Small-business owners who want success when it comes to government contracting need to know the federal landscape. According to Deniece Peterson, director, federal industry analysis at Deltek, which provides enterprise software and information solutions for professional services firms and government contractors, they also must know how to leverage market intelligence.
At the 2016 OPEN for Government Contracting: Summit for Success event in Washington, D.C., Peterson shared several trends and tips as she reported on the federal contracting outlook in 2016 and beyond. If you are a small-business owner or federal contractor, you may be able to use this knowledge to grow your business through government contracting.
Watch the Federal Budget
Paying attention to the federal budget process may be tedious, but it's worth a look if you want to do business with the government.
According to Peterson, nearly all the funds given to federal contractors come from discretionary spending. While President Obama’s administration spearheads the process by submitting an annual budget request to fund its programs, policies and initiatives, it is important to note that the administration has no binding authority. The House and Senate Appropriations Committees are responsible for determining the authority for discretionary spending.
“Budget uncertainty can translate into procurement delays," says Peterson, and by September 30, Congress needs to have a budget or resolution passed for Fiscal Year 2017. Peterson feels that a budget decision is unlikely because since mid-June 2016, only a few bills have been passed. Due to the budget uncertainty after September 30, Peterson predicts that Congress will pass and President Obama will sign a continuing resolution to keep the government running.
Although they have competing goals, passing a budget is important to both the Obama administration and Congress. The administration wants to avoid sequestration, which takes money away from many federal agencies and negatively effects small businesses, and the House is trying to cut spending, says Peterson. Agencies will need to figure out where cuts should happen which may affect contracting opportunities.
Pay Attention to Your Industry—And Others
While no budget has been passed yet, two agencies have already requested budget increases. For FY 2017 Funding and FY 2018 Advance Appropriations, the Veterans Administration requested an additional $700 million for medical facilities. This is an increase from $5 billion to $5.7 billion within the VA's medical and information technology programs which is noted on page 151 of the Department of Veterans Affairs FY 2017 submission. The Department of Education has also requested $500 million in additional funding for "student support and academic enrichment grants." This is meant to add to Title 1 grants, which help keep up academic standards in local education agencies and schools. An extra $156 million has also been requested for departmental management.
To learn more about specific departmental budget requests for FY 2017, visit whitehouse.gov and click on the agency that you currently work with or would like to work with in the future.
Keep Up With Government Contracting Trends
While it’s hard to know everything that’s going on in the world of government contracting, keeping tabs on key numbers can help you feel more versed and confident while searching for contracts of your own. Here are some trends to know and issues to watch, according to information compiled in a Federal Procurement Data System report prepared by Deltek.
- Contracting opportunities are bright, with total potential small-business contract values exceeding $230 billion, according to Peterson. But with more bid opportunities comes more competition. Small-business owners will have to make more bids as single-award contracts become multiple-award contracts.
- IT and professional services categories are the big winners. Deltek’s report also cites that IT achieved 25 percent of awards. Spending in architecture, engineering and construction, however, is down.
- Civilian spending fares better than defense spending. The report states that FY 2015 civilian spending increased 2.5 percent over 2014, compared to a decline in defense spending.
- The federal government’s Small Business Set-Aside Program is expected to grow. In FY 2015, the federal government surpassed its overall small business procurement goal of 23 percent. It also met or exceeded goals for small disadvantaged businesses, woman-owned small businesses, and service-disabled veteran-owned businesses participation goals at 5 percent, 5 percent and 3 percent, respectively. However, the HUBZone program (a program for historically underutilized business zones, which was designed to give small businesses in urban and rural communities greater access to federal procurement opportunities) struggled to meet its goal of 3 percent, presenting an opportunity in HUBZones.
- Solesource awards are declining, according to Deltek’s report.
Acquisition, regulation, budget and geopolitical issues are hot to watch, according to Deltek. Stay close to the issues below to see if they will affect your chance at winning a government bid.
- Acquisition: GSA schedule changes; defense acquisition reforms; procurement mandates. Federal contractors should make adjustments if they notice changes in how the government procures their products and services.
- Regulation: small-business rule changes; FAR changes. As small-business rules change, make sure your internal and external processes also change in order to remain compliant.
- Budget: appropriations; sequestration. Sequestration can really impact a federal contractor’s budget. If possible, have a healthy mix of federal contracts, as well as private contracts spent wisely and safely before and during times of budget uncertainty.
- Geopolitical: upcoming elections/administration transition; Middle East. Politics play an important role in how the government spends money. Pay attention to who is in office, their priorities and how your products or services can play a role.
How Can Small Businesses Win at Federal Contracting?
For long-term success at federal contracting, Deniece Peterson, director, federal industry analysis at Deltek says small businesses must get smarter about which opportunities are right for them. Most contracts are transactions with short life cycles, and 40 percent of total contracting happens in the fourth quarter, according to Peterson. In fact, she says, the end of the year is often referred to as the fourth quarter spending spree, since these dollars are often under a “use-it-or-lose-it" deadline.
Thankfully, a positive relationship may be the start of a strong contracting opportunity in any market sector. Peterson suggests these six steadfast tips:
- Focus on one organization.
- Understand that organization by exploring the data.
- Form a relationship with a key principal inside of the federal agency you currently work with, or who you desire to work with in the future.
- Know their pain points.
- Ensure your solution solves their pain points.
- Create a pitch and capability statement that matches the mission of your target organization.
For more government contracting resources, visit openforum.com/governmentcontracting.