Federal contractors moving ahead after a bizarre 2022 fiscal year
This first week in July, contractors are making the start of the fiscal quarter in which the government spends the biggest portion of available dollars.
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For the federal government, thanks to Congress, the fiscal year rarely starts on time. But it always ends on time. And now this first week in July, contractors are making the start of the fiscal quarter in which the government spends the biggest portion of available dollars. For our yearly year-end prep talk, the Federal Drive with Tom Temin turned to federal sales and marketing consultant Larry Allen.
Interview transcript:
Tom Temin: And we had a particularly short fiscal year this year. I forget when it got started, but it was certainly deep into this calendar year. So what are some of the special considerations for a weird 2022 fiscal?
Larry Allen: Tom, the FY 22 year for government contractors and their customers has been weird indeed. You referenced Congress – delays in congressional appropriations effectively cut the 2022 fiscal year in half. But here we are back in our old familiar part of the year, the fourth quarter, also known as federal busy season, this is the time of year when most of the business gets done. And increasingly, Tom, that work is shifted to the very end of this quarter, even for projects that used not to be done. At the very end, things like complex service buys or large IT acquisitions. We see a lot of those being pushed back until the last two weeks of September even. So I’m talking to contractors right now about three things that they need to work on for the fourth quarter. And this is one of them, which is don’t assume that it’s over until it’s over, you have to make sure that you’re tracking your leads, you’re following your pipeline, you’re staying in contact with your business partners and your would-be customers until the very, very end of the fiscal year, precisely because so much gets done at that very end of the year. And I think with the very late start to this fiscal year, Tom, that’s even going to be more exaggerated. So no contractor vacations until the 2nd of October.
Tom Temin: Yikes, what a prospect for the summer that produces! People just back from Fourth of July. But to what extent do you think the old phenomenon, by that I mean the ’90s and maybe early 2000s and prior, that agencies would get a lot of the hardware, they needed. Printers, laptops, desktop PCs, monitors that kind of stuff. They would often, when that was a bigger part of the whole buy in the first place relative to services, but still, they would kind of get those done because it was easy to buy. It was a discrete product, easy to specify, easy to get bids on. Does that still happen?
Larry Allen: It absolutely does still happen, Tom. This is the time of year when agencies say look, we’ve had these modernization projects on the books, we’ve worked on some of them. Others, though, we’re just really going to have to wait until next year. In the meantime, we need to upgrade our office IT on our current systems. So they’re going to make the purchases, they need to give themselves many upgrades albeit within the same overall infrastructure. So if you’re a company that works in the office IT arena, this is your time of year. Similarly, year-end buys typically tend to be in the furniture area. People want that desk, they want their offices refurbished, especially now that they’re going back to them. So those are a few things that you can expect to see be purchased during this time of year.
Tom Temin: Yes, you want a nice new Formica service for the fern plant that you’ll be bringing into replace the one that died during the pandemic.
Larry Allen: That’s right. And there are multiple ways to get that solution.
Tom Temin: And by the way, it’s probably also important to point out that you need to be selective in the vehicles you offer, because some of them are faster and more flexible than others.
Larry Allen: And this is something that I always counseled companies on. And that is make sure that your customers know how to get to you. You may have done an excellent job of telling them what solutions they can get from you and the functionality of those solutions. But you need to follow it up with answering the “how” question, and the “how” question is making it easy and fast to buy from you. And while I don’t think that it’s a good idea to give your federal buyers 15 different options. I do think that you want to give them two or three so that they understand, hey, I can get you on GSA’s schedule. I can get you on NASA SEWP or maybe I can do a small business set aside with you if the company qualifies as a small business concern? Don’t assume that your federal buyer has all the information on quick and effective acquisition methods. Make sure you’re providing them with a couple of good options.
Tom Temin: We’re speaking with Larry Allen, president of Allen Federal Business Partners. And there’s another brewing item in Congress, resurrection perhaps of some sort of Bill, stimulus bill, whatever, if it can get enough support in the Senate, that trillion-dollar bill, which seemed dead last year, could be raising, again from the grave, and therefore they’re contracting dollars in there if you look carefully.
Larry Allen: Tom, that’s right. We’re talking here about what used to be referred to as the president’s Build Back Better bill, a lot of alliteration in there on your morning drive. But Senate leaders really last week and the week before had been working on putting together a new version of this bill, one that lowered overall tax rates with the hope that it would attract at least one of the two Senate holdouts, Sens. Manchin and Sinema who had been opposed to the bill in its original form. So now there’s some speculation that, hey, we might be able to get something done. And that something would be about a $1 trillion price tag, approximately half of which would be in new taxes, and half would be in new spending. And of course, some of that spending time would probably make its way into FY 23 government contract actions, whether it be for professional services, or health care, or even things like IT. But regardless of general product areas, you have to imagine that a bill of this size is going to have a lot of earmarks. So if you have companies out there that have been working with their elected officials to get projects specially designated for them, this bill could be the vehicle to get that done. So that’s definitely worth watching in the Senate.
Tom Temin: Yeah. So the lesson there is what happens in Congress, besides just the yearly budget is of interest to contractors and the smart ones, keep their eyes on the full horizon of political activity.
Larry Allen: Tom, that’s absolutely right. One of the things that I’ve been telling companies, particularly this time of year is, remember, Congress can do things for you, as an industry, they can do things to you, as an industry or company. Best practice for government contractors of all sizes, is to keep at least an occasional eye on what Congress is doing, whether it’s being really late with appropriations, or whether it’s instilling new tax provisions or requirements for your government contractors. You know, in referencing the new version of Build Back Better, I talked a little bit about taxes. The government giveth with new spending opportunities, Tom, the government taketh away with a string of new taxes. That’s just one example of why I think contractors need to pay attention to what happens on the Hill. You make a big investment in your government business, you don’t want to wake up one morning and find that Congress has changed the ground rules, and now your business is in trouble.
Tom Temin: And something else overlooked, besides watching legislation is the idea of actually knowing who represents you in Congress, and they may add up to chaos as a body, the Congress, but individually, the members don’t seem all that fanged when you talk to them individually.
Larry Allen: Tom I couldn’t agree more. I think that’s right. And I think a first step that each contractor should take is get to know their elected officials. Don’t assume that they’re always in Washington. Every elected official has multiple districts in their state, or district offices, if they’re a member of Congress. They are in those district offices or state offices a lot of the time, and you can go and get appointments with them. If that’s easier for you than coming down to the Capitol in Washington. Even if you don’t get to see the member, you didn’t see the district director or the chief of staff here in Washington. Sometimes they’re called the congressman-in-waiting, Tom. They’re good people to get to know. Again, don’t assume that your elected officials know that you sell to the government. Make sure that they understand the positive economic impact your government contract business brings to that state or congressional district, make sure they know the number of jobs that are at stake when they talk about instituting new regulations, new barriers to market entry that make business more expensive for you to conduct well. You end up on their fundraising list? Quite possibly. But that doesn’t necessarily mean you have to play in that part of the game. But the bottom line is, when you’re educating customers about business, you should be educating your elected officials about that business. So that if you do have a problem, the first time they hear from you isn’t in a crisis mode.
Tom Temin: Right. And if you do end up on the contribution list, you don’t have to bring bags of money anymore. They take Venmo.
Larry Allen: Very flexible, very 21st Century.
Tom Temin: Larry Allen is president of Allen Federal Business Partners. Thanks so much.
Larry Allen: Tom, thank you very much, and I wish your listeners happy selling.
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Tom Temin
Tom Temin is host of the Federal Drive and has been providing insight on federal technology and management issues for more than 30 years.
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