As the COVID-19 pandemic progresses, the challenges facing government contractors are presenting unique changes in operations. While those changes haven’t all looked the same, there are a few commonalities that we’ve seen from client to client and how they’ve handled them. At the same time, some of the changes are here to stay, and we’d like to highlight what they are and how they’ll impact the government contracting industry in the long term.
What changes have already taken the industry by storm?
- Contract Negotiations: Government contractors are having to proceed cautiously with all contracts, especially when negotiating fixed-price contracts. For the most part, cost-reimbursement contracts don’t present huge risks because they’re considerate of situations like the COVID-19 pandemic when many contracts are on hold.
On the other hand, fixed-price contracts and subcontracts don’t necessarily have the same flexibility. The risk is on the seller, not the government agency employing them. When you’re negotiating contracts in today’s climate, be precise and be sure to consider the contract/subcontract type and the risk involved before moving forward.
- Remote Work: Obviously, this isn’t specific to government contractors, but remote work has made the day-to-day operations for many people much trickier, requiring succinct planning and reliable communication among employees and partners. Not only is direct access to staff and customers hindered, but the closure of many buildings and work sites has placed significant restrictions on project progression.
Additionally, remote work requires IT tools, strategies, and cybersecurity measures that allow a business to continue working safely; however, many companies are finding their current infrastructure doesn’t support remote work. Shopping for the right IT services to match your business needs has always been time-consuming, and current events aren’t making it any easier.
- Project Delays: One of the biggest challenges facing government contracting during the pandemic is the massive surge in project delays and postponements. For many government contractors, project delays have affected more than half of their overall contracts, and postponement continues to trend in current jobs and bids. Other delays are happening because of increased costs; for instance, the threshold for purchases in defense of the virus have risen from $10k to $20k around micro-purchases and required documentation.
The effects we’ve already seen have paused the progress of contracts and wins. Still, the best course of action right now is to do four things: give timely notice, prioritize documentation, continue performing when possible, and remain positive. This last one is tough: we’ve all heard it in difficult times, but the constraints of our new normal are making positive forecasting for our businesses a tricky mindset to grasp. Nonetheless, it’s essential for progressing through the new boundaries COVID-19 has set in government contracting (and every other industry, for that matter).
What does the future hold for Government Contracting?
We can’t say for sure how things will look when the situation allows us to “go back” to non-distancing lifestyles, but we have some sound predictions we believe will change Government Contracting for years to come.
Remote work isn’t going anywhere:
Finding the right software to support remote work may be difficult, but many government contractors are figuring it out. And, while adjusting to their new day-to-day operations, people are realizing there’s opportunity to maintain remote workforces permanently. Of course, onsite workers can’t do this, but the home office may very well be a permanent location for employees in accounting, HR, and corporate positions.
U.S.-based manufacturing will take the lead:
The shutdown of international imports has revealed the need to reassess domestic manufacturing opportunities and the overall supply chain of industrial products for government contractors. This has been in the works for a while, but the pandemic has revitalized interest in U.S.-based manufacturing. The least we can say is that many companies will dissolve current deals with international manufacturers and begin negotiations solely with U.S.-based companies.
Enhanced regulations around technology:
From data localization to cybersecurity, the regulations and requirements around business technologies will be significantly enhanced in the coming years. The initiatives to tighten up these regulations have been in play for quite some time now — e.g., the Cybersecurity Maturity Model Certification (CMMC) and the California Consumer Privacy Act — but there is going to be revitalized vitality around creating safer technology. With cloud-based technology being the major tech shift right now, the drive to make it safe and accessible at every level is in full force.
Moving Forward With Optimism
A lot has changed in the past few months, but again, keeping an eye out for every potential flare of positivity during this pandemic is a best practice for everyone. Keeping your government contracting business aligned with current changes and making room for changes to come might provide your company with a bright future.
Additionally, making sure your clients know that you’re a trustworthy and reliable partner is one of the most important things you can do — the value in being confident in our partnerships is never unappreciated. Finally, if one thing is for sure, it’s that we cannot hoard our knowledge or expertise to gain a competitive advantage; sharing what we know is vital to securing a successful business and economy post-COVID-19.
At GovCon365, we’re hosting a webinar series to address our industry’s current state to help our clients and our peers navigate the issues we’re all facing. As the situation continues to evolve, the topics we cover progress following the most pertinent information to benefit all attendees.