The Proposal Market over the Past 6 Months

The proposal desert of the past 6 months was like few times in memory. It was probably worse than the slow period encountered 12 years ago when the dot com bust, 9/11, and the anthrax attack combined to put a lengthy drag on the market. And it was certainly worse than 2011 when congress waited until the latest ever – April 7 – to pass the final appropriations for the fiscal year.

What can we Expect During the Next 30 – 45 days?

The passage of the final appropriations act for the fiscal year puts the oasis within sight. Government procurement personnel will now need 30 – 45 days to recalibrate their program priorities to the available funds. So the likely net effect is that proposal activity increases slightly during early and mid April, increases more in late April, and gets fast during early to mid-May as agencies push to get awards in place before the end of the fiscal year on September 30.

What Business Volume we can Expect During the Next 6 Months?

With less than 6 months left in FY 2013, proposal business will likely be fast by early mid May. And that it will continue to be relatively fast during the rest of the fiscal year. This is because business was so slow during the past 6 months that a large volume of procurements were pushed to the right. And agency procurement offices need to process as many of these as their bandwidth will permit during the remainder of the fiscal year.

The key question is how much business will there be during the next 6 months? The main factors that will affect the answer to this question are as follows:

  1. Business previously pushed to the right will have to be processed during the next 6 months.
  2. On the negative side of the equation, the $85 billion sequestration of funds affects the amount of funding that remains for the last 6 months in FY 2013.
  3. Further, the federal procurement shops will not be able to get all of the pent up business processed because they don’t have the bandwidth to handle all of the programs that are in the funnel.

There is no known statistical process that can accurately predict the volume of RFP releases in any period of time. Our guestimate is that, when all factors are combined, the result will be that proposal business during the next 6 months is 10% slower than it was during the same period last year.

What Type of Business Flow we can Expect During the Next 6 Months?

Another question of high interest is, what will the flow of business from month to month look like during the next 6 months? One approach to answering this question is to look at the pattern of business flow at our company OCI. We are large enough to experience a business flow pattern that usually runs with the market and not counter to it. The best year to pick when trying to find a pattern similar to 2013 is 2011. This is because the federal appropriations were enacted at almost the same (late) time for both these years. In 2011 the final appropriations were passed on April 7, while the appropriations for 2013 were passed on March 26. Following below is the month-to-month pattern of business at OCI in 2011:

Can Things be Fixed Through a “Grand Bargain”?

There is now more hope than at any time in the past several years that the parties can pass the “grand bargain” legislation that so far has eluded them. It is clear the president has decided to attempt to work with congress like never before. And most members of congress see the folly of proceeding with 8 more years of the ruinous sequestration program.

For present purposes, the important parts of a grand bargain would include greatly reducing the amount of funds automatically sequestered and making up the difference through cutting spending on entitlements, primarily Medicare. Just as everyone sees the sequestration as too much to bear, most recognize that the size and trajectory of Medicare is unsustainable and must be reformed.

Effect on the Proposal Market for Next Fiscal Year

It is too early to make detailed and accurate projections of the proposal market for Fiscal Year 2014. Even if sequestration is not rolled back, however, there should be more proposal activity in 2014 than in 2013. This is because of several factors. First, many of the 2013 programs that could not get through the procurement funnel will be pushed into 2014. Second, the series of “fiscal cliffs” should push congress and the president to find ways to avoid repeating those experiences. Finally, if any sequestration is required, current law provides that it will be applied at the beginning of the fiscal year rather than three or six months into the fiscal year.

If congress can indeed pass grand bargain legislation, then proposal activity in 2014 should be a lot faster than in 2013. It would not be “business as usual” because the amount of spending has increased nearly every year within the lifetime of most proposal professionals. However, with a grand bargain, proposal activity might be not far different from a CR type of year. That is assuming congress can pass the full year 2014 appropriations at a normal time such as December or January, rather than waiting an inordinate length of time to get it done.