The BDO GovCon Week Ahead - January 2021

January 2021


January 18, 2020

Government Contract Spend Hits 5-Year High: In fiscal year (FY) 2020, U.S. government agencies spent $681 billion on contracts, which is more than they have in any of the previous five years. This number represents a 43 percent increase from the $478 billion the government spent in FY16.

Between FY19 and FY20, the government allocated an additional $21.2 billion to the medical sector, $9.1 billion to R&D, $6.1 billion to professional services, and $5.5 billion to information technology (IT). These sectors saw the most growth during this time, and the COVID-19 crisis is the common denominator when accounting for this additional spend.

Following existing year-over-year trends, Government-Wide Acquisition Contracts (GWACs), which are utilized exclusively for IT purchases, have continued to increase, hitting nearly $21 billion in FY20. The COVID-19 pandemic has bolstered the growing use of Other Transactional Authority (OTA) contracting vehicles. In FY20, OTA spending more than doubled to $18 billion compared to $8 billion in FY19.

As the COVID-19 pandemic continues and government spending achieves record highs, it is expected that these trends will endure through the end of FY21.

For more informatoin, please click this link

Pendulum Swinging Further Toward Fixed-Price Work: One of the first topics covered in any introduction to government contracting course is an explanation of the different contract types covered in the Federal Acquisition Regulation (FAR) and the risks and benefits associated with each. Often, tenured instructors/consultants will use a pendulum metaphor to describe shifts in how much risk that the government is willing to accept in its acquisitions, with the two extremes being firm-fixed-price (FFP) contracts on one side and cost plus fixed fee (CPFF) contracts on the other.

2021 is no different, with the Office of Management and Budget (OMB) issuing a refresher memo earlier this month, asking agencies to take additional steps to keep the pendulum on the fixed-price side of the contract type range. OMB acknowledges that there are certain acquisitions, e.g., those for research and certain development work, that cannot be scoped into a fixed-price agreement. However, they are asking agencies to take the following steps for all other acquisitions:

  • Document contract type rationales in business cases, as required under OMB Circular A-11
  • Review and clarify policies to support the reduction of risk when selecting contract types
  • Support exploration of tools to assist agency program, budget and acquisition officials in making decisions on contract type
For more information, please click this link.

Navy Reopens Massive RFP: Last week, the U.S. Navy reopened the Request for Proposal (RFP) for submissions from companies seeking a lucrative slot on the branch’s 10-year, $50 billion SeaPort Next Generation (NxG) contract.

The naval initiative requires engineering and program management services to “span the entire spectrum of mission areas and technical capabilities,” and has already resulted in 1,870 companies receiving contracts and vying for task orders under it. The SeaPort NxG contract is the next iteration of a similar naval initiative dubbed SeaPort Enhanced (SeaPort-e). In FY20, SeaPort-e spending obligations topped $5.1 billion while SeaPort NxG obligations totaled $1 billion. As awards continue to transition from SeaPort-e to SeaPort NxG, it is expected that NxG spend will eclipse SeaPort-e spend in the coming years.

Since FY16, top companies under the contract include Science Applications Internal Corporation (SAIC), Booze Allen Hamilton and General Dynamics being awarded $1.9 billion, $1.8 billion and $1.2 billion in task orders respectively.

The last time this RFP was opened was back in late 2018, so companies interested in pursuing a potentially lucrative contract under this RFP should do so quickly, as the Navy is only accepting submissions until February 12, 2021.

For more information, please click this link.

January 11, 2020

Congress Passes Another Stimulus Bill… Is it Enough? As the COVID-19 pandemic continues to present a previously unseen business disruption, Congress and the Trump Administration have passed another stimulus package. This $900 billion bill had been in the works for months and was signed just before 2020 ended.

Although not as wide-reaching as the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act that was approved in March 2020, this bill provides much-needed relief to millions of Americans and businesses alike. The bill includes, among various other benefits, the following:

  • $600 stimulus checks for Americans whose 2019 income was below $75,000. Those making above $75,000 but below $99,000 will receive a progressively smaller amount. These income thresholds will be doubled for couples, and in addition, eligible families will receive an additional $600 per child.
  • Jobless Americans will receive a $300 weekly Federal increase in benefits, through March 14, 2020.
  • The Paycheck Protection Program (PPP) will be reopened but will be limited to companies with fewer than 300 employees that have seen a drop of at least 25% of their revenue during Q1, Q2, or Q3 of 2020. Additionally, the maximum amount a borrower can receive is reduced from $10 million to $2 million, but businesses are being given more flexibility on how they can spend the loan and the forgiveness process for loans under $150,000 has been simplified. Please join us for the PPP Loan Changes: Forgiveness, New Eligibility, Second Draw and More webinar on January 12, 2021

Although this bill may not be as robust as previous efforts, this package is intended to provide the support Americans need while vaccinations begin to ramp up.

For more information, please click this link.

Small and Minority-Owned Businesses Set to Get a Boost in 2021: It’s widely anticipated that President-elect Biden and his administration will revoke recent executive orders restricting new regulations, which would allow for the introduction of new regulations that would help provide a stimulus, of sorts, for small and minority-owned businesses.

The Biden campaign site lays out a $400 billion spending plan to increase small and disadvantaged businesses involvement in federal contracting. The plan would include steps to achieve the following:

  • Expand the Small Business Administration (SBA)’s development program to increase participation
  • Require prime contractors to increase subcontracting opportunities for small and disadvantaged businesses
  • Protect small and disadvantaged businesses from contract bundling

While campaign plans rarely go exactly as hoped, it is important to note that the Biden administration plans to tackle the inequities in the federal contracting system and increase the government’s goals for small disadvantaged businesses soon.

For more information, please click this link.

Congress Pushes Trump’s First Veto Override: With only a few weeks remaining in the Trump presidency, a largely bipartisan Senate has dealt the current administration its first veto override during its four-year tenure. On Friday January 1, 2021, the Senate voted 81 to 13, well above the two-thirds majority needed to secure a presidential veto override, to approve the previously vetoed $741 billion National Defense Authorization Act (NDAA). The Senate vote follows the House’s landslide vote on Monday, December 28, 2020, to overturn the veto by a margin of 322 to 87, well above the required majority.

President Trump had repeatedly threatened to veto the bill if it did not repeal parts of the 1996 Telecommunications Act that protects technology companies from liability for content posted by their users and if the bill contained provisions that would change the names of military bases named after confederate officials. The bill that was originally approved by Congress did not meet these standards and President Trump followed through with his veto promise.

This bipartisan support pushing the NDAA over the proverbial finish line represents a rare instance of collaboration with a notoriously divided Congress.

For more information, please click this link.