When the politicians could not pass final appropriations until April, this delay had a negative effect on proposal activity.  Without appropriations, many of the procurement personnel could not begin to release their RFPs until months later than usual.  As a result, the first part of the fiscal year saw relatively slow proposal activity.  And after the appropriations were passed in April, the procurement groups just haven’t had the bandwidth to process all the programs that they would like to get processed by end of fiscal year.

The picture of proposal activity during the next two months and into FY 2012 is extraordinarily complicated.  Government procurement shops are running in high gear to get as many programs as possible processed before end of fiscal.  However, due to the delays caused by the late appropriations this year, many program releases will be pushed into the fall.  In fact, Professional Services Council executive vice president Alan Chvotkin said, “Many of the programs that could not be processed in the fourth quarter are being pushed into the fall.  As a result, the fall may seem  like ‘a fifth quarter of FY 2011’.”

Predictions of FY 2012 proposal volume are complicated by four factors:

  1. The lingering effects of the recession are causing some large businesses and more small businesses to be conservative in investing in proposal work and resources.
  2. The continued popularity of  multiple award procurements tends to foster more proposal work because of the need to generate not only the initial contract proposal but then numerous task order proposals as pieces of the program come up for bid.
  3. Alan Chvotkin and others predict that the net federal spending on services and products in FY 2012 will drop by 3-5%, compared to 2011. However, as  of this writing (2 August  2011), the House has passed only 6 of the 12 mandatory  appropriations bills and only two others are in process; the Senate has approved only one of the 12 bills.
  4. Even the grand agreement reached on the deficit reduction plan and spending caps could still create challenges in enacting appropriations bills for FY 12 and beyond.   While this agreement could ease the appropriations process because all of the players would know in advance what level of spending is possible, there are still significant battles to be fought in allocating the scarce resources among agencies and programs.   However, the atmosphere of political mistrust and the stubborn unwillingness of politicians to compromise will certainly slow significantly the process of completing the appropriations for FY 2012.   As a result, there will have to be some form of continuing resolutions (CRs) this fall, and we could again be waiting until well into the new year before the final appropriations bills for all agencies are passed by congress.

Alan Chvotkin was asked the question, “How much reduction are we looking at in the procurement of goods and services that are done through bids and proposals for FY 2012”?  He answered as follows:  “It is impossible to translate appropriations actions for the government as a whole, or even for specific agencies, into solicitations that agencies may issue. Furthermore,  I’m not confident that we will have more than a few  of the regular appropriations bills for fiscal 2012 enacted before the start of the fiscal year.  And the prospects of further continuing resolutions well into the first quarter of fiscal 2012 could further shift significant agency acquisition actions to the right. Based on what I know as of August 2, I expect the final fiscal year 2012 appropriations to be between 3 and 5% below the FY 2011 enacted levels. But on the “bright side,” there will be an uptick in proposal activities as agencies are reducing the overall size of their contractual actions, continue to use task order solicitations under IDIQ contracts, and try to execute the late enactment of the fiscal year 2011 appropriations”.

So what is the net net picture of how these complicated factors will together affect the volume of proposal business in the coming months?  In attempting to answer this question, let me say first of all, the question is not something that can be addressed by a precise statistical equation.  So I will rely instead on experience, which is sometimes referred to as “Kentucky windage”, the seat of your pants, or gut feel.  Therefore, the writer is 100% to blame for any accuracy or inaccuracy found in the predictions.

Those commentators who say that the growing trend to use multiple award contracts increases proposal activity are certainly right.  The positive effect of this factor, however, is probably cancelled out by the stringency forced on many bidders by the lackluster state of the economy.  A greater challenge to our business is the reduction in federal spending on services and products predicted to end up being as much as 5% or more.  But by far the worst part of the picture is the political gridlock that will almost certainly draw out the appropriations process to an unusual length, unless there is a debt agreement with a spending cap.  Even if the spending is smaller, proposal activity is greater or lesser in proportion to how timely the politicians can be in passing the appropriations.

The sum total of these factors must be a somewhat slower market for proposal services in 2012.  The market is not going to fall off a cliff.  Nor is it going to be terribly depressed.  Nevertheless, fewer federal dollars and the slower appropriations will translate into a palpably slower market.  Some shops may need to reduce staff.  Boutique services vendors will face a challenge.  And there will likely be more periods of inactivity where the corporate proposal personnel need to work on infrastructure rather than developing proposals.

However, proposal personnel are versatile and resilient people.  The business tends to attract this type of person, or to make people into this type of person.  Most of us have weathered storms in the market before, and we can get through this one with a little forethought, planning and belt tightening.