As the final push for fiscal 2017 contract obligations comes to an end, it’s helpful to take a step back and assess the contracting environmental trends that have emerged over the past year. Each trend lends itself to further study, so here’s a high-level look at the top 10.
1. Federal sector spending has bottomed out, with anticipated growth.
Following years of declining spending, it is beginning to appear like this decline has bottomed out, with a growth in federal spending on the horizon. While there is considerable talk, firm steps are in motion for increased contract spending, particularly in defense, with reduced civilian agency spending. Clearly, a reevaluation is occurring from the dramatic budget cuts proposed for many civilian agencies, while the Department of Defense will reap increases in the short term.
2. Incumbent “win” rates are down.
This is due to a variety of factors, but primarily because government customers are looking for financial savings and simply do not see the “best value,” as compared to the past, in the long-term relationships and historical knowledge that have been traditionally offered by incumbent contractors.
3. More and more, government contractors are branching out ― away from government.
Some firms are successfully branching into alternative commercial or state or local government sectors, as opposed to focusing their business solely on federal government contracting. From a business standpoint, it makes sense that firms would attempt to diversify their portfolios when one significant part of their business is in decline, which the federal sector has experienced for more than five years.
4. The job market is improving, but filling these positions is becoming more difficult.
Today, there is an improved acquisition job climate, but organizations are having difficulty obtaining talent. Companies are hiring — particularly for highly skilled positions in cyber, technology and acquisition; that is if they can find talent to fill them.
5. The use of OTAs is on the rise.
The DoD’s Defense Innovation Unit Experimental has rediscovered other transaction authority agreements, and the use of OTAs as an alternative to traditional contracting is increasing. However, whether long-term cultural changes, along with significant time or money savings, are the result of the increased use of OTAs over traditional Federal Acquisition Regulation–based contracts is not completely clear.
6. Category management continues in the form of contract vehicle consolidation.
The impetus provided by the last administration for category management continues. One need only look at how governmentwide acquisition contracts and the Federal Supply Schedules are used against new, standalone awards to see how this is taking shape. However, this begs the question: How many contracts is “enough,” particularly under a shared services model?
7. Reliance on cloud-based services is increasing.
There is now an increased reliance on cloud-based services, with a corresponding decrease in reliance on centrally owned and operated computer hardware. Bottom line: Agencies don’t want to own and maintain IT equipment that takes too long to acquire, grows out of date too quickly and continues to drop in price. The uniqueness of agency needs and their security requirements as important considerations appear to be losing ground as these services can be further commoditized.
8. There is a wider prevalence of technology tools from requirements to acquisition.
Wherever we look, new tools and products are coming to market, intended to make our lives easier. This certainly impacts the nature of the requirements being developed, as well as the process in which their acquisition is conducted. From analysis, reporting and meeting overall needs, technology is becoming evermore the “disruptive” factor for all of us today.
9. Some form of further “acquisition reform” is inevitable.
Everyone from the hallways of Congress to the Section 809 Panel (and other panels) to those who implement both in government and industry acknowledge things must change. However, everyone “owns” this problem, and as such it will take the entire community to address it. From the practitioners to the legislators, all will need to make compromises, or the conversation will simply continue for years to come.
10. Acquisition skill sets are merging.
As the complexities of the process and the technology available to meet them increase, today’s contract managers wear many hats. They are increasingly performing the duties of project, supply chain, cost, proposal and subcontract managers. Operating within the environment of an entire acquisition team raises existing skill needs but simultaneously creates efficiencies. The new Contract Management Body of Knowledge is reflective of this reality.
It has been a tumultuous year. In many ways, acquisition has been on pause, as priorities of the new administration and controversy take center stage. When federal leadership eventually gets back around to acquisition, this list may change. In an outsourced government, nothing is more important than to deliver services to citizens effectively.
Michael Fischetti is the executive director of the National Contract Management Association.