Government contracting trends that defined fiscal 2019, such as increases in “as a service” and IT consolidation, are likely to continue into FY20. But several new programs and initiatives are likely to shape the contracting landscape in FY20.
A new report from contract analysts at Bloomberg Government released Jan. 7 broke down these areas likely to mold government contracting trends in 2020:
Best-in-class: IT consolidation
Federal agencies using best-in-class (BIC) contracts, designated by the Office of Management and Budget as a preferred solution, grew to nearly 40 programs in FY19, the BGOV analysis found. That accounted for $40 billion in spending.
As contracting moves in 2020, BGOV expects that spending on BIC contracts will rise, particularly on IT contracts.
“Federal agencies are facing pressure from the White House Office of Management and Budget to shift IT investments from stand-alone contracts to designated BICs as part of its category management strategy,” the analysts wrote.
Multiple Award Schedule consolidation
The General Services Administration’s hallmark project in FY19 was its work consolidating the 24 categories under its Multiple Award Schedule and reducing it to just one. As the GSA looks to move forward on this project after completing the new schedule, contracts are likely to be affected while the GSA modifies terms and conditions, BGOV wrote.
The schedule consolidation is likely to “affect a vast majority of contractors in the federal market because the MAS program accounts for over $30 billion annually across about 18,000 contract holders," BGOV wrote.
Government buying “as a service”
Cloud computing has allowed the government to purchase different capabilities and technology “as a service," a contract style that “accelerated in new ways” in FY19 and is likely to continue into FY20, the BGOV report reads.
Common as-a-service contracts are platform, software or infrastructure. But BGOV wrote that in FY20 it’s likely that there will be an increase in security operations centers as a service and mobile back-end as a service. This is part of the government’s effort to move to a more flexible model that allows it to buy as much of a service as it wants, instead of a set number of licenses.
“That buying attitude allows agencies to shift from purchasing capital assets and instead count costs as operating expenditures, which normalizes their year-to-year ledgers,” wrote BGOV.
Small-Business Runway Extension Act will begin affecting contracts
In FY20, new legislation kicks in that classifies the small business designation by basing it on average earnings over five years, instead of three years, in an effort to reduce the impact of revenue spikes in a single year.
BGOV predicts that the rule will be finalized this year and that it will have “significant effects on how small-business contract competitors are evaluated.”
Cybersecurity will become cost of doing business
FY20 is the year that the Department of Defense’s Cybersecurity Maturity Model Certification (CMMC) will start to affect contracts. The CMMC will set different levels of cybersecurity that contractors and their subprimes will have to meet in order to do business on various contracts.
CMMC will have significant ramifications for vendors.
“In the future, vendors that lack the desired CMMC level will become ineligible to compete for certain contracts and task orders,” BGOV wrote.
BGOV added that, “the CMMC program will create opportunities for firms to differentiate themselves based on their cyber defense postures and raise the demand for third-party assessment services..”
By: Andrew Eversden