Edge360

For the first time in eight years the federal government is undergoing a complete change of power. With the change, comes uncertainty for what happens next. Almost every agency is funded by a temporary spending bill that expires at the end of April. Federal hiring is frozen, and then it’s not. All of these factors combine to make the current federal market confusing and frustrating, especially if you’ve been in the market for less than eight years.

Here is some clarity to help you figure out what’s going on and what it means to you, the government contractor.

The presidential transition is slowing things down:  Yes, we have a new President and even a few cabinet secretaries. The transition to the new Administration, however, is nowhere near halfway done. It’s not that this group is moving any slower than their predecessors. Filling over 2,000 appointee jobs takes time. It will be well into the summer before people in jobs important to government contractors are in place.

Until then, many career feds are operating in a holding pattern out of concern that any decisions they make now will be overturned by new appointees and that, as a result, their careers will be consigned to Siberia. The government is, for now, open for business and routine work is getting done. Still, there is definitely a “fear factor” in many agencies that is keeping all but the most basic decisions on hold.

Most agencies still can’t initiate new projects if they are funded by appropriated dollars:  Unless you’re selling to the Department of Veteran Affairs (VA), Congress, or a military construction agency, your customer is still operating under a Continuing Resolution. This resolution runs until the last week in April and it means no new projects can be initiated that need appropriated funds.

It is too early to tell right now whether Congress might pass an omnibus appropriations bill – an outcome that contractors want – or if it will pass a CR for the rest of the 2017 fiscal year – an outcome government contractors manifestly do not want.

Although we tend to be a bit cynical, Allen Federal is leaning toward the “full year CR” option. A lousy way to run a government? You bet. Critical infrastructure programs can’t be started and it’s actually more expensive to operate this way. As above, routine spending to continue existing projects is taking place. So, too, can projects that have multi-year money or are funded in a different manner. This is your addressable market until something changes.

The hiring freeze that isn’t is still a distraction:  First, there was an Executive Order requiring all federal agencies to stop hiring new employees.  Many agencies also interpreted this as a ban on promotions.  Now, there seem to be more exceptions than the rule itself.  DOD alone, for example, has issued 16 exceptions to the “freeze.”  Internal promotions can also still move ahead.  While this is all generally good news, the substantial confusion this has caused has slowed business and been a huge distraction for your government customer.  The very people you want to meet with have been, and may continue to be, closeted in multiple meetings over what the freeze means for their agency or department.  Once the meetings end, directives must be written.  More than one contractor has been told that business has to wait until personnel matters related to the freeze are addressed.  The good news is that this issue should be worked out soon, but that doesn’t mean there might not be another one coming right behind it.

The best bet for government contractors right now is to stay focused, try to maintain communications with prospective clients, and to pay attention to what Congress might do with funding when April rolls around.  Above all else, patience is important.  A sense of humor couldn’t hurt, either.



Larry Allen

About Larry Allen

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Larry Allen has over 20 years’ experience in government acquisition. He has provided critical information and advice to most of the top 10 federal contractors doing business with the government today. His relationships in, and knowledge of, the federal contracting arena are second to none. He is routinely sought-out by contractors, investment firms and other consultants to provide expert insight into various aspects of the federal market. This includes spending trends, market leaders, acquisition policy, and the opportunities to shape federal acquisition via coordinated government affairs campaigns. He served as a member of the Multiple Award Schedule Advisory Panel and the “Federal Contracts Report” Board of Advisors. He has testified often before committees of the US Senate, House of Representatives, and several state legislatures. He hosts his own radio show on government procurement, “Off the Shelf” on Federal News Radio in Washington, DC.

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