Will agencies get a 2023 budget in December? Don’t hold your breath

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Two weeks into the continuing resolution, agencies hoping to start new initiatives are now looking towards December 16. That’s when Congress promised to establish a 2023 budget. History shows that’s a pretty thin reed to lean on. The Federal Drive with Tom Temin  talked to Larry Allen, president of Allen Federal Business Partners, who isn’t ruling out the possibility of a full year continuing resolution.

Interview transcript: 

Tom Temin: And yes, we have seen this in our lifetimes, full year CRs and in fact, the current fiscal year didn’t start until a few months to go. So December 16, doesn’t have all that much meaning if you’re in contracting, does it?

Larry Allen: Tom, December 16, is really the best case scenario for when contractors and their government partners could expect to see maybe some final action on FY23 appropriations, but I’m sorry, I’m a little bit of a pessimist. I don’t think we’re actually going to see the best case scenario, I think we’re going to end up with something a little bit delayed this year, Tom, even more delayed than December.

Tom Temin: Yes. And even if they reach December 16, sometimes they do something even worse than another long piece. And that’s a day to day type of thing while they scurry around the denizens there scurrying around the basement cobwebs of the buildings on Capitol Hill.

Larry Allen: Well, I certainly can see that being something that would happen this year. As you point out. Look, December 16, is when the government is currently funded through that day. But even if there’s a deal that’s imminent, to get appropriations done in December, and I think we all hope that there will be, it’s highly likely that we would see a 24 or 48 hour CR, just to get all of the packages wrapped in the bows done on the on the appropriations presents. So it probably wouldn’t be the 16th then, might be the 17th, 18th or 19th. But even then, Tom, we’re talking about best case scenario, I think what we really have to look at is what might happen in the congressional midterm elections. If Republicans take one or both houses during the midterm elections in November, I think it’s very probable that we’re not going to see any final action in December, we’ll see another CR, undoubtedly, but we’ll see one that probably takes us to the third or fourth week of January. And then the new Congress will have the ability to come in and hopefully finish the work that this Congress started. But that crystal ball then gets pretty hazy indeed. So I think that if we see some change in the political tides, we’re definitely looking at a significantly delayed appropriations process.

Tom Temin: And there’s an ironic thing going on that you are also telling your clients this week. And even though the government is in a continuing resolution and can’t really in theory, start  new initiatives, there is a requirement from the White House on agencies to increase the amount of contracting they do with small and disadvantaged businesses up a percentage point versus what they did last year, which is kind of a strange juxtaposition to change your contracting strategy when you’re on a CR.

Larry Allen: Yeah, that’s an excellent point, Tom. continuing resolutions, by their definition, basically keep things going that were already happening. So there’s no new project starts. And if there are no new project starts, and it’s going to be difficult to make new contract awards to any type of business, whether it’s a small disadvantaged business or anybody else. Certainly there are alternative funding sources. Things, so called “know your money”, some agencies have capital improvement funds. But those types of projects, Tom are pretty specific in how they can be used. And there certainly aren’t a lot of dollars in them compared to the appropriations route. So last year, the executive branch did 11% of prime contracting with small disadvantaged businesses, which is great. The administration, as you noted, ticked it up to 12%. for this year. The ultimate objective is to achieve 15% a couple of years from now. But I think that’s going to be difficult if we essentially are cutting the FY23 fiscal year in half, which is kind of what I’m predicting now. and still be able to reach those socio-economic goals. I think the other thing that’s notable about those socio-economic goals, Tom, is that if you look at it, the government’s own small business goal is still 23%. And now we have small disadvantaged businesses, supposed to be accounting for over half of that slightly over half if they hit 12%. And if you’re a another type of small business service, disabled veteran owned, women owned, or just a plain small business, you got to think about how that’s going to impact your small business set aside portfolio and what that means. Similarly, if you’re a large business, you’re thinking more about maybe teaming with small, disadvantaged businesses, if you know that this administration is actually serious about escalating to 15%.

Tom Temin: We’re speaking with Larry Allen, president of Allen Federal Business Partners. Yeah. So that really then squeezes out traditional small business that might not fit in any of the socio-economic categories. You’re just simply small.

Larry Allen: Right? I think that that’s going to be a real challenge for some small businesses. I’m kind of surprised that we haven’t seen Congress increase the small business goal over all, Tom. The government, at least on paper has had its small business contracting goal for at least two or three of the last several years. And anytime you meet a goal, what’s your reward? Well, you get a new goal to meet. But we haven’t seen that yet. I think that if I were a small business that didn’t have that SDB designation, I would be asking my elected officials, if they could take a look at increasing the overall goal, just so that I could keep my small business portfolio active. Even as specific designations have their own goals increased. I’ve got my folks that I want to keep employed and keep busy, just like everybody else. So it would be good to, I think, to have that acknowledgement.

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Tom Temin: And if all of that wasn’t enough, there is the new increased risk of suspension and debarment. That’s coming not so much from the White House to find causes to do this to companies. But coming from Congress, or at least some members of Congress.

Larry Allen: It is coming from some members of Congress Tom, and it really is something that whether you’re a small contractor or a large contractor, you really ought to be paying close attention to what’s happening on the suspension and debarment front. Traditionally, suspension and debarment has not been used as a punishment for failure to comply with government contracts, at least not in and of itself. What suspension and debarment officials have traditionally been looking for is evidence of current responsibility. Current responsibility on the part of the company or on the part of specific people attached to that company. But now we have Senator Elizabeth Warren and Senator Lujan, from New Mexico sending a letter to DOJ essentially saying “we don’t think there are enough suspensions and debarments and we think you ought to be encouraging the IG community to increase this as a tool.” Ironically, it’s not IGs, or this Department of Justice that do the lion’s share of suspension and debarment actions, Tom. Each agency has a designated official for that purpose. So right away, it’s maybe a little bit of a disconnect. But also, I think, a lot of political pressure. And it’s not just from the senators, we’re seeing some House members get into the act as well, trying to expand the basis on which companies could find themselves in front of a suspension or debarment official. And look, if you’re sitting there, you have to understand that you have to show while you’re presently responsible, if you’ve been accused of wrongdoing in the past, what is that you’ve done to take intermediary steps to clean everything up. And it could be things that don’t even have to do with a specific performance on your government contract either. It could be something that another part of your business did that you don’t really have any control over. And yet now this suspension, the debarment officials are being pressured to put new standards in front of you on why you should remain eligible to do business with the government.

Tom Temin: Yes, it seems like maybe the statutes makers don’t quite understand the statutes surrounding debarment and suspension, because there are statutory limits on the government’s ability to do that. And it’s not because if you don’t like what the company does, somewhere over here that you can suspend or debar them for what it’s doing for the federal government over there.

Larry Allen: It certainly has been the basis of suspension and debarment actions. The great majority of the time to the present time, Tom, we’ll have to see if suspension and debarment officials can withstand some of the pressure they’re getting. Have to see whether the Department of Justice feels it’s appropriate to send out new memos to those officials and exactly what the effect of that memo or the directive might be in people that don’t really report up to DOJ. So we’ll have to see. You know, one of the things I remember years ago talking to a senior congressional staffer,  Congress does wield significant power this person said, but every time Congress wields it’s kind of a meat axe approach. It’s not really precision or labor. I think this is a good example of what that staffer was talking about.

Tom Temin: Larry Allen is president of Allen federal business partners.

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