Contract spending is set to grow across the board in 2024

Bloomberg Government predicts record contract spending, once Congress passes appropriations bills for 2024. It sees $762 billion in total procurement, including $113 billion for professional services. With how companies need to prepare, the Federal Drive with Tom Temin turned to federal sales and marketing consultant Larry Allen.

Interview Transcript: 

Tom Temin  It’s sort of a case of water, water everywhere. How do you get your drink? I guess fair to say, Larry.  

 Larry Allen That’s a good way to look at it. Right now, the water is kind of behind a dam as we wait for Congress to pass the final FY24 appropriations, something that increasingly looks like will happen early in calendar year 2024. In the meantime, however, companies should be preparing themselves to pursue that. And there are a couple of things to keep in mind. Aside from the obvious that you want to be in front of your customers and potential customers, you really want to make sure that you’ve got the contract vehicles that they may favor to make their buys, whether it’s a client or NASA’s Soup or even the GSA schedule. We know that a lot of buys get made through the standing indefinite delivery, indefinite quantity vehicles. And I think that’s going to be particularly true in 2024, because we’re going to have such a compressed buying period, a compressed year. And so federal buyers are not only going to be looking for solutions, they’re going to be looking for easy ways to get at those solutions. So that’s something for industry to be thinking about now and develop a strategy on how to get the stuff over to a client quickly.  

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 Tom Temin In other words, full and open just simply takes too long. So a task order under an existing vehicle is quicker.  

 Larry Allen That’s exactly right. Full and open you know, can take weeks. And if you have a buying season, that is only going to be half of what it usually is, which is sort of what we’re looking at right now, then you’re going to be looking at those standing contracts. You’re also going to be looking at small business set asides. We know, for example, that the administration has made a major endeavor to increase awards made to small disadvantaged businesses. So if you’re one of those businesses, that’s a good sign. If you’re not, then maybe considering teaming up with one of those businesses could be a good strategy as well.  

 Tom Temin What is the status of CIO SP4 from NIH NITAAC? That one was a single contributor to the rise in the number of protests last year made them go up 22%. Most of the rise was because of protesting that deal because SEWP seems to kind of sail along serenely. And GSA appears to be getting around its protest issues with new GWACs.  

 Larry Allen So Tom, we all hope, I think for smooth sailing for CIO SP4 in the coming year. All of the pre award protests have been dealt with. The agency NIH is currently in the process of making award decisions. I think they’ll probably make a number of award decisions fairly quickly. Predictably, there will almost certainly be post award protests. Why not? There have been protests at every other stage of this acquisition, but we are getting closer to the finish line and I think we can expect to see CIO SP4 up and running sometime maybe in the first half of calendar year 2024. That would be good news. It’s good news for buyers. It’s also good news for the NITAAC division of NIH Tom, because no sooner do they get this one out the door than they have to turn their attention to the product oriented CIO CS contract, which itself is going to be up for renewal.  

Tom Temin And that’s a good point, is that the GSA, to some extent NASA’s SEWP and NIH and a few others too, for that matter, have you know, the GWAC for services is something we’ve seen emerge in the last few years, not just for products. And as you point out, you know, Bloomberg is predicting this $113 billion in professional services and R&D, $74 billion. There are GWACs for that, too.  

 Larry Allen Right? You know, if you’re looking for technology or professional services opportunities, you’re definitely going to want to have one of these standing IDIQ contracts at least Tom, or have access to it. And that’s another part of this business, which is, look, if you don’t have these contract vehicles or if you don’t have the relationships, partner with people who do, you know. So often I talk to newer market entries and they’re interested, of course, in getting in front of government officials. But sometimes you can be even more effective by getting in front of partners and showing your talents and how they can match together to enable you all to pursue business. On the R&D front, if you’re an established government contractor, you know, one of the things that I’ve kind of seen gained favor lately in the R&D world is the SBIR program on the small business research program that’s supposed to be for noncommercial items, items that have not been in current production. It seems that everyone has kind of caught the SIBR bug lately, particularly in the Department of Defense. So, again, if you’re a small business, that’s an interesting way to do some research and development and even potentially get something into current production. And if you’re a large business working with some small businesses that can work through that program is a good idea.  

 Tom Temin We’re speaking with Larry Allen. He is president of Allen Federal Business Partners. And the other thing you’re warning people about is their approaches. And we’ve talked about this before, I think the emergence of cybersecurity rules for contractors. There’s a big slew of them coming from homeland Security and probably contractors ought to be in control of their cyber. But now they’ve got to be.  

 Larry Allen Well, they really do. Tom, we’ve been talking about CMMC over at the Department of Defense Cyber Security maturity model certification for about five years now. And we always knew that the Department of Homeland Security was coming right behind DOD and here they are. They announced recently that they’re going to use a cybersecurity readiness assessment to evaluate whether contractors bidding on DHS business have appropriate cyber defenses in place before they make contract awards. So, Tom, this means that if you’re a business of any size, you have to make sure that you’ve done your so-called cyber hygiene, that you’ve got verifiable cybersecurity protections, policies in place, things of that nature. And, of course, these aren’t going to be the exact same types of approaches that DoD is using for CMMC. They’re going to be DHS’s own standards. But the good news is that industry can comment on the draft cybersecurity readiness approach DHS published in SAM on November 1st, the draft statements, and they’re basically asking if not begging for contractors to submit comments. Comments I think they’re due the third week of November. So you’ve got a little bit of time, but not much. But if you do business with the Department of Defense, you’re going to have to know about the cybersecurity readiness assessment, make sure that you’re going to be able to meet the requirements for whatever type of business you’re going after and be able to prove it to anybody at DHS that’s looking.  

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 Tom Temin So we’ve got these cyber requirements coming in. CMMC could eventually actually take a grip on the industry. So whether it’s civilian or a defense, that’s something that contractors are going to have to do. Plus, you’ve got this large amount of money for contracting coming really late in the fiscal. We don’t know what the political situation will produce. It could be a C.R. through early next calendar year, which makes for a very short fiscal year. If there is a fiscal year, then contractors, they’ve got some homework to do. I guess. Bottom line.  

 Larry Allen Tom, there really is a lot of homework to be done. If you look at the federal market at first blush right now, you might say, well, hey, there’s not a lot of activity going on there right now. We need to kind of wait around until Congress decides to pass some appropriations bills. Nothing could be further from the truth. This is the time where you should be looking into opportunities that your customers pretty much know they’re going to have the funding for. They’re going to be able to and want to take preliminary steps so that they have as much done in an early manner as they possibly can so that when the money hits, they can go ahead and move forward with the acquisition. So if you’re waiting until then, you’re going to be way behind the curve.   

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