GovCon Through the Trump Transition: Finding Business Opportunities and Focus

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Cameron Leuthy, senior budget analyst at BGOV

Every new administration likes to come in and try change things up, Bloomberg Government analyst and transition expert Cameron Leuthy told WashingtonExec’s general management council last week, and this one is no different.

But over the last few weeks of rocky executive order rollouts, media meltdowns and massive disruptions of personnel and processes across multiple government agencies, no one seems to know what’s going on. So, where does that leave the govcon industry?

“I think it’s fair to say that this particular transition is going to be different than those in the past,” Leuthy said. “Because of the nature of your work as government contractors, it’s going to be up to you to help your government clients manage this change.”

The Budget is a Battlefield.

The crux of the challenge, Leuthy said, is that while the Trump administration and Congress are waging battle over budgets and presidential appointees, the government still has to run. That task falls to the career civil servants. While there’s always a period where politicals don’t trust the civil servants (and vice versa), there’s a chance that for this administration, this mistrust could last for all four—or eight—years. Considering how the first few weeks of the administration have played out, many civil servants are becoming even more risk averse than before.

Dan Harris of SAIC is the chairman of WashingtonExec’s general management council. When he asked Leuthy how this risk aversion would affect request for proposals timelines and award decisions, Leuthy said it may, but the difference wouldn’t be significant.

BGOV’s Donald Thomas added that while there are delays, things are moving forward. His team has done some modeling looking at budgets, contract and proposal cycles, and delays.

“It didn’t look great,” he said, “but it didn’t look different.”

Speaking of Spend

Most people expect the departments of Defense and Homeland Security to get a bit of a budget boost, but where those dollars will come from is unclear. The cuts the administration has proposed in executive orders, for example, are still bound by laws. When asked if they’re taking that into consideration, Leuthy said no.

“Politics is poetry, but policy is prose,” he said, “and they are hitting a prose wall right now. That’s why we talk about continuity, even though there’s all this promise of change.”

It’s possible additional funds will be put in the overseas contingency operations account, which is not subject to the Budget Control Act caps. But Republicans on the Hill (namely Sen. John McCain of Arizona) and in the administration, including Donald Trump’s pick to head the Office of Management and Budget, Mick Mulvaney, are opposed to inflating OCO. Putting it back in the base, Leuthy said, “would be good governing and more honest accounting, if you will, but it will take time.” And if there’s one thing we know about this president, it’s that he’s impatient.

Yet, Trump has also made clear he’s looking for cost-savings everywhere, including at DOD. There’s going to be pressure there, just like at every other department, to find savings. Here, too, is where government contractors can help.

“The government is going to be under huge pressure to be fiscally responsible,” Leuthy said. “They’re going to need a business case. It’s not just about a better mousetrap; it’s about a better mousetrap with a business case.”

 

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