OASIS, E-SITE, 21st Century JFO, elevator inspection services and Rifleman Radios are but a few of the procurements slowed by the government shutdown.
Agencies are adding more notices to FedBizOpps.gov every day telling industry that requests for proposals are suspended until further notice, for example, or that an industry day is postponed until after the government shutdown.
“The challenge comes on both sides,” said Trey Hodgkins, senior vice president of the global public sector at TechAmerica, an industry association. “The government isn’t getting what it needs. Clearly the basis of that is a funding issue. But it also has ramifications on the personnel. You don’t have people there to do the evaluations. On the corporate side, OASIS is a great example. Companies for the last several months or longer than that have been looking at what is the contract vehicle going to look like, how do I make investments and position those investments to be competitive, who do I team with and how do I bring those people on board. What they face now is a holding pattern. So the investments they made are not delivering on the earnings. For some companies it could represent a lost opportunity.”
“The way a lot of companies look at the market is they pick and choose during the course of the fiscal year and they budget decisions to go after contracts and make strategic investment decisions,” he said. “If OASIS slips, then they’ve missed the opportunity to compete elsewhere and maybe could have taken those dollars and gone after a comparable large offering. So those strategic business investment decisions are upset by this process.”
Acquisition delays are real
Govini, a market analysis and research firm, looked at federal procurement data during the first five days of the fiscal year — Oct. 1 to Oct. 6 — to see what the impact of the shutdown has been on the procurement market.
Govini analyzed 983 procurements in 2013 compared to 1,394 in 2012.
But the average delay in 2013 compared to 2012 was 11 days longer — 15 days compared to four days.
“(There is a) lack of spending given it is the first week of the fiscal year, but we see a 29 percent decrease in the number of solicitations the first week of October this year versus last year,” said Geoff Celhar, Govini’s vice president of research and analytics. “So the first week of solicitations is already under stress for both these reasons. Then, we see an increase in the number of solicitations which were amended to have the closing date further into the future, so even fewer closed in the first week of October.”
Celhar added that while the sample size was small and it was early during the shutdown, the data showed an immediate downward trend in both number of RFPs or other contracting actions and across a longer timeline.
“I would think almost any activity already is being delayed. It may not have been formally announced,” Hodgkins said. “But for DoD, all of the acquisition people are being furloughed. There is no one there to receive a competitive bid. If you at that point in the process and they have it, there is no one there to do the evaluations and there is no one there on the acquisition side to put it motion.”
Michael Fischetti, the executive director of the National Contract Management Association and a former federal acquisition official, said much of what contracting officers are doing is short term, fill-the-gaps type of work, unless they have funding for a major weapons systems that lasts over several years. He said services are taking a harder hit than products.
Current projects need to be rescheduled
The other issue beyond current or future RFPs is work under existing contracts.
One executive, who works for a large federal contractor and who requested anonymity because they didn’t get permission to speak to the press about the shutdown, said trying to make up for lost time on projects will be tough.
“What do you do about deliverables due Nov. 1?” the executive asked. “If you are contractually obligated to meet a deadline, you have to hope that the government will arbitrarily extend to Dec. 1, but that could have costs. Anytime there is a contract change or modification, you are essentially opening up contracts for renegotiations. Contractors could come back to discuss costs, and there are implications of opening up negotiations. In some cases, the government will have to pay more.”
The executive added sometimes vendors are dependent on other contractors to do their job. So a delay in one part of the project will have a ripple effect on other deadlines.
“Getting that in-sync will have to be worked out and it will take time and negotiations,” the executive said. “And meanwhile the problems continue and you get further out of whack.”