Why 2023 is shaping up to be a rough ride for federal contractors

From new and burdensome rules, to delays in governmentwide vehicles, to Congressional new blood, federal contractors face a daunting year. For a few items at the top of the list, the Federal Drive with Tom Temin spoke with Larry Allen, federal sales and marketing consultant.

Interview transcript:

Larry Allen
Tom, this is going to be a big year for General Service Administration. They’ve got a lot on their plate in terms of contracting and some...

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From new and burdensome rules, to delays in governmentwide vehicles, to Congressional new blood, federal contractors face a daunting year. For a few items at the top of the list, the Federal Drive with Tom Temin spoke with Larry Allen, federal sales and marketing consultant.

Interview transcript:

Larry Allen
Tom, this is going to be a big year for General Service Administration. They’ve got a lot on their plate in terms of contracting and some very major program renewals. So first up for in terms of newer or extension programs for them is the Alliant 3, IT Governmentwide Acquisition Contract. This was the agency’s main governmentwide acquisition contract for IT solutions. Allaint 2 has been phenomenally successful. It’s very popular with government agencies, and Allaint 3 is expected to be no less popular Tom. The big issue for GSA on Allaint 3, is that they have a short timeframe to get the new procurement out the door. And unfortunately, one of the byproducts of that is that it provides reduced opportunities for discussion with industry. We’ll have to see how that goes. But overall, I think both GSA and its contractor partners would like to have more discussions, just don’t have the time. After Alliant 3, in terms of extended programs, on the services side we have GSA’s really popular Oasis program that’s up for renewal. The new iteration of that contract Oasis-Plus, that contract is expected to be out sometime this year. Again, massive, it’s supposed to be much larger than the current Oasis contract. We’ll have to see how size mixes with manageability here, Tom. You want a contract that provides users with options but you also don’t want to get them bogged down in having to use a contractual GPS to find what they’re looking for.

Tom Temin
And we also haven’t gotten to the stage yet of pre-award protests even, correct.

Larry Allen
So neither of those contracts are out in the request for proposal process yet. But I expect that they probably will draw protests, because they’re big procurements. But one contract that we know that is already under protest at GSA is the Small Business Polaris program. And it really is a shame because this program now is being in some cases significantly delayed by protests, some that have gone to the Court of Federal Claims. In the meantime, Tom IT business is getting done, IT business is getting done via other small business contracts, some of them at GSA. So it’s kind of an irony that the small businesses that keep protesting Polaris are hurting themselves as well as other small businesses, because government is not sitting still here. It’s continuing to buy from small firms via other contracts.

Tom Temin
And speaking of contract doors, this rule that is pending, with respect to the requirement that contractors pretty much all of them above a certain size, and that size is pretty small. Will have to do to demonstrate carbon issues.

Larry Allen
Right Tom, we’re talking about the proposed rule on greenhouse gas emissions. And it’s a tiered implementation, starting with certain requirements. If your company does as little as seven and a half million dollars a year in government business, and it goes up. So the more you do, the more reporting, the more mitigation requirements you’re going to have to meet. Ironically, we’ve already started seeing this appear in some GSA solicitations in various ways, even though it’s just a proposed rule at this point. Also, I think what’s worth noting is we tend to look at things inside of acquisition and why not that’s our area. This is the business that we do. But greenhouse gas emission rules are not something that’s unique to government acquisition. And I think it’s really important on this issue, to take a step back and look at what the Securities and Exchange Commission is doing. They’re working on a similar but of course, not really identical rule that would cover commercial companies, commercially traded companies. The SEC hasn’t even gotten out yet with their draft rule. So I’m urging caution here for the Federal Acquisition Regulatory Council and GSA in terms of the greenhouse gas rule, look, everybody wants to be pro environment. But if you don’t coordinate with other agencies, you run the risk of saddling companies with disparate requirements that really add up to increased paperwork and overhead, that’s increased cost. And even though we’re in the age of electronic transmission Tom, you know that’s going to result in a few more trees going down.

Tom Temin
Right, yeah. Well, that takes care of the green agenda on that end of things. I guess. We’re speaking with Larry Allen, he is president of Allen Federal Business Partners. And I wanted to ask you also about the group of House Republicans, I guess among them are those that were the recalcitrant 20, you might say in preventing an early and quick vote on Kevin McCarthy (R-Calif.) being the speaker. But they oddly, I guess, in terms of historically how Republicans have treated the defense budget, they are looking for cuts there.

Larry Allen
They are, they’ve come out and said that was one of the conditions that this cadre of House Republicans made in order for Speaker McCarthy to get their support. And now we have here the specter of potentially having reduced defense spending. I wouldn’t get too far out of that right now, though, Tom. It’s January 2023. A number of these members, not all of them, they’re either first or second term members, they may not have a full awareness yet that there’s probably a lot of Department of Defense contracting business that comes through their districts, which translates into a lot of jobs and a good economy that, in turn allows them to run for Congress. So I’m predicting that we’re gonna see some of this rhetoric, maybe change by the time pen comes to paper or electronic pen comes to the virtual paper. However we do it these days, in terms of what a defense budget defense spending proposals might look like.

First, once these members get a little more education from their home teams, about just what defense spending means, there, we’ve seen it happen before people get a new understanding of exactly what that entails. It’s not some abstract thing. It’s real. The other factor Tom, is world events have a way of overcoming the best policy plans. And we’ve seen this particularly happened before with defense spending. So again, here we are in January, we have all kinds of nation sponsored threats, whether it’s China, North Korea, Russia, we also have a lot of non national threats in terms of some of the various terrorist groups around the world, particularly in the Middle East. Any one of those or any combination of those that decide they want to make an issue of things could really have an impact on what actually gets spent. So my advice to contractors is not to sit back and do nothing. You want to make sure you’re telling the story to your elected officials about what defense spending means for them and for your company. But if you do the work that you’re supposed to do, all things being equal, I think that the rhetoric that we’re seeing now may soften a little bit, particularly because the call for reduced defense spending is just in this one area. It’s not really shared across the board.

Tom Temin
Right. And company should always weigh in on rulemaking. We mentioned earlier, the greenhouse gas proposed rule. There’s also the proposed rule from the Federal Trade Commission on doing away with any sort of noncompete contracts.

Larry Allen
That’s a big initiative by the administration to try and end noncompete agreements. I know this is a big issue for government contractors as it is for other businesses. And that’s just another example, Tom, to your point of why contractors need to understand the environment in which they’re doing business. It’s not just unfortunately, responding to RFPs and RFQs. And having a great sales process. You have to pay attention to the regulatory front, whether it’s noncompete agreements, greenhouse gas, or a new cybersecurity initiative. All of these could fundamentally impact the way you go to market.

 

 

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