With the United States beginning its operations to "degrade and destroy" ISIS in the Middle East, President Obama has requested $5 billion for a counterterrorism fund, some of which will flow to contractors, but the questions are how much and for what?
The $5 billion in counterterrorism funding that President Obama has requested in order to address tensions with ISIS could serve as a short-term opportunity for contractors who already support the Defense Department in certain capacities.
Originally requested in May, the $5 billion fund is embedded in the fiscal 2015 Overseas Contingency Operations (OCO) budget and aligns with the four-part strategy that the president outlined in his speech on Wednesday, said Deniece Peterson, director of Federal Industry Analysis at Deltek.
According to the president’s speech, the four-part strategy to “degrade and ultimately destroy” ISIS will include airstrikes, international support through training, prevention of further attacks and humanitarian assistance.
As for the $5 billion counterterrorism fund, Peterson said that $2.5 billion will go toward general counterterrorism efforts, $1 billion will support Syria regional stabilization, $500 million will go toward for crisis response and $925 million is reserved for the European Reassurance Initiative, which the White House said will increase exercise, training and rotational presence across Europe.
Since those specific allotments are vague, it is unclear what kinds of services the government will require, but Peterson said that the core of it seems to be around intelligence, surveillance and reconnaissance.
Regardless, companies who are in the position to benefit from this fund should view this as a short-term opportunity only, said Alan Chvotkin, executive vice president and counsel at the Professional Services Counsel.
“I don’t think there’s going to be a huge benefit to the government contractor world, or even the defense contractor community at large, but I think there are some companies that are niche players in that market who will see some short-term benefits,” Chvotkin said.
In this case, “niche” does not necessarily mean “small,” he added, but rather those companies who are already providing services like ISR as well as analysis.
Other key services, according to Peterson, may include partner support services such as training, equipment, intelligence, advisory services, data collection, counter-IED work, threat analysis, data sharing and possibly even cyber-related work.
But aside from professional services, there may also be an opportunity for companies who deal in communications due to the United States’ focus on supporting international allies and programs: “Everybody’s going to have to have similar communications capabilities, get on the same IT networks, and have the same technologies to share real-time data,” said Trey Hodgkins, senior vice president, Public Sector at the Information Technology Industry Council.
The companies who already assist the Defense Department in these capacities can likely expect the government to use existing contracts to acquire the services it needs, particularly task order contracts, Peterson said. As for which contracts in particular, it is anyone’s guess, she added.
If the campaign against ISIS draws out for longer than anticipated, the government may require additional services in the future, which brings up questions around fiscal 2016 and sequestration, Hodgkins said.
But if everything goes as planned, contractors should “prepare to ramp up quickly, and prepare to downscope quickly,” PSC’s Chvotkin said.
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