Budget uncertainty a major concern across agencies

The Professional Services Council’s annual Vision Forecast is a different kind of market research project. Sure, it has plenty of numbers but it does something more than that.

Each year, PSC members sprawl out across the market to interview agency officials about their spending plans, priorities, challenges, and of course their vision of the future.

Starting Tuesday morning, PSC will showcase those findings through two-days of presentations on individual agencies as well as panels and keynotes looking at topics that stretch across nearly all agencies.

In a pre-conference briefing with reporters Monday, PSC shared some high-level findings that will be expanded on when the Vision conference gets underway this morning.

While different agencies have different challenges and priorities, PSC President and CEO David Berteau said there are several themes that most agencies share.

Budget uncertainty. The government is under a continuing resolution through Nov. 21. There is much uncertainty if another short-term CR will be passed, a partial CR with some agencies getting full funding, or if there will be a CR for the entire year. The last choice would mean a budget cut for most agencies compared to expectations.

Though budget cuts might not matter because many civilian agencies aren’t spending their appropriated funds. They didn’t in 2018 and it looks like they didn’t in 2019.

Workforce issues. Security clearances are a problem, but there also are many vacancies for appointed positions and unfilled senior positions that make it a challenge for agencies to get their work done, particularly on new initiatives. “There just aren’t enough people,” Berteau said.

Global economy. The global economy is sluggish because of trade barriers, conservative investment strategies by corporations, low productivity and the uncertain worldwide security environment, said Lou Crenshaw, a PSC volunteer and chair of the team for the Defense Department topline forecast. He’s a former executive with Grant Thornton and now has his own consulting firm.

The U.S. and the global economy are more intertwined as evidenced by the broader impact of one-on-one trade disputes, he said. In other words, China and the U.S. might fling tariffs at each other but the impact is felt across multiple countries.

The uncertainties of the 2020 budget are balanced against what is known – no budget caps and no debt ceiling thanks to the Bipartisan Budget Agreement of 2019, he said. But there are plenty of unknowns – trade agreements, the impact of tariffs, impeachment, elections, and a slowing economy.

Government as an enterprise. The federal government is beginning to act more like an enterprise. The President’s Management Agenda is a big driver, but this is a cultural journey that will need strong leadership and a rethinking of approaches and structures. IT modernization efforts will play a big role in this alongside the IT Technology Business Management initiative.

Cloud and managed services are growing, with 18 percent of the federal IT budget going to what PSC called “provisioned” IT. This includes software-as-a-service as well as platform- and infrastructure-as-a-service.

“That is exciting,” said Greg Lobbin, co-chair of the IT management and budget forecast. He is an executive with Unisys Federal. He and co-chair Steve Vetter of Cisco Systems said that some of the growth could be attributed to better reporting of spending but the growth is too strong to be caused by changes in how spending is reported.

Alan Chvotkin, PSC executive vice president and counsel, offered some highlights from the Vision forecast that dealt with procurement and acquisition findings:

• Contracting officers are in short supply

• Best in class contracts are gaining steam

• CPARS are growing in importance and contractors need to be active how their performance is being recorded

• Too many requests for information and no one is happy about it. Industry complains about a lack of feedback and government says not enough companies respond. One contracting officer told PSC: “At least tell us you’re going to bid and have no questions.”

• Spending through Other Transaction Authority at the Pentagon grew by 40 percent and there is no indication of it slowing down

We’ll drill down into these issues as the Vision conference moves forward Tuesday and Wednesday.