If, Then: 2024 serves up many questions and potentials

Just about everyone likes to make predictions with some specificity. In the off-chance that they turn out to be true, the forecaster looks and feels like a genius.

We are more conservative around here in trying to tell the public sector ecosystem's future. Our alternative approach is to present around a dozen pathways, possibilities and scenarios to walk through. Disagreement, pushback and a dose of “hey, also consider this” is all encouraged as we are an open book.

Off we go then.

If our starting point is the proposed rule for the defense industrial base's CMMC cybersecurity standard that is finally out after much anticipation...

Then we first will acknowledge the density of the proposed rule at a cool 234 pages, which puts that document in-line with these books that we are sharing just for kicks. 

Some pointers from those in-the-know: take the time to read all of it and provide constructive comment to the government over the next 60 days. Complaining takes one down a road that leads to a dead end.

These notes also are worth repeating: The cost of the status quo outweighs the cost of CMMC, and those in charge of CMMC have been teaching industry to the test all along the way.

If 2023 was the year that generative artificial intelligence took off in the mainstream and showed us what is possible...

Then let's play it safe by saying 2024 should be the year of more pilots, more experimentation and (in theory) more opportunity for the industry. We also have a lot of sympathy with the federal customer on anything of the "black box" variety being a non-starter. Why would any entity responsible for personally identifiable information and national security, among other key assets, buy something without knowing all of its inner workings?

If 2023 is also essentially Year Zero of the push to regain U.S. leadership of computer chip production...

Then the government's starting point of where to allocate the $52 billion in "CHIPS For America" money highlights a wider sort of public-private sector partnership needed to make that climb back to No. 1 happen. Recipient number one of that grant funding is BAE Systems Inc. a defense company with a significant commercial industry influence within themselves. Knock-on effects will carry the day for this effort.

If there is one federal court decision that certainly will reorder how the government market's landscape functions and operates...

Then look no further than the matter of "Ultima Services Corporation v. U.S. Department of Agriculture," which zeroes in on the 8(a) program. But we have to level-set with everyone: this plaintiff appears to be looking at a whole lot more than just that specific program for disadvantaged businesses. We remind that the 8(a) program remains open for business, albeit with more paperwork to do.

If the Veterans Affairs Department appears to have successfully protest-proofed the actual award of the massive, go-to T4NG2 technology solutions contract vehicle...

Then unless we are missing something, our reaction is being floored. The VA received 177 proposals for the potential 10-year, $60.7 billion program and whittled that down by 6x to choose 30 companies. VA may have been taken to court in the pre-award phases, but we tip our hat to any agency that can protest-proof the award of large multiple-award vehicles like this.

If the General Services Administration successfully protest-proofed its actual award of the unrestricted track of the Alliant 2 IT solutions vehicle back in 2018...

Then we won't bet against against GSA repeating the feat for Alliant 3, even when considering the protest troubles surrounding the OASIS+ professional services and the issues being raised there. GSA couldn't pull off the feat for Alliant 2 Small Business and is trying again with Polaris, but protest troubles seem to surround that opportunity as well.

If GSA fended off one protest from Boston Consulting Group over OASIS+, speaking of that, and wanted to move quicker on awards...

Then not so fast: BCG has indeed taken its protest over what GSA wants to know about what is in every OASIS+ proposal to the Court of Federal Claims. Some degree of sympathy for the company appears to be in order given the issues it raises, but the court is where we can see both sides of the argument in full. The judge can help us get more clarity on what are, and are not, commercial items.

If the CIO-SP4 IT contract vehicle caused more angst and loathing across the small business community than many other vehicles in recent memory...

Then at this point we have to ask what the point is of continuing with the CIO-SP effort at all if it's going to be this hard. It also brings back up the question of contract vehicle duplication across the federal government. To us at least, CIO-SP looks and sounds like a lot of what the other contract vehicles described earlier in this page page are doing. At least CIO-SP4's unrestricted track was protest-proofed.

If all of those aforementioned contract vehicles also turn the lens on self-scoring and the problems that methodology can bring into the system...

Then we feel obligated to once again remind that the kind of federal contracting system everyone wants is very, very, very difficult to make happen without having the needed numbers of acquisition workers at the right ages coming into government agencies. These numbers from 2022 are still a relevant signpost of what we are talking about.

If the U.S. military has only spent 2% of the $9 billion ceiling for its big-ticket commercial cloud contract as reported by the Washington Post...

Then the $269.9 million in actual orders for the Joint Warfighting Cloud Capability effort would only raise that share to 3%. Not a big number, but we're holding off from too many snap judgments regarding the progress of building a tactical cloud for soldiers that is centered around commercial tech. Everyone in charge told us that doing so would not be easy, but is necessary.

If there is a prime takeover candidate in the overall government market landscape that would immediately move the needle for its buyer...

Then look at United Launch Alliance, whose CEO Tory Bruno practically put up the "Ready to Buy" when talking to Bloomberg back in October. It's not his call given that Boeing and Lockheed Martin are equal owners of ULA, but the Wall Street Journal says Jeff Bezos' Blue Origin and private equity firm Cerberus are serious about biddng. Boeing and Lockheed have a massive call to make, and agree upon.

If we saw some smoke signals back in the spring that an announcement of intentions to go public was coming to the government market...

Then we at least had the direction right, but perhaps not the complex nature of the new government services company that Amentum and Jacobs are working together to make. The smoke signals of more public listings to come are also strong. We hope Baird's Jean Stack is right that more are on the way, and see a larger public company universe as showing a more mature market.

If Pitchbook, widely considered to be *the* go-to source for watching venture capital activity, is right to call the current state of VC in defense technology as being in a "boom"...

Then we naturally have to ask when do some of those bets turn into busts. Thankfully others are already pointing out that there is likely not enough budget to go around for everyone, which means the path for those with lofty goals will be to grab market share.

For the record: we assume private equity involvement to always be a constant in the market and see it as not new. But the new and emerging private equity names remain interesting to take note of.

If we effectively saw a handful of chief executive transitions across the very top of the market when considering those first at Leidos, then at Microsoft, and most recently at Science Applications International Corp....

Then the next one to watch is happening in May at RTX, when its chief operating officer Chris Calio moves up to succeed Greg Hayes as CEO. Who and where next in terms of CEO transitions is always a matter of intrigue. We go into every year expecting at least one, and we'll just leave it at that.