The BDO GovCon Week Ahead - April 2021

April 2021

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April 19, 2021

Big Spending Increases for FY22, But Maybe Not Where You Would Expect: The Biden administration has officially released its 2022 budget request, and federal civilian agencies—not defense agencies—are seeing a record double-digit increase. This budget proposal would see $769 billion go to non-defense discretionary spending, a 16% increase over the 2021 budget, and $753 billion go to defense programs, a 1.7% increase over the 2021 budget.
 
The full budget has yet to be released, but from the preview the Biden administration has provided, this request would see nearly all civilian agencies receiving notable spending increases. This includes, but is not limited to:

  • The Department of Health and Human Services receiving a 23.5% funding boost
  • The Department of Interior receiving a 16% increase
  • The Environmental Protection Agency receiving a 21.3% boost
  • The Department of Commerce receiving a 28% increase
  • And the Department of Education could expect to see a 41% increase over current funding levels

In addition to these civilian agencies, other agencies like the General Services Administration, National Aeronautics and Space Administration, Cybersecurity and Infrastructure Security Agency, Department of Veterans Affairs and Department of Homeland Security can all expect to see millions, or even billions, in increases to their current funding thresholds.
 
The details currently provided are only a brief preview of the administration’s full 2022 budget request. The full proposal is expected to be released in the months ahead. Although the budget is not yet finalized, contractors can expect to see an influx of activity, especially from civilian agencies, in Government FY22.

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Where Do You See Yourself in Four Years? At 15% ... The answer to everyone’s least favorite interview question is rarely expressed as a percentage, but the Biden administration is making an exception in the case of small disadvantaged businesses (SDBs) and the percentage of federal contracts awarded to them.
 
The goal is that, by 2025, 15% of contracts will be awarded to SDBs, and the requested fiscal year 2022 budget would allocate an additional 9.4% to the Small Business Administration (SBA) to staff up its contracting programs. Further, it would also allocate an additional $30 million to the SBA to continue to grow its Small Business Innovation Research and Small Business Technology Transfer programs, which is more than double the normal funding levels.
 
As anticipated, the authors of the budget document ensured that it is consistent with the Biden administration’s commitments to increasing small business involvement in federal contracting.  They describe the rationale for the requested increases as steps that will be taken to expand the number of opportunities for small businesses owned by those who are socially and economically disadvantaged and “expand the geographic and demographic reach of the innovation programs, enhance outreach and training efforts, support the development of innovation hubs across the nations, and help ensure America’s small businesses stay at the cutting edge of innovation.”

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U.S. Army Looking into Future Biological Threat Detection: As the global recovery from the COVID-19 pandemic continues, the U.S. Army is looking into new biosurveillance systems that can help to predict and detect future biological threats. The U.S. Army Contracting Command, on behalf of the Combat Capabilities Development Command Chemical Biological Center, released a request for information (RFI) on Monday, April 5, 2021, expressing interest in available commercial off-the-shelf “disease-forecasting tools or epidemiological decision support systems.”
 
The RFI describes the system technologies of interest as “capable of providing early indications and warnings of potential emerging biological threats and will assess technology capability to identify, accumulate and synthesize relevant data from open sources into timely and operationally actionable information.” The bio surveillance systems of interest are for several data types, including “infectious diseases, zoonotic diseases, plant pathogens and surrogate secondary information, excess mortality, increase in hospitalizations, bio security threat information, surge in prescriptions, etc.”
 
The RFI includes several required capabilities such as timeliness and ability to identify and report potentially significant infection outbreaks, ability to leverage artificial intelligence within the system, effectiveness of web-scraping and translation methods, and ease of use. Additionally, the system should have the ability to incorporate “into a broader integrated bio- and health surveillance architecture for Department of Defense and interagency application”.
 
Responses to the RFI are due by Friday, April 30, 2021, and interested parties can view and respond to the RFI on the beta.SAM website.

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April 12, 2021

All Aboard the Modernization Train, Next Stop: State Department: The U.S. State Department is the latest passenger hopping on the IT modernization train, as reflected in a request for information (RFI) published Monday, March 29, on beta.SAM.gov.  Many of the department’s contract vehicles are nearing the end of their periods of performance, and with that comes an opportunity to shift the agency’s IT acquisition strategy.  “IRM [Information Resources Management Office] is currently undergoing a reorganization and is pivoting to a project-based mentality instead of a technology-based one,” the agency states in the RFI.
 
Currently, IRM purchases IT services through a host of contracts and has been focused on purchasing specific technologies.  However, the proposed $4 billion vehicle aims to shift this focus to a project-based, problem-solving strategy, with an emphasis on follow-on acquisitions.  Further, IRM officials propose organizing the new contract around 11 functional areas, including: data center services; compute services; services for storage; services for networks; services for platforms; services for output; services for end-user solutions; application; delivery; security and compliance; and IT management.
 
The agency asked for feedback on what industry would like to see in the resulting award(s), including contract ceiling, contract vehicles, composition, proposed number of awards and existing contract vehicles, and responses were due last week.  As such, interested potential offerers should continue to monitor beta.SAM.gov and the GovCon Week Ahead for news on potential solicitations.

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Love “IT” When a Plan Comes Together: Earlier in April, President Biden announced his intent to nominate Michael Brown for the Under Secretary of Defense for Acquisition and Sustainment (A&S).  This position is responsible for overseeing acquisition innovation; recruiting, developing and retaining a diverse A&S workforce; and responsible for building a safe, secure and resilient defense industrial base, which Congress and Deputy Secretary of Defense Kathleen Hicks seem to be most concerned about.
 
Brown, previously the CEO at two large, publicly traded tech companies, is currently the director of the Defense Innovation Unit (DIU).  Since 2018, he has led DIU through bringing 26 new capabilities to the warfighter and introduced 70 first-time vendors to the Department of Defense (DoD).  Further, Mr. Brown has also authored Pentagon studies on China’s participation in the U.S. venture ecosystem and led efforts to diversify the U.S. supply chain with U.S. technology.
 
This nomination further drives home the current administration’s goals and objectives included in the Made in America Executive Order and reinforced by the Defense Critical Supply Chain Task Force activation by the House Armed Services Committee.  The DoD is continually looking for ways to increase the involvement of domestic tech companies and recognizes that the Federal Acquisition Regulation (FAR) and its DoD supplements can make it undesirable for these companies to work with the government.  Mr. Brown’s nomination would give the Biden administration someone familiar with both sides of the coin and would put him in a position to start addressing policies and regulations that have effectively been barriers to entry for years.

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New Roads on the Horizon? Warmer weather, lighter days, inevitable sneezes and CRASH, pothole season …  Spring is officially upon us.  In an effort to combat those dreaded potholes, President Biden has unveiled a massive infrastructure proposal to the tune of nearly $2 trillion.  All jokes aside, this proposal, dubbed a “once-in-a-generation investment,” is designed to provide the funds necessary to modernize many facets of infrastructure ranging from high-speed broadband and school construction to affordable housing and, yes, overhauling those dreaded potholes, among other issues, on U.S. roads and bridges.
 
The metrics for this proposal, officially named the American Jobs Plan, are staggering and include, but are not limited to:

  • $621 billion for transportation infrastructure including roads, bridges and rail services
  • $213 billion for creating over 2 million affordable homes and commercial spaces
  • $111 billion for the nation’s piping systems (think drinkable water, wastewater and storm drains)
  • $180 billion for technology and climate science R&D

To pay for the massive $2 trillion price tag, the Biden administration has proposed increasing the corporate tax rate, which is currently at an all-time low of 21% following the 2017 tax cuts, to 28% and eliminating various tax loopholes.  With these efforts, the administration projects the $2 trillion price of the American Jobs Plan to be fully paid off in 15 years.
 
As expected, this plan has been met with opposition in the House and Senate.  Republicans consider the plan to be too expensive following multiple rounds of COVID stimulus and some Democrats do not think the plan is big enough.  Interestingly, both Democrats and Republicans are showing support for an infrastructure improvement plan; however, the size and extent of the plan is up for debate and will likely change from the current proposal.
 
As such, it appears that an infrastructure improvement bill is in the pipeline at some level. Contractors in the construction, technology and other related sectors should stay on top of the American Jobs Plan and what opportunities may arise from the proposal.

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April 5, 2021

DoD Doubles Down on AI Adoption: We’ve reported before on the Department of Defense’s (DoD) desire to increase and expedite the adoption of cutting-edge technological solutions and tools, with artificial intelligence (AI) commonly being at the forefront.  To double-down on this critical initiative, the DoD’s Joint Artificial Intelligence Center (JAIC) has launched a department-wide development platform that is designed to expedite and expand the testing and overall adoption of AI-related tools.
 
This platform, dubbed the Joint Common Foundation (JCF), is a development, security and operations (DevSecOps) platform spearheaded by the JAIC that seeks to remove existing barriers to AI adoption through providing a protected testbed where DoD users can share data, trainings and algorithms across the various DoD components.  JAIC Director, Marine Corps Lt. Gen. Michael Groen, colloquially describes it as a “lending library,” where one DoD entity can utilize AI data and trainings from another DoD entity and subsequently adapt them to their own algorithms and requirements.
 
In a broader sense, the JCF is designed to help the JAIC become the catalyst for expediated AI adoption within the DoD.  This was outlined in a report from the National Security Commission on AI and calls on the DoD to be “AI-ready” no later than 2025.  So, if you are a contractor in the AI-space, the DoD may need your help!

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Too Many Eggs in One Basket? Department of Defense (DoD) spending is up 18%, but the number of DoD prime contractors is down 36% over the last 10 years.  Further, the number of subcontractors is also down, and the supply chain is being viewed as weak.  Congress has taken notice, and the House Armed Services Committee has activated the Defense Critical Supply Chain Task Force to investigate what can be done, with hopes of significant new legislation to bolster the domestic supply chain by the end of the year.
 
One trend that analysts are tracking is mergers and acquisitions among prime contractors.  Larger contractors continue to acquire smaller contractors and merge with other large companies, which has created a smaller group of primes with more resources to propose on and perform the work.  Additionally, some products and requirements are complex and highly technical; there are only so many small to mid-size U.S. manufacturing and engineering companies that can meet those specifications; and dealing with the Federal Acquisition Regulation (FAR)-based acquisition process doesn’t exactly have these companies pushing each other out of the way to work with the government.
 
While the House’s Defense Critical Supply Chain Task Force will be focusing on potential new legislation, the DoD, under Defense Secretary Lloyd Austin, will also be tackling these matters, as well.  We’re still awaiting the naming of an acquisition chief, but Deputy Secretary of Defense Kathleen Hicks has openly expressed concern about the consolidation of the defense industrial base.  Stay tuned for developments from the DoD and Congress on these matters.

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Science Agencies May Soon Be Doing the SALSTA Dance: Although it’s not a legitimate dance style … yet, the Securing American Leadership in Science and Technology Act (SALSTA) may soon be giving lawmakers and federal science agencies a reason to dance in celebration.  The re-introduced bill proposed on Tuesday, March 23 would nearly double the current research funding across several science agencies.
 
According to the bill’s legislative framework, total authorization levels would increase from $17.6 billion as enacted for Fiscal Year (FY) 2021 to a total of $34.5 billion in FY 2031.  From an individual agency perspective, investments would increase from $7.4 billion to $15 billion at the Department of Energy; from $8.5 billion to $16.2 billion at the National Science Foundation; from $1 billion to $1.9 billion at the National Institute of Standards and Technology; and from $600 million to $1.2 billion at the National Oceanic and Atmospheric Administration.
 
The original bill was introduced under the same name by House Science, Space and Technology Committee Ranking Member Frank Lucas, R-Okla., but the latest version includes an additional section that focuses on research integrity and the establishment of a National Supply Chain Database. “While SALSTA is a comprehensive proposal for investing in American [research and development], there are quite a few sections that can be introduced as individual bills, and we expect to see that soon on critical minerals, advanced recycling and fusion energy, among others,” a member of the legislative staff who helped draft the bill said. “Those all have solid bipartisan potential.”
 
If the bill is passed in full or on a piecemeal basis, the additional funding in research and development could lead to significant opportunities for government contractors in the science and technology sector.

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