple, smaller awards, in part driven by budget pressure and a desire to get quicker results. “That creates a great opportunity for you to educate your customer on how best to do that,” he said. “Communicate to them what is the smartest strategy.”

Contractors also face pressure to control their own costs and consolidate internal processes to protect their profits, Bjorklund said.

“This is hard stuff. It takes a lot of work and labor to find the gold,” he said. “This is the time to reflect carefully on your position in the market.”

About the Author

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

Reader Comments

Fri, Mar 30, 2012 Timothy Coffin

Good article – we wholeheartedly agree with Bjorklund that with contracting dollars down, the emphasis is now on modernization and maintenance. In this environment, it stands to reason that agencies will become more risk averse and will try to use more fixed-price and low price, technically acceptable contracts. An innovative way to approach this is to pay for outputs – measurable outcomes; rather than inputs – activities to get to a deliverable. This reduces the risk for the government, reduces costs – and improves results.

Timothy Coffin, Vice President, iGATE Public Sector

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close
SEARCH
contracts DB

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Read More

  • Is SBA MIA on contractor fraud? Nick Wakeman

    Editor Nick Wakeman explores the puzzle of why SBA has been so silent on the latest contractor fraud scandal when it has been so quick to act in other cases. Read More

Webcasts

  • How Do You Support the Project Lifecycle?

    How do best-in-class project-based companies create and actively mature successful organizations? They find the right mix of people, processes and tools that enable them to effectively manage the project lifecycle. REGISTER for this webinar to hear how properly managing the cycle of capture, bid, accounting, execution, IPM and analysis will allow you to better manage your programs to stay on scope, schedule and budget. Learn More!

  • Sequestration, LPTA and the Top 100

    Join Washington Technology’s Editor-in-Chief Nick Wakeman as he analyzes the annual Top 100 list and reveals critical insights into how market trends have impacted its composition. You'll learn what movements of individual companies means and how the market overall is being impacted by the current budget environment, how the Top 100 rankings reflect the major trends in the market today and how the biggest companies in the market are adapting to today’s competitive environment. Learn More!