Presidential transitions are a turbulent and protracted process that affects both public and private stakeholders. If your company recently began contracting with the federal government, or are planning on doing so, a new administration may create uncertainty in planning for your short and long-term government sales efforts.
Here at JetCo, we’ve helped our clients secure government business during good times and bad. To help you navigate through this process, here is an outline of what to expect during the transition, and what changes may be coming from the Biden Administration:
Transitions take time – expect stability and a slow pace
Do not expect rapid reforms to federal contracting. The inauguration brought many changes, but staffing the government is a long process. There are over 4,000 positions in the executive branch that a president must appoint someone to – roughly 1,200 of which require confirmation by the Senate. This process takes approximately 18 to 24 months if an administration is dedicated to filling every position.
If you are already doing business with the federal government, your contracting officers will be taking cues from their supervisors and other career administrators in the interim. Contact them if you are curious about the status of your contracts and upcoming opportunities.
Your active contracts are (almost) certainly safe
The business of government must go on, and your contracts are no exception. Any early changes to contract spending by the federal government in a new administration is extremely limited. Only high-visibility and politically-charged contracts are subject to pauses, delays, and cancellations if a new president does not want the project to continue.
Almost every contractor and subcontractor are not subject to such abrupt changes. Contact your contracting officer if you believe your active contracts fall under the aforementioned category.
What the Biden Administration plans on changing to the contracting process
President Biden signaled during the campaign and transition period that his administration will plan on tripling the amount of opportunities set-aside for small, disadvantaged businesses. This change would allow more small businesses, especially women-owned and 8(a) businesses, to compete for high-value contracts.
Concerning labor costs, the President recently directed his administration to draft an executive order aimed at increasing the minimum wage for federal contracted employees to $15 an hour. The proposed change is expected to take place before April 30, 2021.
Some experts are expecting President Biden to issue executive orders that will direct federal agencies to investigate numerous issues in contracting, such as employment standards, wage discrimination, and compliance with energy and environmental regulations. No specific changes have been announced as of the publishing of this post.
What to look out for in upcoming bills and budgets
The Biden Administration will most likely release a complete budget by May 2021, which signals policy and funding priorities that will affect many government contractors. Here is a high-level overview of what to expect from these first budgets:
- More stimulus funding to combat COVID-19. The administration released their $1.9 trillion plan to defeat COVID-19 which, if enacted, will significantly increase the amount of contracting opportunities for companies involved in the manufacture or distribution of PPE, tests, and vaccines.
- A flat or decreased military budget, with funds shifted towards research and development. With combatting the pandemic and economic downturn at the forefront of the Biden Administration’s priorities, a new defense budget is expected to change little or decrease. Existing funds are expected to shift within the defense budget towards new research and development projects. Expect more opportunities from the SBIR/STTR programs.
- More funding towards infrastructure repairs and new development. President Biden released a $2 trillion infrastructure plan during the campaign to repair existing roads, rails systems and structures, and to develop green transportation technology. Congressional buy-in is uncertain but expect a push from the administration towards more funding.