Fiscal Cliff Averted? What’s the Real Fallout for Government Contractors?

President Obama just signed into law a bill averting the much discussed fiscal cliff.  So we can all breathe a sigh of relief and get back to work as government contractors, right?  Well, yes and no.  First, the “no” side of the equation.  Though bypassing a looming crisis, Congress postponed dealing with some of the key issues that spawned all this fiscal cliff stuff in the first place.  Our leaders deferred the $1.2 trillion in spending cuts (known as “sequestration”) for two months.  Further, they didn’t raise the debt ceiling even though the Treasury technically hit the $16.4 trillion limit Monday.  These things we’ll need to be addressed just about the time the continuing budget resolution runs out and a new budget battle will be underway.  Looks like more fireworks are in our future.

Now the “yes, we can get back to work” side of the equation.  While an environment of uncertainty such as has been created by the fiscal cliff battle can certainly have a negative impact on programs, I can assure you the federal government isn’t going away anytime soon.   It will still buy billions of dollars worth of stuff every day–hopefully some of it from you.  The main point: uncertainty is nothing new to experienced contractors.  There is always a cloud of precariousness hanging over government contractors:  funding battles, continuing resolutions, political turnover, contract expirations, bid protests, etc.  All of these serve to make government markets a bit rocky.  It’s something you deal with and navigate, meanwhile being thankful for the good characteristics like long-term contracts, and a customer that pays religiously.

So, amidst all the turmoil and uncertainty, just do what you do best.  Build relationships, solve problems, create value.  Do it well and you’ll build bridges across this and any future “cliffs” that may lie ahead.

Government with its Head in the Cloud

Cloud computing icon

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Michael Koploy,  e-Procurement Software Analyst for Software Advice, writes a solid article on cloud computing in the public sector in his State of the Union: Public Sector and the Cloud.  He makes a good case that the key to government movement toward cloud services is, and will continue to be, cost reduction.  With huge debt and significant budget cuts, government IT managers will no doubt be drawn to cloud services as a lower cost approach to on-site management.

So why aren’t government IT managers flying full speed into the cloud?  Michael says threats to security, and a loss of ownership are key barriers.  It only takes a couple of well-publicized security breaches to make IT decision makers in the government squeamish.  Recent hacking incidents raise questions about just how safe the data is when it’s “outside the walls.”

From our perspective, we continue to be bullish on contractor cloud opportunities.  The commercial world is embracing it dramatically, and, like other trends, government will lag behind, but follow.

It goes back to one of our key principles related to selling to government buyers:  they don’t like risk.  IT contractors will need to double efforts at securing networks, data, etc. (and double efforts at convincing buyers).

Relationship Building Strategy: Leveraging Shared Values

If you’ve been in sales for any length of time, you have probably heard the rapport-building advice that upon entering a prospect’s office, you should look for ways to connect with what is important to him/her on an individual level.  Pictures of family on his desk?  Talk about your kids.  Golf trophies on her bookshelf?  Tell her about your trip to Pebble Beach.  The theory?  Practicing this method provides common ground between you and the prospect–important for laying a relationship foundation.

It’s decent advice on the surface, as honing in on prospect passions is clearly an effective method for easing initial introductions.  However, deeper relationship building requires expanding this practice beyond the initial meeting.  Salespeople should move past thinking the method is just an ice-breaking gimmick. Instead, sales pros should focus on ways to build a deeper shared value framework between you as the seller and your prospect (or strategic partner) over the long-term.

Here’s one process for doing this:

  • Observe.  Make a concerted effort to become more aware of interests and values.
  • Capture.  Make notes about the interests/values you uncover and capture these in your contact database.
  • Review.  Revisit the values you have observed regularly so you’re tuned in.
  • Collect.  Be on constant lookout for things you know will pique your prospects’ interest or tap into mutually shared values.  Simple things like news articles or pertinent websites are great.
  • Share.  Commit to passing along content that will be of interest to prospects and reinforce shared values.
  • Be Genuine.  Don’t overdo it.  Trying to “force” shared values where none really exist will backfire on you.

Leveraging shared values takes some effort, but it will help you develop deeper prospect relationships–the absolute key to “owning an RFP” and winning deals.

President Obama Proposes Merging Agencies and Elevating SBA Head to Cabinet Position

Seal of the U.S. government's Small Business A...

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Today, President Obama proposed merging six trade and commerce agencies into a single agency, while elevating the head of the Small Business Administration to a cabinet level position.  The plans would affect the Commerce Department, the Small Business Administration, the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corporation and the Trade and Development Agency, according to an article in the Wall Street Journal.

The president can’t make the change on his own, so he will ask Congress for authority to undertake the reorganization quickly.

According to the Journal article, “the president appears to be seeking to show that he is looking out for a part of the business sector that Republicans say is the main engine of job growth, and one that other Obama policies have hurt.”

At this point it is unclear whether Congress will give President Obama what he seeks. Reorganizations are tricky in Congress because they impact certain committees’ oversight structure.  At least, however, discussion and focus are being placed on Small Business–a key engine for economic growth.

Five Government Procurement Rules that Stifle Innovation

Government procurement is often no picnic.  If you’ve been involved in selling to government for any length of time, you know the myriad of rules, regulations and hoops you must jump through in order to successfully compete.  Of course, these rules are required to a degree to protect us, the American taxpayer and promote fair business practices.  Yet, many times these formalities have detrimental unintended consequences.  This is particularly true in the rapidly changing world of technology.

The linked article, Five Government Procurement Practices that Stifle Innovation, by Justine Brown in Public CIO magazine brings up some great points about how procurement rules can stifle technology (and what some agencies are doing to make things better).  It’s well worth a quick read.

 

Federal Contract Preferences for Companies that Hire Vets?

A federal task force has raised the idea of offering special privileges to government contractors with a certain percentage of employees who are veterans.

The new type of business would have privileges similar to those afforded to small businesses in Historically Underutilized Business Zones, or HUBZones (federally designated economically depressed areas). To be eligible for set-aside contracts, HUBZone small business must have 35 percent of its total workforce living in the zone (and agencies have annual goals for awarding them contracts).

The task force said the government could apply that same principle for companies whose total workforce is comprised of at least 35 percent or more of veterans, including guard and reserve members.

President Obama signed an executive order in 2010 to establish the task force with an intent to help veterans in the government marketplace. He also announced the new Interagency Task Force on Federal Contracting Opportunities for Small Businesses, which will take a broader look at small-business contracting.

 

Finding Business Opportunities within Federal IT

A new survey by the immixGroup (highlighted in Washington Technology) says federal agencies are emphasizing value measurement, process improvement, elimination of redundancy, and the adoption of new technologies to improve operations.  Buying trends expected to emphasize cybersecurity, cloud computing/virtualization and telework/mobile computing.

The 2012 Federal IT budget request is approximately $80.9 billion up slightly from the $78.8 billion IT budget in 2011.  For 2012, 52 percent of the request is for the civilian sector and 48 percent is for defense.

Some 75 percent of civilian agencies are expected to be utilizing cloud technology in some capacity by the end of 2012, the immixGroup survey said.

Teleworking and mobile computing are also among the most important new initiatives being considered by the federal government, with mobile Internet and e-mail usage surpassing desktop Internet and e-mail by 2014.