Where have all the contract awards gone?
Each day we try to track as many contract awards as we can and in recent weeks, it has gotten harder to find new contract awards. What we have seen instead area a lot of modifications, amendments and extensions.
I’ve been asking around and others have noticed too.
I’m not sure what the long term implications are but the trend is likely being driven by three somewhat related factors.
First, we are still in the midst of the transition to the new Trump administration. We haven’t hit the 100-day milestone. And while the top level appointees have been made, there are a lot of levels of appointments below that haven’t been made.
President Trump has said that he might not fill all of the appointments that are open to him, implying that there are too many political appointees. Perhaps this is part of his strategy to reinvent government and streamline operations.
But until he puts his management structure in place, there is still a leadership void that is slowing things down.
Secondly, we are operating under a continuing resolution. The current CR runs through the end of April to make six months under a CR. That’s a long time under any circumstance.
Because of tensions between factions in the Republican Party, concerns are growing over whether Congress and the White House will finalize budget for the rest of fiscal 2017. There are growing concerns that the government could actually shut down.
A bone of contention is what will the budget for 2018 look like. Will there be funding for the wall between us and Mexico? Will defense spending rise?
For agencies it is causing a great deal of uncertainty.
And third, again is the budget. How will the administration and Congress move forward with fiscal 2018 funding? Again, the result for agencies is a huge cloud of uncertainty. So they are turning to modifications and extensions.
One source told me he knew of one company with seven contracts in its pipeline but all the incumbents on those contracts received one-year extensions.
Agencies are using extensions to buy themselves some time, another source said.
But I had another source who wasn’t so sure. That person is focused primarily on Health and Human Services and Commerce, where there have been some delays but is primarily “business as usual.”
The market has been through these kinds of situations before but it feels different now. Perhaps as another source said, the typical uncertainty we are seeing is being amplified by combative dynamics between Congress and President Trump.
This is a temporary phenomenon but it could put downward pressure on opportunities for government contractors. And it also protects incumbents.
But I’m curious what you’ve been experiencing. Please share in the comment section or email me directly at email@example.com.
Posted by Nick Wakeman on Apr 04, 2017 at 2:13 PM