September is a time for spending – for many federal offices anyway. There is always an end of fiscal year spending surge – earn it or burn it, as many say – but with a six month delay in the 2011 budget and new fears that 2012 and beyond will look worse, federal offices may be even quicker to open the purse strings and spend any remaining dollars, according to Paul Murphy of Bloomberg Government.
Speaking before an audience at a recent Small and Emerging Contractors Advisory Forum event, it was a bright spot in what can otherwise be a murky fiscal forecast for defense contractors, in particular. With so much bad news looming about the defense budget (and tropical storm Lee dumping a week’s worth of rainy days in Washington to match the mood) – are there any bright spots? For small businesses, yes, and here’s a roll-up:
- Most agencies are still behind in their small business spending goals. While DoD leads the pack in small business spending, most agencies are behind. A number of other agencies are ramping up their efforts and driving small business growth, including the Department of Veterans Affairs, Department of Homeland Security and Department of Energy. Look to these agencies to continue the upward small business spending trends.
- More fixed price contracts, less sole source. Not good news for all contractors but a bright spot for many small businesses. 79 percent of small business dollars come from fixed price contracts while just over 50 percent of large business dollars do – that means the current sole source contracting squeeze should open up opportunities for small businesses.
- Certain industries are bucking growth trends. While the days of unlimited defense and intelligence spending are certainly gone, specific industries and arenas are on an upward trend, according to Kevin Plexico of Deltek Input:
- Energy/Conservation. Research and Development investments in energy are up. Companies with energy saving solutions or infrastructure modernization options will have customers in government.
- Healthcare. The push for electronic health records and the expansion of government healthcare programs have both opened up contract opportunities within the healthcare arena. It’s an area both technical firms as well as administrative and professional services companies can see opportunity.
- Budget Streamlining. Can you say waste, fraud and abuse? Well, the government can, and they’re looking at ways to improve performance and increase oversight. If your company is selling solutions that modernize, improve or enhance government programs in a way that saves money, (think cloud computing and data center consolidation, for example) there will be an ongoing need for your services.
- Cybersecurity. You’d have to be living under a rock to not have heard government’s ongoing quest for expanded cyber operations. Cyber security firms, and especially those with qualified cyber talent, will find opportunities.
- An end to insourcing. There is virtually no interest in insourcing in today’s congress, according to Plexico. And contractors who bring top talent and subject matter experts to the table will be in increased demand. In a budget strapped environment contract requests will likely cut down the number of staff expected on each contract, but expect them to up the ante when it comes to the quality of talent among winning bidders. There will be increased focus on contractor capabilities and how those meet the government need, said Plexico. Within that there is a demand for hiring individuals who are at the top of their field, with subject matter expertise and an analytic point of view.
It’s easy to focus on the negatives, but in a month like September – where requests and needs are more at the fore, and the ability to match expectations with solutions is more important than ever – it’s also worth focusing on the opportunity. For small businesses with a cleared talent pool and a laser like focus on meeting government needs with innovative solutions, opportunities are out there both now, and in the 2012 budget cycle.