FY21 Opportunity Outlook for Federal Contractors

Friday, January 29, 2021

As we enter 2021, the Government Contracting industry is benefiting from a 10-year high of discretionary procurement spending. The Pulse examined the last decade of spending data and found the following:

  • Between Fiscal Year (FY) 2017 and today, discretionary appropriations have increased 30% – not including the additional $1.76T spent in FY20 for COVID-19 requirements
  • Defense spending has grown more than 17%, while non-defense has grown more than 15%
  • Federal spending is expected to total 21% of Gross Domestic Product (GDP) in FY20, while revenue is projected at ~16.4% – meaning the Government Contracting Industrial Base is 25% of the USA’s economic welfare

Change is all but certain with a new Administration and a party flip, especially for an industry that is so heavily impacted by the ebb and flow of the federal landscape.  Government Contractors have already seen a flurry of impactful agency and regulation updates, as well as Executive Orders during the Presidential transition:  

National Defense Authorization Act (NDAA)

  • Small Business Administration (SBA) issued final rule for a one-year extension for 8(a) program participants. 
  • Pentagon’s Chief Management Officer (CMO) role officially disestablished by Congress.
  • The new Corporate Transparency Act (CTA) will impose beneficial ownership reporting requirements on many companies, particularly small businesses (SBs).
  • The final rule issued, implementing FY16 NDAA provision, clarifying the types of assets that individual sureties must pledge as security for bonds used with a Government Contractor.

Executive Orders

Other

The industry has also started to see a massive change in leadership, which will most certainly impact the federal workforce and agency and department initiatives. However, not too much will change in this FY’s spending as budget caps have been previously set, and since the FY21 Omnibus and the FY21 NDAA were passed into law just a few weeks ago.

FY21 Omnibus Funding

Currently, the federal government has only spent 9% of its FY21 discretionary enacted spending level. This means there is a lot of money still left on the table. The FY21 Omnibus provided spending increases to over 15 federal entities including: Department of Agriculture (USDA), Department of Defense (DOD), Department of Education (ED), Department of Energy (DOE), Department of Transportation (DOT), Environmental Protection Agency (EPA), Department of Housing and Urban Development (HUD), Department of Interior (DOI), Department of Justice (DOJ), Department of Treasury (TREAS), Department of Health and Human Services (HHS), Department of Labor (DOL), National Aeronautics and Space Administration (NASA), Department of State (DOS), and the VA.

FY21 Omnibus Scope Trends

In FY21, Government Contractors will continue to feel the impacts of the pandemic in the year ahead, but other requirements will continue to push their way forward. After digging through all +5K pages of the FY21 Omnibus and NDAA – we identified the top technical words that Government Contractors are sure to see throughout Section C of the Request for Proposal (RFP) this year:

FY21 Opportunities + Competition

The Pulse just released two special reports on the FY21 Federal  Discretionary Directives. In this report, we explored each agency’s favorite inter-agency acquisition vehicles to help Government Contractors understand where FY21 opportunities will likely be competed.

In summary, GSA IT-70 and PSS (now MAS) Schedule, as well as NASA SEWP V are overwhelming favorites with over 71% usage across the 19 federal agencies we researched. GSA OASIS and OASIS SB may only take up 3% but it is the primary favorite of DoD so don’t let the low percentage fool you.

FY21 + New Administration

Government Contracting in 2021 is sure to be interesting with a new Presidential transition taking place while the FY21 funding begins to be released. As new leadership comes into power, expect to see some opportunities get pushed to the cutting room floor (i.e. “transformation” or “reorganization” requirements for the previous FY); whereas some might come back to life as federal agencies (i.e. EPA) that have been dormant over the past 4 years get re-energized

Be on the lookout for spending to increase starting in mid-March through the end of September. However, since agencies are uncertain of what they’ll have for FY22…it could slightly dampen FY21 obligations. But inn the meantime, we can anticipate additional funding boosts – primarily in the areas of healthcare, transportation, construction, and technology modernization – as the new Administration works with the 117th Congress to pass additional COVID-19 stimulus bills throughout this year.

Are you looking for more information on the FY21 Omnibus + Discretionary Opportunities?

The Pulse just released two special reports on the FY21 Federal  Discretionary Directives. You can purchase and download this report here or become a Pulse Insider or SME member to access both reports for free!

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