With two months left in the federal fiscal, it’s not easy being a contractor. As has been the case for the past decade, the government is headed toward a continuing resolution because Congress is unlikely to finish its budget work before the November elections.
It’s not because of the Hill’s workload. Members have shown they can get anything done, however sloppily, when there’s sufficient pressure. Witness the recent passage of the Transportation bill. In this case, so much philosophical and ideological baggage rides on the budget that Members would prefer to finish the budget in the lame duck session. That way compromises can’t be used against them, or so they reason.
But budget inaction does guarantee a CR, and CR’s of indeterminate length make it harder for both program managers and contractors to do meaningful planning. This is a hunch on my part, but I think this situation favors incumbents on new task orders for unfinished projects. Sticking with an incumbent makes a task order look less like new ground, and new initiatives are theoretically prohibited when the government is operating under a CR.
Planners within the government have their own uncertainties as they work on 2014 budgets. They don’t know with absolute certainty which items they planned for 2013 will actually end up funded for 2013. In a practical sense, most of it will, but controversial programs often get horse traded in the final moments of deadline compromises.
But contractors have a few other uncertainties to deal with. One is small business. No matter how hard administrations try and push the idea of small business contracting, the government never seems to quite hit the legal target of 23 percent of contracts going to small and disadvantaged businesses. The latest Small Business Administration report, covering fiscal 2011, shows agencies awarded $91.5 billion in contracts to small companies, down from $97.9 billion in 2010. The absolute number isn’t as important as the percentages. The government handed 21.7 of its contracts to small businesses last year, down from 22.7 percent the year earlier. The figure for Defense was 22.28 percent.
Bloomberg analysts predict the government will be off for 2012, too. Bloomberg’s Danielle Ivory reports that a special set-aside program for women-owned businesses – launched 11 years after it was authorized – yielded just $21 million in contracts since April. A slow start.
And yet, as we’ve noted, bills from the House Small Business Committee would raise the required threshold to 25 percent, liberalize rules for allowing women-owned business sole-source awards, open up SBA rulemaking transparency, tighten up contract bundling, and extend mentor-protégé relationships beyond 8(a) small companies.
It’s anyone’s guess what the fallout from all of this might be, but it does have large contractors wondering. Especially when they see agencies like the Homeland Security Department going out of its way to restrict service contracts to small companies.
Contractors also face another new challenge, in addition to many others we’ve pointed out over the last year. Now, near-twin bills in the House and Senate would put responsibility on contractors working overseas to make sure subs don’t engage in “human trafficking.” As Alan Chvotkin of the Professional Services Council points out, imprecision in the language creates both loopholes and unlimited liability. The House version made it through the whole chamber as part of the Defense authorization bill.