With 2018 budget, Christmas comes early for federal contractors

The passage of the 2018 spending package and its budget increases will fuel a fourth-quarter spree unlike any other. Here's how to prepare.

The federal government is flush with money, thanks to a $1.3 trillion fiscal 2018 funding package. Contractors that take proactive steps now can benefit from this bonanza.

After five continuous resolutions and a government shutdown, it’s Christmas in April and the gifts are flowing. The biggest winners in the omnibus spending bill include the departments of Commerce, Defense, Energy, Health and Human Services, Homeland Security and Transportation, all of which saw increases of more than 10 percent over last year.

Even the EPA, the beleaguered agency that the White House wants to slash – remained flat. The State Department was the only major agency that had a cut, only 5.9 percent, less than the 8 percent requested in the President’s budget.

With a total increase in the fiscal 2018 budget of $143 Billion, $80 billion for defense and $63 billion for civilian, the challenge now for most agencies will be spending the massive influx of funds by the end of the current fiscal year, Sept. 30.

Army Secretary Mark Esper has said, “The increase is spectacular. But I probably won’t see those dollars until April, which only give us a few short months to spend them.”

In addition, there is talk by the White House about attempts to rescind funds, further delaying their release. Despite this possible scenario, the current funding situation still creates a unique opportunity for federal contractors. After many years of dealing with flat or declining budgets, federal agencies will see significant increases resulting in more contracting dollars dispersed into the marketplace.

Spending throughout the remainder of this fiscal year will be greater than normal. Federal spending historically rises in the fourth quarter, often called the year-end buying season or fourth quarter surge. 

But this year, the surge in the fourth quarter will be much larger than any time in the recent past. Federal agencies will be working hard to allocate these funds as quickly as possible. And for contractors that proactively work to position to take advantage of this market force, it could be the best year in a decade or more.

But contractors beware, don’t just chase agencies with the biggest funding increases, but rather focus outreach efforts on agencies and capabilities where your company currently has an established foothold, or in places that are a logical extension of your core business.

With that in mind, as a contractor, do not delay and begin immediately to promote your solutions to customers. Start with existing customers, they already know and like your company. Also, with current customers there is already a contract in place to buy products or services from your company. It is easier for the contracting officers to allocate additional funds to existing contracts than to issue new ones.

Look for ways to offer expansion of the current scope – or additional tasks that are related to those services. For example, if you are providing network management, perhaps a new dashboard or software application could improve the efficiency of the network. Or if you are performing software development, perhaps you can propose an increase in staffing to work off the backlog of applications awaiting modifications or development.

Whatever you propose, think about offering your solution as a “ready to go” project. This is similar to the “shovel ready projects” the Obama administration was seeking in 2009 to expediently approve funds under the $787 billion economic stimulus package.

A “ready to go” project means a complete package ready for approval – including a proposal with a scope of work, a timeline, deliverables, and pricing. Be sure to promote any existing IDIQ contract vehicles that you have as well. These contract vehicles make it easier for federal buyers can get to your company without having to issue a formal solicitation. With these things in hand, a contracting officer can issue a task order quickly and move on to the next. Make it as easy as possible for the CO to procure services from your company.

Once you have approached your current customers, it will be time to pursue potential new customers. Carefully researching the market will lead you to the most receptive and likely buyers for the services you sell. To begin, look at the spending patterns of the various buying offices of agencies and departments where your company has current or prior related experience. Next, evaluate the spending profile of these buying offices, based on NAICS Codes. At Castlemar, for example, we’ve been analyzing the buying offices slated for the biggest funding increases and using a data-driven approach to categorize them by the types of capabilities they’re likely to procure in the next six months. This allows us to quickly identify pockets of growth that are most aligned with a company’s offerings and relevant experience.

The next step is developing or tailoring the “ready to go” project that you can propose to the target organizations. Finally, identify the program staff and buyers in the target agencies and approach them with your offer.

Get started today. Buying organizations have internal deadlines that are coming up before July 1 to receive and process tasks and funds for the current fiscal year.

Remember these key points: (1) focus on your core capabilities; (2) Prioritize expansion of current clients; (3) Analyze market data to boost efficiency; and (4) get as many “read to go” proposals into potential customers’ hands as possible in the next 90 days.

Following these simple steps and focusing your outreach will improve the results of your efforts and pay dividends in the form of new task orders and new customers this year.

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