WT Business Beat

By Nick Wakeman

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Hot topics from the Top 100

We had our Top 100 conference today, with more than 200 attendees, including some of the top leaders in the government market.

I made a promise at the luncheon to hit some of the high points of the conference and solicit comments from people. Whether you attended or not, I hope you find something here that sparks some thoughts. The idea is to use the conference and this blog to start a dialogue on the important issues facing government contractors.

First, a helpful link. Click here and you'll find the full agenda, and here you'll find bios of the speakers.

I. Market Overview

Ray Bjorklund
of FedSources, the organization that does the market research on the Top 100 gave a presentation. Ray had some doom and gloom ? he sees the net government market contracting by as much as 10 percent. That covers all of government spending, not just information technology specific spending.

But there are pockets of opportunity and if you are a large business say in the Top 100, you're still growing and capturing new business. Small businesses also are finding success, but the percentage of contracting going to the mid-sized companies continues to shrink.

More gloom ? Congress is working its way through the fiscal 2009 budget now; the Bush administration is working on the fiscal 2010 proposal, which will come out after they leave office. Bottom line ? practically no new initiatives. It is as though we are operating under one large, continuing resolution.

Another bottom line take away ? competition is going to get tougher. There are signs that the government workforce is actually growing, which will mean less work going to contractors.

I'm working on getting his slides or at least link to them. As always Ray had some great data.

II. Linda Gooden's keynote

It was an honor to have Linda Gooden from Lockheed Martin speak, and she didn't disappoint. Taking a big picture approach, Linda talked about the responsibility the industry has a whole has in helping government customers with security, resource constraints and the drain on talent.

IT is at the heart of helping government with those issues through products and systems that are more secure, helping agencies revamp process to be more efficient and helping to create a workplace where Generations Y and X can be engaged.

Here is a whopper statistic ? Lockheed Martin is hiring 14,000 people a year for the next decade. I'm sure other large contractors have similar goals. It is a staggering number.

One driver she spoke of is that as citizens demand more and better services from the government, government customers are going to ask that of their contractors.

Companies also have a responsibility to be good citizens. Doing good and doing well are different sides of the same coin ? to paraphrase Linda.

III. Compliance and Ethics Landmines

I moderated this panel, and I thought the group was insightful.

Alan Chvotkin of the Professional Services Council asked if anyone had talked to their customers or their congressional representatives about their ethics compliance program. No one raised their hand.

Alan's point is that companies should be talking about ethics, and talking about it before there is a problem. It is probably one of the best pieces of advice for being proactive in explaining how a contractor operates that I've heard. Face it, most people on the Hill don't understand procurement or the role contractor's play in government operations. Talking about ethics and compliance is a great way to educate people, I think.

From Mike Gerich of the Office of Federal Procurement Policy ? exemptions are being closed around the requirement that contractors notify the government of possible violations of ethics rules or the law. In other words, if you see a problem, you better report it and have a process in place for reporting it.

Primes also will need to push more compliance requirements down to their subcontractors.

Shauna Alonge with the law firm Crowell & Moring said primes shouldn't just take their subcontractors at their word. They should ask for proof that a compliance program is in place.

She also warned about a resurgence in the GAO's interest in government officials going to work in the private sector. Her advice ? talk to agency ethics offices before hiring or assigning work to a recent hire that has come out of the government.

Fred Geldon of EDS described a tell-tale sign that a company doesn't have a culture of ethics compliance. Will management back up the ethics office if they rule against something or will they go ahead with the questionable activity? That's the test.

An ethical culture starts at the top.

IV. The Presidential Elections

Tough intractable realities ? was practically the first phrase out of panelist Stan Soloway's mouth. Fiscal woes, fixed costs at DOD, DOD health care costs rising, major weapon systems that need to be paid for, a workforce that is getting old fast.

No matter who wins, those are some of the issues that will face the next president.

Not a rosy picture, but Stan, president of the Professional Services Council, is optimistic about the professional services, technical services and IT services markets ? which increasingly are one and the same. Those types of services are critical to government operations.

Some of my notes on who said what are a little shaky here, but the other panelists included Bobbie Kilberg of the Northern Virginia Technology Council and Trey Hodgkins of ITAA.

They spoke of both candidates favoring policies that aren't really contractor friendly ? McCain doesn't like earmarks; Obama wants to spend more on modernizing the government workforce. Both initiatives could reduce spending with contractors.

The panelists also warned about the growing public sentiment that the government is out of control and the growth of contractors is proof that the government is turning over too much control over to the private sector.

V. Hot topics in contracting

This panel led by Bill Gormley of the Washington Management Group and FedSources included Larry Allen of the Coalition of Government Procurement, Steve Charles of the ImmixGroup, Kurt Tripp of CSC and Anne Reed of Acquisition Solutions.

Their ears must be burning over at GSA. While the panel talked about a variety of subjects, GSA was the target of some of its harshest criticism, namely that the procurement agency really needs to step up its customer service. If it can deliver quality service through the schedules and through its other contracts, it will see people come back to its vehicles. That is the only thing that will bring their customers back.

These contracting experts also are seeing a slow down in business as agencies step back from task orders to make sure their are following procedures. They are trying to avoid more award protests now that task orders over $10 million can be protested.

Anne Reed said that the government sends conflicting signals. Policies recommend the use of fixed cost and performance based contracts, but at the same time the a seasoned acquisition workforce isn't there to administer them.

For small businesses ? Larry Allen said that SBA isn't finished with its small business size standards. More work is being done. It may not directly impact IT contractors but people should pay attention.

Whew, I'm going to stop. This blog either is too long or too short, because there is plenty more to say.

But these are the highlights I came away with. If you attended, add some more by using the comment feature. If you didn't attend, ask some questions or react to what is here.

Posted by Nick Wakeman on Jun 25, 2008 at 7:22 PM


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