Funding worries dampen market optimism

Two leading industry trade groups are worried that the lack of fully-appropriated budgets are dampening optimism for this fiscal year.

Two major headwinds loom over the government market more than the rest amid the renewed optimistic outlook after two years of budget growth: the uncertain funding picture and talent supply crunch.

One boon for government contractors on the other hand is the Defense Department’s hunger for modernization and adoption of emerging technologies to counter adversaries like China and Russia.

But during Defense One’s Outlook 2020 conference Thursday, two heads of GovCon sector trade groups and one industry chief executive all agreed that companies are feeling stressed to certain extents from the headwinds even with the opportunities present.

For one, the government is operating on a continuing resolution through Nov. 21 despite the two-year budget agreement that sets spending caps but no appropriations and CRs have been a running theme in the market for many years now.

“Think about the ecosystem that’s post-World War II that led to these decades of enormous American leadership and innovation, it’s the partnership between academia, government and industry that’s not as strong as it has been,” Aerospace Industries Association CEO Eric Fanning said at the event in Washington, D.C. “For a healthy industrial base, we need our government to be thinking about its part of that responsibility, and that comes down to investment,” Fanning added. “It’s not just how much, it’s the predictability of it.”

Both Fanning and Hawk Carlisle, CEO of the National Defense Industrial Association, agreed that the current defense budget is likely the high-water mark after two years of frothy funding.

Carlisle, a retired Air Force general, brought up one bipartisan proposal put forth earlier this week that would reorient Congress to a two-year budget cycle that could almost be like a framework to set the caps but get more specifics down.

Of that legislation, Carlisle said, it “is a great idea because it takes the topline budget out of the political football realm and puts it into a little bit more regular order.”

Also as Carlisle pointed out: “China and Russia don’t have continuing resolutions,” nor do they have government shutdowns.

Neither does the commercial technology industry that competes with government contractors for the same pool of skilled talent, Parsons Corp. CEO Chuck Harrington said.

“They don’t have an employee workforce worrying about ‘Am I going to get paid for the next two weeks or am I going to get laid off?’ So these are the impacts that can have kind of a calming effect on, or uncalming effect on hiring, which I don’t think is positive for the country,” Harrington added.

Nor does innovation and iteration of technology, particularly the kind dependent on software.

“Our hardware products have a lifespan of probably 12-to-18 months before we come out with revisions of sensors and things like that,” Harrington said. “The pace of change to technology is ever increasing, so you can’t just take a time out and expect to stay up with your adversaries and competition.”

Along with budget, Fanning identified workforce as one of his two highest strategic, long-term concerns regarding the future health and outlook of the defense industrial base.

Part of that is down to communication in his opinion.

“The jobs we’re talking about in our industry are different types of jobs, they’re really high-paying jobs that have longevity, that allow you to raise a family, that lift up communities, the kind of jobs the automotive industry used to have where I grew up in Michigan,” Fanning said.

A low national unemployment rate of around 5 percent compounds a difficult problem of growing the talent base, not to mention the security clearance backlog even though the government has reported it is coming down.

Companies like Parsons are seeing broader population dynamics within themselves with Baby Boomer-aged employees in one group and Millennial-aged workers in another.

Harrington described how companies such as the one he leads are disrupting themselves in order to account for that through investments in new technologies that assist in tasks such as software code-writing to change the work environment.

“When we look at the advances in robotics and autonomous systems, I think even the way we weld ships and planes in the future is going to be greatly different with more 3D printing, more autonomous welding,” Harrington said. “We’re going to have to get comfortable that doing things with autonomous systems can achieve the same level of quality.

“It’s not because we’re going to displace workers, it’s because we have to augment the capability of the workers we have in this country with more capacity to get more done with the same workforce. Our population just isn’t growing fast enough to be able to meet the demand of what we’re producing.”

NEXT STORY: Five ways to win your bid protest

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.