What a difference a few months makes!

It’s been just over five months since I posted my last blog. What’s different? A few things – a new year, a new President and lots of bad economic news (1.8 million job losses in the last three months, the Dow Jones Industrials down approximately 45% since the end of September, major bank rescues and the auto industry on life support and another “Ponzi” scheme scandal). We certainly live in interesting times.

What does all this mean for the Government contract industry? Lots. However, I think a little optimism is in order.

Government spending: The federal government is going to spend nearly $1.5 trillion dollars between TARP and the economic stimulus package just signed – $1,500,000,000,000 – that’s a lot of zeros. Certainly the largest chunk of this spending is not going to be contracted out. OK – how about 10%? That’s $150 billion dollars! A quick look at the stimulus package “American Recovery and Reinvestment Act of 2009” provides a short roadmap - $19B for Health Information Technology, $7B for environmental cleanup, $0.9B for Government Technology Improvements, etc. In order to deploy these funds quickly, the Congress and the Administration are going to need the support of the government contracting industry.

It will take time to deploy all those federals funds and the effect of that spending will not produce an immediate up-tick in the economy. Stan Soloway of the Professional Services Council (PSC) was recently quoted in the Washington Post about the effect on contacting:
(http://www.washingtonpost.com/wp-dyn/content/article/2009/02/24/AR2009022403504.html)

Stan’s comments are on point concerning the need for a robust government procurement workforce and how critical that is for both Government and Industry.

A cautionary note:

Government contracting and outsourcing has never been popular, but the economy is putting more political pressure on our market. Just last week President Obama ordered a review of contracting practices:

(http://www.washingtonpost.com/wp-dyn/content/article/2009/03/04/AR2009030401690.html?sub=AR)

Clearly the environment for contractors has shifted. You need to ensure all your internal controls are operating and continue to train and educate your staff on the regulatory environment.

Keeping forging ahead:

I’m very optimistic – once the wheels in the procurement process get turning, there is a bright future for this market.