Federal Contracting Trends: What can we Expect in 2020?

Federal money spending government

If 2019 is any indication, Federal contracting in 2020 promises to be a very interesting year. Federal contracting has experienced steady growth – an average of 6 percent year-over-year – for the last five years according to Bloomberg Government. Spending jumped 9 percent in 2018, representing a 50 percent uptick from previous years.

A continuation of this growth next year will be driven primarily by an increase in defense spending and wider scaled deployment of new technologies across the Federal government.

This growth will present new opportunities, and of course, new challenges for those operating in this space. Here are some top-line issues that will impact Federal contracting in 2020 and beyond.

Teaming Agreements are on The Rise

Teaming arrangements have become more popular over the last several years in Federal contracting, and for good reason. Teaming helps contractors gain access to work, minimize risk, increase knowledge and offer a more competitive price point.

Small businesses view teaming as the most effective way to thrive in the competitive Federal market. There will be a significant uptick in teaming in 2020 as both smaller and larger contractors look to provide the types of capabilities needed to fulfill a wide variety of requirements on larger contracts.

Large Contracts are Becoming More Accessible to Small Businesses

The Federal government has made it a priority to award more Federal contracts to small businesses. In fact, nearly a quarter of prime contract dollars have gone to small businesses over the past five years. In 2020, small businesses will continue to have greater access to large contacts that previously only went to big contractors. A primary reason for this is the focus on HUBZone small businesses, which helps distribute contract proceeds to underutilized areas.

The Importance of Being “Employee-Centric”

It is no secret that top talent is at a premium in today’s Federal contracting market. In an effort to attract the best and the brightest, employers are offering perks such as flexible work schedules, increased benefits and telework. These efforts help attract and retain qualified candidates. However, a more “employee-centric” work environment is key for maximizing employee satisfaction. This can include processes and procedures that ensure open communication and flow of positive feedback. It also means offering flexibility in terms of the types of projects that team members can support.

Increasing Need for Best in Class Contracting Vehicles

For several years now, the Federal government has been pushing agencies to access best-in-class (BIC) government-wide acquisition contracts (GWACs) to increase their buying power. The overall assessment is that this increases the need for teaming across the small business community. Small businesses that are adequately prepared for these requirements should expect to expand in the coming year. The use of these vehicles will grow, which will allow government to access specific skills more efficiently.

Get Ready for 2020

With a growing economy and expanding government priorities, Federal contracting has a bright future in 2020. Being on top of trends will help contractors gain opportunities and smartly navigate whatever issues arise. While the trends discussed in this article are not all-encompassing, they will likely be in the headlines throughout the next twelve months and beyond.

Increase your awareness of these key trends and get ready to take advantage of the opportunities 2020 will bring.

By: Walter Barnes III, president and founder of PM Consulting Group