2012 is fast approaching, and with it comes big changes in the Federal IT industry. WashingtonExec gave local executives the opportunity to share their thoughts on where they see the government contracting industry headed.
Today’s “2012 Outlook” is from the Senior Vice President of Civil Agencies at STG Inc., Mark Jendzejec.
WashingtonExec: What will next year (2012) hold for Government Contracting? More M&A Activity? More IT budget cuts?
Mark Jendzejec: Next year, 2012, will present both industry and government with unprecedented challenges especially as we plan beyond 2012. There are many factors that have yet to play out that will affect our budgets such as global and US debt, terrorism, rising cost of healthcare, social security and the aging US population about to begin participating in the entitlement programs. The appetite and demands for both discretionary and non discretionary funds will increase as agencies vie to protect their budgets. In 2012 we will have to begin to deal with these issues and lay the ground work for future change. We will all be faced with finding efficiencies in these lean economic times. Both government and industry will be forced to prioritize and focus attention to key core areas of mission and capabilities. Industry will look to ensure they retain their current customer base while investing in key capabilities that will help position for future market growth.
Additionally, look for growth through the M&A process as the activity begins to heat up during the upcoming lean budget environment. Companies will look to the M&A process to expand into new customers, add new technology or expertise to their existing portfolio or look to create a more competitive, cost efficient company. Budget cuts and freezes will affect our industry. The specifics will play out over the next year as the government decides its priorities regarding the discretionary budget, especially those essential to national security. As these priorities are being decided we are beginning to see delay’s in the release of new and follow on acquisitions resulting in more short term bridge type contracts for existing contract holders. Companies will find it imperative that they demonstrate value added services to the government through the introduction of technology rich solutions married with deep experience and understanding of the customer culture, mission and environment.
WashingtonExec: What shape will collaboration take between industry and government in addressing tough issues: Healthcare, Defense, Cloud?
Mark Jendzejec: The paradox of government contracting in 2012 and beyond is that, because of the world financial crisis and the US debt, the United States government must reduce costs, and government agencies will inevitably reach out for the seemingly easiest budget to cut — contracting dollars — at a time when the need for the intelligent use of contracting is arguably at its highest point in history. Why? Because the government will need the agility and creativity of the market to tackle burgeoning healthcare costs, develop effective cyber solutions, and implement technology-intensive counter-terrorism strategies, but the march toward “lowest cost” contracting decisions will never achieve them. Both government and industry will have to change, and, mostly, develop a true partnership to meet the challenges ahead in the coming years.” Healthcare, Defense, Cloud, Cyber are all important topics that affect everyone in this industry. These topics are increasingly being addressed in the various industry and government symposiums, conferences and other public and private forums. Increased attention to acquisitions and acquisition strategies should take place in the form of RFIs followed by face to face discussions that enhance both the governments and industry partners perspective on needs and potential solutions. Improved collaboration between government and industry will serve to improve mission efficiency in these turbulent times.