Government contractors need to prepare not only for a more austere future for government spending, but also adapt to a shifting landscape that is favoring task orders over traditional acquisition contracts, a leading government forecasting group said today.
Among the forces reshaping that landscape are agency efforts to accelerate the delivery of technology and other projects. One way they’re doing that is by breaking projects into smaller, more modular chunks. That has resulted in a growing use of task orders, said
Kevin Plexico, senior vice president for research and analysis services at Deltek, speaking at Deltek’s FedFocus 2012 forum today.
Multiple award task order based contracts permit agencies to establish a limited set of companies, typically with specific skills, to compete for individual projects under a pre-negotiated set of terms and conditions. They also help deal with the fact that though government contract spending has increased by 50% over the past five years, the size of the acquisition workforce has remained flat.
Consequently the volume of multiple award task orders has more than doubled over the past five years (in light blue bars in chart above), while spending through GSA Schedule 70 and other contract vehicles has remained relatively flat.
Plexico outlined these and other facets of the 2012 federal budget that are likely to impact the government contracting community.At the heart of Deltek’s outlook is the administration decision to lower discretionary government spending to $1.043 trillion, from $1.211 trillion in fiscal 2011. (See full slide presentation here.)
“We’re not talking about that the federal budget is falling precipitously,” he said, trying to put the expected budget cuts in perspective. “Put in commercial terms, you see much more fluctuation in commercial markets than you see in the government market.”
But contracting firms which have benefited from ongoing government projects of the past can expect to see fewer contracts and fewer players getting those contracts in the coming fiscal years, he said.
“The (federal) budget environment is leading to a much more competitive landscape for contractors,” he said. “We’ll see companies protecting the work they’re doing,” and having to look at other opportunities to grow, including acquiring other companies, other skill sets, or realign with companies which have existing contracts, he said.
“Companies must adapt to an accelerated proposal environment brought on by task order contracting,” he said.
That point was brought home by Homeland Security Department CIO Richard Spires and Dave Wennergren, assistant deputy chief management officer for the Department of Defense, who spoke at the forum. Both stressed how new budget pressures were forcing the adoption of agile – or rapid cycle, smaller increment-development in a growing number of projects, and with that trend, the need to accelerate IT acquisition.
“We’re at a tipping point,” Spires said, referring to expectations of “real cuts in IT” at DHS heading into the next fiscal year, and the need to find lower price points for s across DHS, at lower price points and develop them more quickly.
Spires acknowledged that DHS is still coming to grips with how to consolidate 132 human resource information systems and nine learning management systems down to a much smaller number. The only way to get that done, he said, involved getting all the right players in a room and hammer out what those shared solutions needed to be and established which existing platforms were the most capable of supporting them.
Wennergren added that an essential element to making agile development work is a foundation of enterprise architecture that ensures projects and shared solutions are properly aligned with the underlying mission and business needs of agencies.
For contractors, especially those working on Defense Department projects, the new fiscal austerity will mean not only more fixed priced and task order contracts, but also more risk, said Brian Haney, Deltek vice president, client services. He reiterated “If you’re not a modular development shop and you’re looking to get into DoD, you might consider developing strategic relations” with contractors who are.
— by Wyatt Kash – Published by Aol Government – November 3, 2011 – http://gov.aol.com/2011/11/03/government-contracting-landscape-shifts-as-task-orders-rise/