We have discussed contracting trends in the past but not industry-specific trends.  That is what we are doing today.  We are looking at the Information Technology industry trends for government contractors.

The federal government will continue its IT consolidation and “as a service” throughout the next few years.  A report released by Bloomberg Government (Jan 7, 2020) broke down the areas likely to impact the information technology industry.

IT Consolidation

Consolidation is not something new.  It has been gaining momentum over the last five years.  The Office of Management and Budget (OMB) found this the preferred solution and accounted for $40 billion in spending in 2019 alone.  The government is referring to these consolidations as the best in class or BIC for short.  OMB is pressuring agencies to move from stand-alone contracts to designated BIC as part of its category management strategy.  GSA has already made changes to its Multiple Award Schedules based on OMB guidance.

GSA Multiple Award Schedules

GSA has already revamped its Multiple Award Schedules by consolidating 24 categories into just one category.  GSA, however, is still modifying the terms and conditions on the contracts.  It will take a while as there are over 18,000 contract holders.  Hopefully, GSA was able to organize the one category so that government employees can easily find the service that they need. Next, we will look at “as a service.”

Government buying “as a service’.

These, as a service contracts, refer to cloud computing.  These contracts are platform, software, or infrastructure and will likely increase over the coming years.  We can expect an increase in security operations centers as a service and mobile backend as a service.  Why?  The government is moving to a more flexible model that allows it to buy as many services as it wants, instead of a set number of licenses.  Thus, allowing the government to expenditure operating costs instead of purchasing capital assets.  Also, it will reduce delays waiting for contracting officers to buy additional licenses to meet the government’s needs.  Next, we will review the Small Business Runaway Extension Act.

 

Small Business Runaway Extension Act

This Act will allow small businesses to average their earnings over five years instead of three years.  The result is to reduce the revenue spikes that can happen in a single year.  This can cause many small businesses to reevaluate their competitors.  The result is there is going to be more competition than ever on government contracts.

Cybersecurity

The Department of Defense’s Cybersecurity Maturity Model Certification (CMMC) will impact contracts.  This certification sets different levels of cybersecurity that contractors and their subprimes must meet to do business on various contracts.  CMMC will impact vendors as vendors that lack the certification are not eligible to compete for certain contracts and task orders.  The result will be an opportunity for businesses to differentiate themselves based on the cyber defense postures and raise the demand for third-party assessment services. 

Summary

Government contracting is continually revolving, and small businesses must be able to meet the needs of the government or look for work elsewhere.  These changes will create new opportunities for small businesses who are poised and ready. 

I believe that these changes are going to reduce the number of small businesses eligible to compete on government contracts.  Why?  You must meet all these requirements and still be able to compete against small businesses that were yesterday considered large businesses.  In addition, additional certification requirements can be costly to small businesses and many will not be able to afford the certifications.                                                                             

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