If your organization aims to win contracts with the federal government, it’s important to stay informed about the latest government contracting industry trends. Knowing how contracts with the Department of Defense and other government entities are changing can allow you to adapt and better position your business to win upcoming contracts. Read about 12 of the top government contracting industry trends in I.T. that could affect your organization today:
- Stronger Cyber Security
- Advanced Camouflage Technologies
- Adoption of Cloud Computing
- Blockchain and Innovation OTS
- Streamlining Innovation with Other Transactional Authority
- Prioritizing Air and Missile Defense
- Modernizing I.T.
- Predictive Analysis and IM SHORAD
- Infrastructure Projects and Technology
- Continued Advancement of Artificial Intelligence Technologies
- The Rise of Data and AI Ethics
- Increased Defense Authorization
Read more about each of these trends below.
Latest Government Contracting Industry Trends
The most recent government contracting industry trends indicate a profitable future for contractors who can adapt to the government’s needs and priorities. In particular, the Consolidated Appropriations Act, 2018 provided significant funding for both military and domestic spending programs. The Act, which was signed into law on March 23, 2018, secured $500 billion in new federal government spending. This investment translates to more opportunities for defense contractors.
In addition, disruptive innovation continues to be a notable trend across a variety of industries. The government is no different, and in fact, recent Other Transaction Authority (OTA) procedures have been established to allow the Department of Defense to more easily contract with nontraditional organizations for innovative research, technologies, and prototypes. The demand for groundbreaking technology is sure to continue, presenting government contractors with opportunities in a number of fields, including cyber security, artificial intelligence, predictive analysis, cloud computing, blockchain, and more.
Given these latest changes, contractors who want to remain competitive should work to address government contracting industry trends that have emerged in recent years. Take a look at our top 12 trends in I.T. below to prepare.
1. Stronger Cyber Security
As cyber warfare becomes more sophisticated, the demand for stronger cyber security in the government mounts. New technologies and advancements will always emerge, threatening to exploit previously unknown weaknesses. Government contractors who can adapt to these shifting threats should find growing opportunities in cyber security.
Recently, much attention has been given to protecting our nation against other countries’ attempts to disrupt elections. This could present contractors with opportunities to develop cyber security that protects voting machines, voter databases, and more.
Another area that demands our attention is supply-chain cyber attacks. If an organization partners with another company, it not only has to worry about protecting itself, but ensuring the security of its partners as well. As a result, federal regulations are continuously being revised to manage cyber threats to our government. Government contractors must educate themselves about the cyber security requirements they are required to adhere to, while also considering how these risks can affect federal procurement decisions.
2. Advanced Camouflage Technologies
General Mark A. Milley, the U.S. Army’s chief of staff, has expressed the importance of advanced camouflage technologies to the future of combat. He predicts that the battlefield will only get more dangerous, and the safety of our troops will increasingly rely on having camouflage to mask the electromagnetic and heat signatures of both humans and machines.
To this end, Milley testified before the House Appropriations Committee in April of 2019 about the Army’s plans to devote significant resources to camouflage technology in Fiscal Year 2020. Milley stated, “Advanced camouflage technologies are critical; we are putting a fair amount of money into advanced camouflage systems, both individual, unit, vehicle, etc.”
Previously, the U.S. government has partnered with government contractors to tackle similar I.T. innovations. In 2002, the U.S. Army awarded Saab Barracuda LLC a $10 billion contract for its ULCANS ultra-light camouflage netting system.
It is likely that advanced camouflage technology will continue to grow as a government contracting industry trend, particularly with increases in national defense spending. Budgets proposed by both President Trump and Democrats from the House of Representatives for 2020, as reported in The Washington Post, indicate further increases in military spending are on the horizon. An enlarged budget should allow government contractors to fill emerging camouflage needs.
3. Adoption of Cloud Computing
According to RightScale’s eighth annual State of the Cloud Report, 69% of respondents in 2019 utilize a minimum of one public and one private cloud. The adoption of cloud computing hasn’t just permeated the public; it has become more widespread in our government as well.
As far back as 2010, the General Services Administration (GSA) has reported on cloud computing in the government. At that time, the Department of the Army Experience Center in Philadelphia had started using a cloud-based customer relationship management (CRM) tool to track and interact with potential recruits. Cloud-based solutions like this are especially appealing to the government for their lower costs. The Army Experience Center’s cloud-based CRM was a $54,000 investment, whereas a traditional CRM would have cost approximately $500,000.
Another example of the cost-cutting ability of cloud technology comes from the Lawrence Berkeley Lab, whose research benefits the U.S. Department of Energy. By deploying more than 5,000 mailboxes via Google Federal Premiere Apps, the Lab projected that it would reduce costs by $1.5 million over the span of five years.
As federal government agencies continue to embrace cloud computing, I.T. contractors may find new opportunities to provide services that can improve the government’s ability to use and manage data. In particular, cloud-based software that can increase efficiency and decrease costs should remain attractive solutions for government agencies.
4. Blockchain and Innovation OTS
Blockchain offers important advantages, such as decentralization, interoperability, stronger security for transactions, and lower costs. While most people have heard about blockchain technology in connection with Bitcoin and other cryptocurrencies, its applications are far reaching. The U.S. government has started awarding contracts for blockchain technology as early as 2016, and it should remain a major government contracting industry trend for years to come.
One of these early contracts was for a project titled “Blockchain Software to Prove Integrity of Captured Data From Border Devices.” The goal of the project was to protect the digital identities and past records of Internet of Things (IoT) devices. The Department of Homeland Security (DHS) Science and Technology Directorate (S&T) awarded the nearly $200,000 contract to Factom Inc.
This contract was awarded through Innovation OTS, an Other Transaction Solicitation (OTS). Innovation OTS is a five-year program launched in 2015 and scheduled to conclude in 2020. It aimed to provide opportunities for nontraditional government contractors to work with the Department of Homeland Security developing new technologies to address upcoming threats. Following its conclusion in 2020, contractors should be on the lookout for new opportunities like Innovation OTS to enable them to form government partnerships and provide innovative technologies.
5. Streamlining Innovation with Other Transactional Authority
In recent years, the Other Transactional Authority has enjoyed increased popularity with the Department of Defense. OTA allows select federal agencies to procure research projects more easily, especially research and development projects and prototypes of new technologies. Given its continued success, it appears that this government contracting industry trend is here to stay. Both traditional and nontraditional contractors would be wise to learn about this trend and take advantage of OTA.
One of the primary objectives of OTA is to help nontraditional defense contractors win more government contracts and develop new, innovative technologies. However, traditional contractors, or those who have partnered with the government recently, are still eligible if they partner with a nontraditional contractor. As a result, traditional defense contractors should seek to develop partnerships with nontraditional contractors if they want to take advantage of the opportunities available through OTA.
6. Prioritizing Air and Missile Defense
In March of 2019, the U.S. Army published the Army Air and Missile Defense 2028, a document detailing its plans for developing and modernizing air and missile defense. Lieutenant General James H. Dickinson, commanding general of the U.S. Army Space and Missile Defense Command/Army Forces Strategic Command, said, “Our vision is that the AMD force of 2028 will provide the combatant commanders with a flexible, agile, and integrated AMD force capable of executing multi-domain operations.”
This dedication to air and missile defense in the coming years should continue to provide new opportunities for I.T. contractors. Previously, the Army awarded contracts to Raytheon and Lockheed Martin in October of 2018 to develop new air and missile defense radar technology. Later that same month, however, the Army declared that it would hold a missile defense radar “sense-off” by June of 2019 to observe other radar capabilities.
As the Army continues to prioritize the modernization of its radar, government contractors should remain on the lookout for opportunities to demonstrate their technologies and build prototypes. Brigadier General Randall McIntire, who is leading the Army’s AMD modernization, indicated that the Army is open to pursuing a variety of radar technologies as it continues to determine the radar capabilities it needs.
7. Modernizing I.T.
Recent years have demonstrated that our government is seeking to modernize its technology. In 2017, the Modernizing Government Technology Act (MGT) authorized $100 million to modernize federal I.T. in Fiscal Year 2018. It also laid the groundwork for another $150 million to fund I.T. modernization in Fiscal Year 2019. In 2018, the Consolidated Appropriations Act also secured billions of dollars to assist in upgrading government information technologies.
As such, we can expect to see a wealth of opportunities for I.T. products and services that save money, address security risks, reduce redundancies, and otherwise improve the efficiency of government technologies. This applies to both new technology solutions as well as modernization of existing technologies. In particular, products and services related to artificial intelligence, cyber security, cloud migration, commercial off-the-shelf software, agile development, data center consolidation, and blockchain should be especially relevant to modernizing federal I.T. This government contracting trend is years in the making and should remain relatively stable in years to come.
8. Predictive Analysis and IM SHORAD
The Initial Maneuver-Short-Range Air Defense system (IM SHORAD) and other innovative technology that can predict and address attacks should lead to more opportunities for I.T. contractors in the coming years as well. In February of 2019, for instance, the U.S. Army published a request for information to determine if it would be possible to produce 144 IM-SHORAD systems from Fiscal Year 2020 to Fiscal Year 2024. According to the Army’s budget request for Fiscal Year 2019, it anticipates spending close to $1 billion on IM-SHORAD over the next five years.
The Army also plans to use the contracting process offered by the Other Transactional Authority (OTA) to develop IM-SHORAD. Nontraditional government contractors stand to benefit from this decision, and such contractors and their partners should be prepared to take advantage of this government contracting industry trend in the next few years.
9. Infrastructure Projects and Technology
Infrastructure is a constant concern for any government. Not only do we need to maintain many of our existing roads, highways, bridges, dams, ports, and railways, but we also need to plan and construct new ones. By improving our nation’s infrastructure, we can promote regional connection and economic growth as well. In particular, there is a continued need for our country to increase access to safe, reliable, and affordable transportation for rural and underserved communities.
The Consolidated Appropriations Act provided over $21 billion for infrastructure spending in the U.S. Technological solutions are a growing part of federal infrastructure projects, which translates to new opportunities for innovative I.T. contractors. Technology can be used to introduce new materials or improve existing ones in our infrastructure. It can also improve safety processes and risk assessment. New or updated systems integration and program management software also continues to have a place in government infrastructure projects.
Large infrastructure projects tend to take many years to complete, making them an excellent source of revenue and security for I.T. contractors who are able to take advantage of this ongoing trend.
10. Continued Advancement of Artificial Intelligence Technologies
As artificial intelligence continues to evolve and mature, government agencies are seeing more potential uses for these technologies, from healthcare to national security. With an increasing number of government agencies seeking to adopt AI, these technologies will be a major government contracting industry trend and opportunity for years to come.
In fact, according to a report from the Deloitte Center for Government Insights, growth in government spending on AI is expected to outpace growth in AI spending for consumer services between 2020 and 2022. Deloitte anticipates that AI spending from federal governments across the globe will grow around 44% over this time.
However, the expansion of AI technologies in government agencies and services has been met with some skepticism. When asked about the largest hurdles AI is facing, 84% of American executives in the public sector named data privacy and quality as top concerns.
11. The Rise of Data and AI Ethics
Advancements in AI systems and the expanding role of data in our everyday lives are impacting public policy decisions. Issues surrounding data and AI ethics, including concerns about individual privacy and transparency, as well as AI bias and discrimination, will increasingly affect these decisions.
Federal governments are at the center of the data ethics debate, as they are often responsible for developing regulatory guidelines for AI and advanced data technologies. According to the United Nations Conference on Trade and Development, over 130 nations have passed legislation to protect citizens’ privacy and data. Many governments formalize their approach to algorithmic risks and develop AI toolkits to check unwanted bias in data sets and machine learning models.
Industry leaders are also developing standards and frameworks in their fields, which can have an impact on government requirements and recommendations as well. In 2018, for example, Harvard Kennedy School’s Belfer Center for Science and International Affairs and Bank of America launched The Council on the Responsible Use of Artificial Intelligence (AI). The Council, which works with tech giants such as Apple, Amazon, Google, Facebook, IBM, and Microsoft, aims to more thoroughly understand AI technologies in order to craft more effective regulatory policies.
Moving forward, government contracting trends in I.T. will include participating in AI ethics panels and task forces, designing algorithmic risk management strategies, and developing governance structures to manage technical and cultural risks. New government structures will be developed to monitor AI’s ethical deployment and establish processes to test data and algorithmic output.
Additionally, we can expect more reviews from internal and external parties, emphasis on creating explainable AI algorithms to enhance transparency, and training for developers, data architects, and users on the importance of data ethics, particularly those related to AI applications.
12. Increased Defense Authorization
The U.S. government recently passed its annual National Defense Authorization Act (NDAA) legislation for Fiscal Year 2020. This authorized $738 billion in military funding. The National Defense Authorization Act for Fiscal Year 2021, which has already been approved by the House of Representatives and the Senate, would allocate $740.5 billion for the year.
In addition to the funding provided by the NDAA for Fiscal Year 2020, the bill directed the Secretary of Defense to establish a new software acquisition pathway to procure software applications and upgrades within a year. This creates new opportunities for software contractors.
The bill requires the DoD to establish guidelines for authorizing the rapid acquisition of software running on commercial commodity hardware operated by the DoD. It also requires the development of an embedded systems pathway for acquiring software embedded in weapons systems and other military-specific hardware systems.
These changes build on an already established government contracting industry trend: faster, more streamlined processes for government agencies to solicit and procure I.T. products and services from contractors.
Fulfill Government Contracts with Sentient Digital, Inc.
Technology is always evolving, and our government and its contractors are constantly required to adapt to these changes. By keeping up with government contracting industry trends, contractors can remain competitive and take advantage of emerging opportunities in I.T.
Sentient Digital, Inc. is a leading technology solutions provider for defense, federal, and commercial clients. We are a small, veteran-owned business, which gives us a competitive advantage at winning certain government contracts. If you are interested in partnering with us as a contractor or subcontractor to improve your ability to win and fulfill government contracts, contact us today.
