It’s April, but end-of-termism will start to slow federal contracting

As they do every four years at this time, political appointees begin to depart. In their absence, contractors should prepare for a slowdown in new and innovative project starts. At least, that is the view of long time federal marketing and sales consultant Larry Allen, who talked with  the Federal Drive with Tom Temin. 

Interview Transcript: 

Tom Temin This phenomenon is real, isn’t it? The the end of term, even if the same guy could get elected, the political start to leave in general now don’t they?

Larry Allen That’s right Tom, they really do. And it’s inevitable. It really doesn’t depend on who’s in the White House. Like clockwork this time of a four year presidential term. Whether it’s the first or second term, you see appointees starting to leave either to go back to the private sector. Some may join the campaign and try to reshuffle the deck, if their candidate gets reelected, they can come back in, perhaps in a different spot. But in the meantime, while you certainly a very competent career managers and government agencies, inevitably the pace of change, particularly for innovative projects, drops at least one year. And we’re starting to see that a little bit right now. It’s not that the meat and potatoes of government work won’t get done. That still gets done right now and thankfully will get done through the end of the fiscal year. But if you’re trying to do anything that is closely tied to an administration priority, and then all of a sudden the Top 1 or 2 people in that agency appointed by the administration leave, well, that could create a question mark.

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Tom Temin A lot of agencies, I think, are still evaluating the possibility of TMF Funds of Technology Modernization Fund dollars. And that takes some high level sponsorship in general, doesn’t it?

Larry Allen It does. And you see a lot of scrutiny is paid to the TMF. And I’m a big supporter of that fund, by the way, Tom. I think that it’s something that used correctly gives government the ability to, break out of it. And this is how we’ve always done it mode and get into something new. But it does take that top level leadership. It also takes increasingly accountability at the top level for how those funds are spent, and the ability to repay at least part of them. Back to the fund. We know that that’s been a major, area of congressional oversight of the TMF over the last couple of years. And so if you don’t have that, then I think the people who make those decisions on how TMF dollars are allocated will notice that.

Tom Temin And given the fact that appropriations for 2024 didn’t get to agencies until halfway through the fiscal year in the first place, maybe the whole slowdown issue is a little compounded. You have the slowing down because of the end of the administration, and you also have the slowness to ramp up because of the lateness of the funds. What’s the best course for contractors to keep some action going here?

Larry Allen I think that’s a great question. And if I were advising companies, I would say, why you don’t want to totally dismiss those innovative programs that people have been talking about. You might want to take a little more of a cautious approach to some of them, particularly if you know that the leadership in those agencies has been leaving, but there still is money to be spent, as you pointed out. So if it’s not going to be spent on those innovative things, it’s going to be spent anyway on state of the market, keep everything going, maybe update the programs we already have in place, those sort of expenditures. And if you’re a contractor, you should recalibrate your approach to business accordingly.

Tom Temin We’re speaking with Larry Allen, president of Allen Federal Business Partners. You’re also writing this week that the Small Business Innovation Research, SBIR acquisitions are accelerating, and they’ve been growing fast in the last couple of years. Review quickly what they are and what types of contractors ought to maybe get in on that action.

Larry Allen Well, Tom, what we’re talking about here is the Small Business Innovation Research program, SBIR in the parlance, because everybody’s got to have an acronym and government acquisition. And looking at federal procurement data system spend information. SBIR contracts have gone up 31% over the last four years. That’s a substantial increase. And what these are, they’re really intended to be prototype development sort of programs, similar in some ways to other transaction authority, although with their own special rules and regulations. It’s not supposed to be things that are occurring in commercial production until you at least get to phase three of the SBIR. They’re three phases. And the first phase is the proof of technology. The second would be the prototyping. And third would be on time online production before you transition to a regular commercial item acquisition strategy. In terms of the businesses, even though SBIR, small business is right there in the name, I really think that the SBIR program is starting to get interest from contractors of all sizes. While large business can’t really prime a small business contract by definition. That doesn’t mean that large businesses haven’t taken note of growth in the cyber arena. It’s simply becoming another way to conduct nontraditional acquisitions to try to get around some of the red tape, and an increasing amount of red tape that governs a lot of government buys these days. So for that reason, it’s gaining a lot of popularity. And so if you’re a large business, I think you ought to talk to some small business teammates about this as one of the arrows in your acquisition quiver.

Tom Temin Yes. If you look at SBIR and OTAs you mentioned earlier, it seems like water is seeking its own level in trying to get some kind of efficient way to get these types of contracts done. That is extra far, you might say.

Larry Allen I think that’s a really good way to look at it, Tom. And the idea that you’ve got all these workarounds, it’s like heart bypass surgery. The regular arteries are clogged, but the heart still needs to keep beating. It’s the same thing here. You’ve got a government acquisition system where the traditional lanes are maybe a little jammed up. So people keep looking for ways around, and SBIR is definitely one of those conduits.

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Tom Temin And then there is the issue in the FAR world of increasing demand for data by federal agencies about acquisition, about contractors, about contractor activity. And it’s getting burdensome.

Larry Allen It really is. The demand for data and government acquisition is insatiable. And I think there are some clear benefits to government for data driven acquisition decisions. However, increasingly it’s industry that is being asked or required to come up with the data and to provide it in a way that’s usable to government agencies. That just increases contractor overhead. And what I’m saying here is that it’s time for contractors to have an honest discussion with their government counterparts on their need for data, their desire for it. But the fact that there’s no such thing as a free lunch, and if the government wants all this information, then contractors are going to have to be compensated to pay for it. Because, as I said, it’s not like government traditionally turns to contracting officers and says gather this data. Or if they do, then the contracting officers in turn go to industry and say, gather this data. So, it really drives up acquisition overhead and record keeping burdens for contractors. And if that’s something that the government wants, ok. But we have to have a discussion about who’s going to pay for it.

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