As Trump administration approaches, what's next for contractors?

As the clock ticks down to the end of the Obama era and the start of the Trump administration, federal contractors are wondering, what’s next? While no one can predict with certainty downstream impacts of policies not yet implemented, the outgoing administration has left some initiatives in place that are likely to continue, in some cases with more or with less enthusiasm.

IT Modernization Will Likely Proceed

The Obama administration proposed a $3.1 billion IT modernization fund to help address the problem that up to 90 percent of agency IT budgets go to legacy system sustainment. The House passed the Modernizing Government Technology Act, and it is now in the Senate. The outgoing administration has prepared a list of IT and cyber priorities, and the Office of Management and Budget (OMB) issued a draft memo proposing four steps for IT modernization execution.

Given that the Trump platform favors infrastructure improvement and cyber security dominance, it is quite likely that this initiative will move forward. The big question is whether IT modernization will proceed in a centralized, portfolio management fashion with Federal CIO direction or in a more stovepipe, agency-by agency manner. In either case, Federal IT civilian and defense contractors should see significant contracting opportunities.

Category Management May Not Be Enforced

OMB, Office of Federal Procurement Policy (OFPP) and General Services Administration (GSA) have worked diligently under the current administration to institutionalize category management. They argue that category management increases federal purchasing power for $270 billion of common products and services across 19 categories.

OMB memos and policies called for contract consolidation and reduced spending on desktops and laptops, mobile products and services, and data centers. In addition, Department of Defense (DoD) Better Buying Power initiatives have focused on similar goals, as evidenced by upcoming procurements such as the Information Analysis Centers (IAC) multiple award contract which consolidates three popular vehicles as well as the Defense Information System Agency Systems Engineering Technology and Innovation initiative which seeks to establish an overarching acquisition of services vehicle.

OMB recently issued a draft circular that would direct agencies to use mandatory or preferred best-In-class vehicles, drawing industry ire regarding reduced opportunity to compete. Up to 60 percent of IT work is currently competed under multiple award contracts and OMB’s memo would push even more work in this direction. The MAC trend favors large businesses who can compete well on Unrestricted vehicles as well as small businesses who benefit from set-asides, but has created “mid-tier angst”.

While it is doubtful the incoming administration will do anything to help mid-tiers in the near term such as increasing NAICS size standards, the new administrators of OMB and GSA might not be as fervent supporters of the centralized category management approach. While they are quite unlikely to dismantle current MACs, the new administration may take a more decentralized approach, allowing agencies to create their own vehicles and shun preferred government wide acquisition contracts (GWACs) such as Alliant, OASIS, CIO-SP 3, NASA SEWP, and the like. Thus, contractors may benefit from increased contracting opportunities.

Policy Initiatives Impact IT Systems

As we witnessed under the current administration, passage of the Affordable Care Act had enormous impacts on federal IT systems across numerous agencies, and any dismantling will require additional contractor assistance.

Immigration reform may create increased demand for technologies such as biometrics -- facial, iris, fingerprints – as well as systems related to airport and border security, visas, passports, and the like. Of course, these impacts are downstream because changes take time to enact and impact agency budgets.

Speaking of budgets, the fiscal 2017 budget is under a continuing resolution that allows business as usual until Dec.r 9. The CR is likely to be extended to at least March 2017. Congress may then either pass a spending bill, enact another CR, or shut down the government. Meanwhile, the new administration must draft the fiscal 2018 budget that will more specifically set the course for their policy initiatives. Federal contractors should track these budget developments closely to set direction for business development efforts.

One near time impact is the result of agency hiring freezes. Contractors with existing procurement vehicles should pay close attention to customers who may quickly need support for ongoing sustainment programs and systems.

What’s the Bottom Line?

As with any change in administration, federal contractors must adapt in an agile manner to take advantage of resulting opportunities. Keep your eyes open, stay close to your customers, and look for ways to help them adjust, predict impacts, and take proactive measures.