2020 has plenty to expect. Here's what we're watching.

Dear Washington Technology Readers,

Whether 2020 is the last year of one decade or the first year of the next, it is sure to be a year of more fundamental change in the market.

There are the obvious things such as the presidential election, which means that little is likely to get done in Congress. That doesn’t take into account the specter of impeachment. Impeachment will likely eat up the only window of productive time on Capitol Hill. Whatever shape the impeachment trial takes, it’ll likely be resolved in the first three months of 2020.

After that, I expect that Congress will be pre-occupied with the elections in the six months afterward.

But the good news for the market is that we now have full appropriations for all of fiscal year 2020 and it is a healthy budget. Agencies should spend and we’ll likely see the expansion of initiatives around cloud computing, cybersecurity, artificial intelligence and "X as a service."

We’ll watch those broad trends but here are some more specific issues to consider for 2020.

NGEN

The Navy’s Next Generation Enterprise Network contract -- the great-grandchild of the Navy Marine Corps Intranet -- is expected to be awarded in the first quarter. The incumbent Perspecta has held the work since 2000 when NMCI was won by EDS Corp. Perspecta is defending the work against General Dynamics IT and Leidos. Whoever wins, we should expect some delays as there will surely be some follow on protests.

JEDI and DEOS

Both Defense Department cloud initiatives have been mired in controversy and protests (especially JEDI). The protests of JEDI by Oracle and Amazon Web Services need to be resolved. As for DEOS, remember that DOD pulled back the award to GDIT after Perspecta filed a protest. A new award decision is expected in late January or early February. Even more important than the awards is what these contracts say about DOD’s embrace of the commercial cloud.

C2E

The intelligence community broke the ice for cloud adoption in 2013 when Amazon Web Services won a contract with the CIA. A big question for 2020 is whether the follow-on Commercial Cloud Enterprise contract, or C2E, will have the same impact. Unlike both its single-award predecessor and JEDI, C2E is expected to be a multiple award contract. Look for a final solicitation in the spring.

CMMC

The Cybersecurity Maturity Model Certification will start to gain traction as the DOD starts issuing contract that require a certain CMMC level. Third-party certifiers will start to appear early next year and that group will audit contractors and award them their scores. DOD hasn’t finalized the requirement, so the big question is how far down the supply chain these requirements will reach. In a nutshell, contractors will be audited by third parties to certify how they comply with cyber and other security requirements. In June, DOD will start to issue solicitations specifying what level of certification contractors must meet in order to bid.

SPACE FORCE

The 2020 National Defense Authorization Act created Space Force as a standalone entity, though as part of the Air Force in the same way the Marine Corps is part of the Navy. This is intended to bring the visibility and resources needed to further incorporate space as a warfighting domain. Most Washington Technology readers don’t build satellites. But they do work on command and control systems and crunch plenty of data, just two of several space-related opportunity areas. There also will be opportunities around building and maintaining the infrastructure Space Force needs to operate.

MIDDLE TIER INNOVATORS

We might be entering a golden age of the middle tier. We have seen an increase in the number of high-quality middle tier companies. Many are private equity-backed but that is what makes them worth watching. It is the innovation in areas such as artificial intelligence, data analytics, and the cloud that they are bringing to the market. They often have strong commercial technology partners. I’ve had more than one source tell me that large traditional companies still struggle to truly embrace and incorporate commercial technologies: like their government customers, they can be too slow and bureaucratic. Often their answer is to buy a middle-tier player

M&A ACTIVITY

This is a given in this market. No matter the conditions, something seems to fuel mergers and acquisitions. 2019 started with Science Applications International Corp.'s purchase of Engility and has come to a close with Leidos' announcement of its $1.7 billion Dynetics buy. PAE is in the process of a transaction to make it a publicly-traded company. Tech Data is buying DLT Solutions. The list goes on and on. We’ll round up and analyze the 2019 deals early next year, but some of the drivers we see will continue in 2020 -- buying customer access, capabilities and scale.

OVERALL GROWTH

Here we return to where I started and impeachment and the passage of the fiscal 2020 budget. Impeachment is more of nuisance for government contractors at this point. The risk was more that it would be a distraction and increase the likelihood of a long government shutdown. But that has been avoided. Passage of the budget means contractors can expect new starts, steady funding and predictability for the rest of 2020. That’s a formula for growth.

Will the rising tide lift all of the ships? Maybe not, but government contractors are in a much stronger position to control their own destiny versus the market staggering from one continuing resolutions to another.

I’ll go out on a limb and say 2020 will be a good year. We’ll start fretting about 2021 in February.