What will 2011 bring for government contracting?

On Face the Nation the other Sunday, the panel of reporters was asked to provide their predictions for 2011.  It will be interesting to see what materializes and who was right come this time next year.  This got me thinking about what 2011 may bring for our industry; one that is rarely ever spotlighted (unless there is some sort of drama). Although in our world the new year started on October 1st, it seems January 1st is still a significant milestone for us all.

This past year we saw GTSI get burned a bit and I don’t believe that the microscope will be lifted in 2011.  In fact, according to the WashingtonTechnology.com article, “Contract management becomes top priority for the White House”, the scrutiny will only get more intense.  The December 13th article quotes Dan Gordon, administrator of the Office of Federal Procurement Policy as stating, “We have got to stop situations where everybody knows that there are sham arrangements going on out there, but no one pays attention. We’re paying attention,” he adds,“We are taking this seriously, folks.”

Scrutiny, oversight, and better agency contract management is what government contracting in 2011 needs.  Post award management is crucial and hasn’t been given as much attention as preaward functions have in recent decades.  Granted, the preaward phase is critical to saving money with planning and selecting qualified suppliers. However, if a contractor goes on their merry way and the contract is left to collect dust until closeout, problems, and thus costs, will arise.  As the WashingtonTechnology.com article states, management and communication make all the difference in a successful acquisition and I couldn’t agree more.

What about the budget?  Let’s talk DOD.  According to the White House’s website, “The 2011 Budget for DOD provides $548.9 billion for the Department of Defense base budget in 2011, a 3.4 percent increase over the 2010 enacted level. This funding increase allows DOD to address its highest priorities, such as the President’s commitment to reform defense acquisition, develop a ballistic missile defense system that addresses modern threats, and continue to provide high quality health care to wounded servicemembers.” Notice the first priority listed? Reform of defense acquisition!

These numbers are good news for small business contractors.  More money directly from the DOD and through primes.  We’ll just have to see what the funding looks like once it is actually signed into law. The House passed a stripped down version of the bill on the 17th.  Here are the details of the reform points:

  • Ends the C-17 aircraft program because additional aircraft are not needed, saving $2.5 billion.
  • Eliminates the Joint Strike Fighter (JSF) Alternate Engine program, saving $465 million, because this program raises logistical, management, and cost concerns.
  • Saves an additional $73 million by terminating the Third Generation Infrared Surveillance program, and instead procures upgraded Space Based Infrared System Satellites in the future; it saves $8.5 million more by eliminating the Net-Enabled Command Capability program, which has been unable to meet its requirements on schedule.
  • Reduces the use of high-risk contracts in areas that relate to time-and-materials and labor hours by 17 percent through the end of 2011, and takes steps to ensure that military requirements for weapons are reasonable, program costs and schedules are realistic, and acquisition funding is stable and affordable.
  • Implement the Weapon Systems Acquisition Reform Act.

With the reduction of T&M contracts, will this cause more small businesses to consider getting their systems ready for DCAA audit so they can compete on the Cost Type RFPs?  I actually hope so – although not a high priority for many small businesses who are comfy in their T&M contracts, having their accounting systems get approved may provide an edge in 2011.

Money, reform and the ever constant march of the government contracting life-cycle should make this a good year!

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About Stephanie Amend

Stephanie is the Principal and CEO of Arrowhead Solutions, LLC, a solutions firm specializing in assisting established small businesses be successful government contractors.

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