“Gentlemen, we are out of money; Now we have to think” – Winston Churchill.

“Gentlemen, we are out of money; Now we have to think” - Winston Churchill. 

TechAmerica's annual forecast made one thing clear, budgets are tight and they are only going to get tighter. The only way to be successful is to think and do things differently in government. But that sentiment is so much easier said than done.

In part two of our interviewwith TechAmerica's Trey Hodgkins and Robert Haas they told Chris Dorobek that in order for the government marketplace to be successful they have to bring in new and more agile contractors.

There was a hope that the budget challenges would force agencies to look at things differently. Is this happening?

"We are seeing it in pockets. What we haven’t seen yet, is us reaching that plateau of productivity that comes out of a decrease in budget. They are open to new ideas but in many cases they have been battling budget cycles and freezes for the past couple of months and they have been challenged in actually trying to plan for something new. They haven’t had a lot of time in most cases to think through what some of the implications are and what the possibilities are," said Haas.

  • You might remember during the last cycle we had a continuing resolution through half the year until sequestration was put in place before the full fiscal year and the same sort of scenario is taking place this year. We have a CR for a short period of time after which a new budget will be determined. But the agencies can’t plan going forward.

The more contractors the better?

"You have to show them the money if you will, to get people to play in the government market. Although I do think the size of the government market is attractive to many companies and will remain that way through many of these sequestration activities. There is a tremendous opportunity to innovate. The items that came out of the Tech America forecast was the analysis of the budget versus the innovation cycles. Historically what we have seen is significant periods of innovation occur when the budgets are at their lowest. The analysis goes back to just after World War II and it is a pretty interesting story. “Now that we are out of money we have to think,” Winston Churchill," said Haas.

Technology as an enabler?

"One thing I continue to find promising about technology is that it is the enabler. Whether you are talking about cloud, big data or transition of data centers or enhanced capabilities. At the end of the day all of those investments can demonstrate that they can drive efficiencies and can expand and replace workforce capabilities. That way agencies that retain fewer people can still do as much as before. And of course they can demonstrate savings. IT companies and the government working together to make the right IT investments can save money for the taxpayer," said Haas.

  • One of the significant challenges though is that we don’t have incentives. For example we don’t allow the agencies to keep those dollars, reinvesting them and allowing them to drive more capabilities for better constituent services.

What's happening on the civilian side?

"Do more with less is a challenge that some of these agencies have faced for years from an investment standpoint. They’ve just been keeping the lights on and when you think about what it takes to bring innovation to an enterprise particularly from an IT perspective you require some investment," said Haas.

  • For the civilian agencies that investment really hasn’t been here for the last several years, so the ability to transform hasn’t been here. The cost savings they have achieved really goes back to paying off components to some of these savings required by sequestration.
  • From the innovation perspective what you are seeing is that the innovation component actually requires and additional level of funding. And that funding a lot of times is coming from those legacy systems. So there is an inter-dependency required to transform. If they don’t have visibility to funding in multi-year increments then it is very difficult for planners inside of an agency to make concrete decisions that will help them move forward on an incremental basis.

Contractors have to hurry up and wait?

"We call it the lag and burst procurement cycle. We are seeing the procurements in most places being delayed a couple of weeks and we saw a couple of ones being delayed during the furloughs. That’s just the latest iteration of it, but there will be more as the budget cycle approaches," said Hodgkins.  "Normally contracting would slow down during the holidays for various reasons and then things pick back up in January, all of that is sort of in questions at the moment for the timing perspective because we are not in a normal budget cycle."

Uncertainty breeds poor decisions?

"What our members are telling us is that the long term business environment is not sustainable with the fits and starts and the inability to discern what the customer will be doing. The ability to plan with the customer about what the customer wants to do and the ability to make the internal corporate decisions needed to make those demands - it is an awful environment for someone who is trying to look at the market," said Hodgkins.

  • You can’t make the type of IT investments that are needed. You can’t adequately plan for them. This halting herky jerky appropriations process has seen to become a regular order. We need to get back to the process where we can get the bills passed, so people know how to go into the fiscal year and what to expect.

"The other challenges is that IT is more rapid than the old acquisition processes that we are used to. Even as technology advances by leaps and bounds, we seem to be moving in the other direction with our planning and funding for government acquisition of that innovation. So there is a real disconnect. That makes an awful businesses environment for companies," said Hodgkins.

For part one of our interview with Hodgkins and Haas click here.

 

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