If your company focuses on the defense market, you are probably feeling pretty good right now—same goes for those whose contract portfolio is concentrated in the Departments of Transportation, Veterans Affairs, and Homeland Security. With the exception of DHS, each of these departments, including Defense, saw its proposed budget increase by double-digits in the president’s 2018 request.
As you can see from the Bloomberg graphic from Justin Sink and Erik Wasson, most other departments did not fare as well in President Trump’s first budget proposal. If your company’s contract portfolio is overweight in these departments, there are some steps you should take to mitigate the risk to your business, in the event this proposal (or a close approximation) is signed into law.
- Assess your company’s contract portfolio. It’s important to assess the risk that potential budgets cut pose to your contract portfolio. Make a list of your contracts in the targeted departments and answer some key questions: Which of your existing contracts are in their base year and which are in option years? When are options years are scheduled to be exercised? Which RFPs are in your pipeline from the targeted department? Have any of the contracts been plagued by issues? Answering these questions will help to focus your company’s risk mitigation efforts. The focus should be on protecting your core revenue stream; this may mean that in certain instances it may be prudent to no-bid an RFP, if that tradeoff increases your likelihood of preserving core revenue. This does not mean you should outright abandon a growth strategy but it does mean that you become more judicious in the use of your time and resources.
- Meet with your contract delivery team. Schedule time to meet with your contract delivery team and impress upon them the importance of executing at a high level and overdelivering. The frontline staff and management who work most closely with your government clients are the day-to-day face of your company. They have the pulse of the client and can often add context. For example, frontline staff and management are likely to understand the client’s priorities better than leadership. This could provide much needed intelligence to your company’s leadership on which contracts may or may not be on the chopping block. Also, take this time to reinforce the criticality of their roles as client-facing staff. They must execute at a high level and overdeliver—and work to forge the personal relationships that can be a make or break.
- Schedule time to meet with the Contracting Officer’s Technical Representative (COTR) or Contracting Officer. Don’t rely on reading the news to assess the risk to your contract portfolio. Sit down with your COTR or Contracting Officer and speak to them about potential impacts to your contracts. The objective of this meeting isn’t to make a plea or case for why your company adds tremendous value to the government client. The purpose of this meeting is to gain the perspective of the individual who actually administers your contract on potential impacts to your contracts. Always sell your value proposition but this isn’t a sale pitch; it is a fact-finding mission.
- Build a mitigation strategy and plan. Focus on protecting your most valuable, highest risk contracts. This doesn’t mean you need to adopt a strategy of retrenchment, but it does mean that you may need to sacrifice growth initiatives to safeguard your core revenue. This could require forgoing certain RFPs in order to make sure staff time and resources are focused on preserving the core.