The President has proposed a two-year pay freeze for federal employees; the House of Representatives wants to extend that to five years. Others have proposed legislation that would freeze federal hiring all together. “The government is bloated and too big” goes the conventional wisdom. If you’re a government contractor that “wisdom” could have a profound negative impact on your government business.
Let’s start at the top. Say you’re a company that wants to get a government contract. Be prepared to stand in line. A hiring freeze would mean that the already stretched-thin acquisition workforce will likely get thinner. There will be fewer people (likely with less overall experience) to handle your offer.
Even a pay freeze would impact your business, as qualified acquisition professionals look elsewhere for jobs and those that do remain could have morale issues.
Let’s say your company already has a government contract. Monday, your firm announces a new hot product. You’ve been told that you must get this on your company’s federal contract – fast. Well, not so fast. Fewer acquisition professionals, or even the same amount as we have now, means that there is little ability for the government to move quickly to modify existing contracts. If government customers want your product they will have to take the extra steps necessary to buy it on the open market, a time-consuming process not favored by overworked government contracting officers.
“I’m in sales,” you say? Let’s take a look at the impact of a pay or hiring freeze on your business. There may be good and bad here, depending on what you’re selling.
For product-oriented companies, a static or shrinking federal workforce means that there will generally be less need for the product’s you’re selling, particularly in a tight budget climate. Fewer people mean fewer chairs, desks, real estate, paper, etc. To survive, you must ensure that your efficiency and value propositions literally jump off the page. It must be crystal clear how spending money with you will save the government money overall.
Service providers might have it slightly better. The government will still be expected to meet many missions, and if there aren’t enough federal workers to fill the need, this could translate into increased opportunities for service providers. You certainly have to deal with the same tight budgets that everyone else has to, so I wouldn’t start predicting year-over-year sales jumps. Still, with House Republicans resuscitating competitive sourcing (which allows contractors to bid against government for work currently conducted by federal employees), and continuing public demand for federal services, you have an opportunity to place people where they’re needed most. Added bonus: It might be easier to pick up qualified “frozen” federal workers to perform those tasks if you can offer competitive compensation and the prospect of a pay “thaw.”
The bottom line for contractors: When federal workers are frozen, you’ll feel the chill too.
— by Larry Allen – Washington Business Journal – February 23, 2011