Top 100 exec shares insights on weathering the market's perfect storm

The business-to-government market is weathering a “perfect storm” of challenges that affect companies and government alike. Budgets are tight. Government procurement is in transition. And technology is advancing faster than at any point in history. Such forces demand practical solutions, born from experience and innovation.

NEW PROCUREMENT REALITY

Uncertain budgets limit government commitments. What have traditionally been five-year contracts are increasingly being shortened to three years, triggering an earlier re-bid process than what we saw just a few years ago. At the same time, RFPs and award decisions are frequently delayed—by months and even years, not just days or weeks.

What’s more, an emphasis on lower cost drives the use of LPTA (lowest price technically acceptable) contracts. Government is forced to define solutions that minimally address their greatest needs, rather than search for technologies, processes and expertise that optimally meet their longer-term requirements.

To win business, contractors are scrambling to recruit and retain talented employees, at lower salaries than in previous contracts. Once awards are announced, more and more are protested—5 percent more in 2014 compared to the previous fiscal year (GAO Bid Protest Report 2014).

The resulting prolonged procurement cycle for an increasing number of abbreviated-term contracts creates a substantial workload for procurement officials. This is all happening at a time when many seasoned procurement professionals have recently retired, taking with them a deep familiarity of the many nuances of government contracting. The remaining contracting employees are fewer in number and facing increasingly complex contracts.

The turbulent federal contracting process demands patience, understanding and flexibility all around.

MARKET SHIFT: THE CUSTOMER PERSPECTIVE

When I took the helm at NCI in 2011, I realized a seismic shift was happening in the government market. U.S. soldiers were starting to come home after a decade of war. The global economy was in a downturn. Political pressures were high and budgets were increasingly under pressure. I knew we had to roll up our sleeves and assess the new reality. And, we had to do it from our customers’ perspective. What were they dealing with in this new era? How could we best help them?

Companies that visit, listen to and speak with customers often will be more aware and better prepared for any customer or contract shifts on the horizon.

We listened. We learned. We vigilantly monitored:

• External factors, such as the overseas environment, our political climate and the economy, to understand how those factors will ultimately affect government budgets and spending as well as their bottom line.
• Changes in acquisition, e.g., the long-held mindset of LPTA contracting.
• Customer issues, especially when working with geographically dispersed customers.
• Customer procurement practices. Proposal strategy and award decisions are no longer driven primarily by those responsible for the end mission—it is now significantly more weighted toward acquisition personnel.

STEERING THE SHIP

To get past the tough spots, businesses have to both anticipate and prepare for market changes. Many government contractors made significant reductions in personnel cost and real estate footprints in response to the newly emerging government market reality. When bidding or submitting recompete bids, most have had to cut salaries to win new contracts.

But no company shrinks to greatness. Right-sizing operational infrastructure is only the first step. To stay relevant…to lead solution definition that truly serves the needs of our government customers, companies must invest in people, technologies and customers.

Even through elongated decision cycles, we’ve made a commitment to getting the right team on board. They start by listening and learning right away. When customers are ready, we aim to be present with the expertise, experience and attitudes we believe are required to get the job done right.

Government customers are busy and working within their own personnel and budget constrained environments. It’s our responsibility to keep a finger on the pulse of proven and emerging technology and processes that can serve them well. We must lead. The stability and growth of any successful government contractor depends on just that.

BALANCE IS AHEAD

If you’re looking for smooth sailing, consider this. Approached correctly, tough budget decisions can not only help companies sustain but spur them to innovate. In rising to the challenge, motivated companies may identify new and innovative solutions to address immediate customer concerns while laying groundwork for cost-effective changes that serve them well for years to come.

I am optimistic about this market. Situations and factors may have pushed the pendulum too far in one direction. As it swings back, I expect it will settle into a new reality. One with more measured budget conditions, yet steeped in a practice of innovatively exploring even the most mundane contract to sleuth out a better way to accomplish each mission-critical task.

In the end, we’ll all be better off.

Editor's Note: NCI is ranked No. 65 on the 2015 Washington Technology Top 100.