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.
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.
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.
While the Department of Defense issued its new cloud strategy earlier this
week it is perhaps more notable for what it doesn’t say than what it does. On the surface, DOD is embracing different
types of cloud solutions with an eye toward adopting commercial cloud
platforms. Anyone who’s spoken with DOD
officials, however, knows that pitching an off the shelf cloud solution
will likely not lead to much business.
Left out of the policy is the reality that many DOD and service branch
leaders want cloud solutions with the highest level security protections,
an expensive proposition that automatically counts out all but the largest
companies. Also missing is DOD’s
preference for dealing with known, established contractors – especially
when newer solutions like cloud are being acquired. This is essentially reinforced by the cloud
policy which takes a “warfighter first” approach and states that cloud
solutions must be built “in a manner that never puts the warfighter at
risk”. While there may be some limited,
pilot-like opportunities for innovation, the agency has already signaled that
larger cloud solutions will go to either established DOD contractors that can
implement cloud tools that are both offensive and defensive, or leaders in
commercial cloud technology that can meet high security requirements. Established DOD contractors offering cloud
solutions should be familiar with the policy, but also understand what is
missing
Contractors buy other contractors all of the
time. Indeed, having a key contract can
be the difference between a sale or no sale. It’s
important to remember, however, that regardless of the status of your corporate
acquisition, the government considers the original contract holder to be the
prime contractor unless a formal novation has taken place. Experienced government contractor Grant
Thornton learned this lesson the hard way.
While they had already executed an Asset Purchase Agreement to buy OASIS
contractor Wyle Labs, Wyle’s novation request had not be completed
by GSA. When Wyle bid on an OASIS task
order they admitted that Grant Thornton would do 100% of the work (indeed, the
even did all of the proposal work). The
Department of Homeland Security deemed the offer non-responsive and found
considerable risk in the fact that they would not be in privity of contract
with the entity actually performing the work. When Wyle protested to the GAO, GAO sided with
DHS. Contractors need to be aware of the
risks to pending procurements when conducting a transaction. Similarly, although they should be
open and candid with contracting officers about pending deals, the risk remains
that an agency will disagree and choose not to award a contract until the
transaction, including novation, is complete.