Monthly Archives: February 2019

BUDGET DEAL PROVIDES FULL FY’19 APPROPS FOR COVERED AGENCIES

While most national media outlets focused on the border wall issue during last week’s Congressional action, the real good news for contractors is that the legislation provides full funding for DHS, State, Justice and other agencies for the remainder of the fiscal year.  That’s very good news for both contractors and agencies, both of whom had recently been nervously eying the prospect of a shutdown or a “permanent” FY’19 CR.  New project starts may now be possible by the end of March.  That’s about a month earlier than last year and a two month improvement over FY’17.  Budget analysts predict that larger or mission critical projects will still be able to move forward as planned.  It’s smaller or less needy projects that may be pushed to the side.  The compressed time frame, though, does mean that projects that go through assisted acquisition service shops will have to be initiated quickly.  Indeed, all business for the impacted agencies will have to be done in about half a year, though agencies should now be accustomed to that pace given previous year constraints.  Of course, DOD and other agencies that accounted for 70% of discretionary spending have had their funding all along.  Overall, this means that FY’19 should be better for business than the previous two. 

GSA FACES CHALLENGES ON E-COMMERCE PORTAL PROJECT IN LIGHT OF PRICING COMPARISONS

Studies conducted by the Coalition for Government Procurement and Navy Post Graduate School show that prices for certain goods are cheaper – sometimes substantially so, on GSA Advantage than on Amazon Business. The studies were originally reported last week by the Federal News Network.  While the price difference is not a surprise to GSA Schedule supporters, the study findings do pose challenges for GSA and potential e-commerce suppliers as they move forward the e-commerce portal project.  First, it’s obvious that “faster” doesn’t always mean “cheaper”.  Congress was perhaps under the assumption that commercial providers automatically got better deals from suppliers than did the federal government.  If that’s not the case, then a key foundation for e-commerce program is shaky.  Second, the Navy Post Graduate School report did find that buyers preferred the user experience offered by commercial platforms over GSA Advantage.  How/can does GSA work to update Advantage to match that experience?  One obvious answer would be to outsource the operation of Advantage to a third party since GSA likely lacks the funding and resources to upgrade Advantage internally. That option, however, could face internal hurdles.  Third, for potential e-commerce providers, will they be able to lower their prices to more closely match those on Advantage, or at least come close enough so that their total value proposition makes their platforms a viable acquisition method?  If Congress believes that federal agencies will spend more for items than they can get from existing acquisition sources, they may rescind the project. 

All of these issues are in play as GSA drafts a report due to Congress next month on their progress to date in meeting the existing Congressional requirement.  The report will be in the hands of a different party majority than the one that initiated the project and whether they place the same priority on it as their predecessors is unknown.  Whether and how the questions above are addressed will likely shape the future of the project.

A $90B FEDERAL IT MARKET? BLOOMBERG SAYS “YES”, IN 2020

Steady increases in the federal IT budget may result in a total federal IT budget in excess of $90 billion in FY’20 according to recent analysis conducted by Bloomberg Government.  Bloomberg states that IT spending in FY’18 was nearly $65 billion and that IT budgets are currently on a 5% annual upward trend. Overall, IT spending is divided almost equally between civilian agencies and the Department of Defense.  While spending on existing infrastructure is still the largest single area of where funds are allocated, cloud, agile technology, and emerging areas such as AI are all experiencing increased spending.  This is great news for contractors that can offer comprehensive, multi-faceted solutions.  While feds still need equipment, it is more and more the services that come from the equipment that they want, rather than the machines themselves.  GSA officials recently reinforced this with a prediction that almost all IT business will be service-based in the near future.  Larger companies are, frankly, generally better situated to conduct DOD business than smaller or newer market entries.  While DOD leaders do want innovation, many larger projects have at least one established company as part of the team.  The risk-averse nature of acquisition decision making is one thing that hasn’t changed. 

HAVE YOU HAD YOUR ANNUAL ETHICS TRAINING?

Annual training on ethics and contract compliance is an established best practice for government contractors.  Like the flu vaccine, it can greatly reduce (but not eliminate) the impact of any adverse actions government agencies may take against your company if incidences of non-compliance are found.  Training should be mandatory and participation be recorded.  Allen Federal has trained many companies on what to do – and not do – in the pursuit of government business.  Don’t be a contract “anti-vaxxer”.  Get your training scheduled today! Contact Allen Federal at info@allenfederal.com to see what we can do for you.

RESOLUTION IS NO CLEARER WITH FIVE DAYS TO GO BEFORE SHUTDOWN PART II

While many had hoped that the President’s State of the Union address last week would at least signal a path to avoiding a new partial government shut-down, that didn’t really materialize.  This leaves Congressional leaders, and feds, with substantial uncertainty over what happens next.  A bi-partisan Congressional group has been working on compromise spending legislation and may well be close to a deal.  Whether the White House would accept that, however, is a large unknown.  Even if Congress passed a spending bill and the president vetoed it, it is very uncertain whether there would be enough votes for an over-ride.  Even the Democratically controlled House would need some level of Republican support for such an action.  Indeed, some leaders in each party at least privately want the President to use his emergency authority to divert existing money and build a border wall so that they can pass a clean spending measure that is separate from that issue.  While that opens a new can of worms for the use of presidential authority, it would, at least, result in a government that was on more sure footing in terms of being open for business.  It is quite likely that this one will come down to the wire, as most shut-downs do.  Contractors must be prepared to close down some operations, again, but may not have to.  Watch next week closely and remember that at least this is more exciting than last Sunday’s “Super” Bowl.