The pandemic has been the major focus of 2020 in all areas of our lives and the government contracting market was not exempt. These are unprecedented times; every market has been affected by COVID and its presence has forced all of us to adapt. This year in government contracting seems to be yet another record year as far as spending. With the year not quite over yet, it would be premature to declare this feat, however, with 2019 spending exceeding $600B and marking a fourth-straight year of spending increase, 2020 has a shot at a fifth. After all, we the people played a huge part in responding to the demands of the virus, and the government spent a lot of money and sought the help of contractors in its attempt to mitigate.
The federal contracting market has seen some trends this year that are worth noting, some related to COVID and others not. Below are some of said trends provided by Washington Technology:
- Incumbents Remained Entrenched – With the pandemic, many government agencies were reluctant to move contracts away from incumbents this year. This resulted in less opportunities for small and medium sized companies to expand to new client spaces. It remains to be seen if this trend will continue into 2021 especially given the changing administration.
- Pricing Became More Competitive – As federal agencies worked through budget constraints, the need for price competitive bids increased in 2020. This forced companies to “prune and tune” throughout the year in an effort to remain at price points that were often tight to begin with.
- More of a Focus on Best in Class Vehicles – For a few years now, the federal government has been pushing agencies to access best-in-class (BIC) government-wide acquisition contracts (GWACs) to increase their buying power and access to pre-vetted industry partners. In general, this has been a positive for mature small businesses and should continue to expand in the coming year. OASIS, STARS III, CIO-SP4, Polaris and a multitude of other vehicles are becoming more prevalent in federal contracting.
- New Business and Networking Became Harder – This was mostly due to the pandemic. Meeting prospects and providing capability briefings was much harder in 2020 as there was little opportunity for in-person meetings. It is much harder to make new connections and provide a clear view into company culture and compatibility through Zoom or Google Meet.
- The Importance of Being “Employee-Centric” – It is no secret that talent is at a premium in today’s federal contracting market. In 2020, employers offered flexible work schedules, increased benefits and telework to attract and retain top employees even before COVID hit hard in March. These benefits certainly help attract qualified candidates. However, a more “employee centric” work environment is key for employee satisfaction. This can include processes and procedures that ensure open communication and positive feedback. It also means offering flexibility in terms of schedules and projects that a team member is assigned. This is a trend that will continue going forward.
- Teaming was on the rise – There was an uptick in teaming and joint ventures as smaller contractors looked to market collective capabilities and large primes saw more attractive opportunities in the set-aside arena. Teaming arrangements have been becoming more popular over the last several years in federal contracting, and for good reason. Teaming helps contractors gain access, minimize risk, increase knowledge and offer a more competitive price point. In fact, small businesses often find that teaming is the most effective way to compete and thrive in the federal market.
Author: Paul McVeigh