As this newsletter was being prepared for publication, we have called it back four times to rework this article in light of fast-breaking developments. Two weeks ago, we really did not have much hope that Congress would be able to agree on the other nine major appropriations bills in a timely manner.   However, more recently, Congress quietly moved toward a compromise behind the scenes that would allow the appropriations process to move forward.

Some of the well known factors slowing the congressional appropriations process have been the desire of the House to sharply curtail spending and the desire of others to shift spending from the DoD to the civilian agencies.  In the overheated political environment, any advantage for the one side is seen by the other side as an unacceptable loss.  The result was the much lamented gridlock that had paralyzed the process of passing appropriations.  There was no Lyndon B. Johnson in the White House, and there was no issue-forcing event to make the parties compromise.  Instead, the strongly held views of the parties had prevented them from coming together on a set of priorities.

In the last few days, the picture changed dramatically. Congress passed and the president signed a “mega-bus” appropriations act providing funding for the balance of the federal fiscal year for all of the federal agencies that were not covered by the initial “mini-bus” appropriations law enacted in November. The top-line appropriations levels align with the ceilings included in the August 2011 Budget Control Act.  After behaviour that has appeared shameful and childish to many, Congress completed work on an appropriations deal much sooner than expected by observers close to the scene.

Many industry analysts had shared the view that the FY 2012 period would be much like FY 2011.  That is to say, proposal activity would be down because Congress could not enact the appropriations in a timely manner. Thus there would not be enough months left in the fiscal year to get all the possible business through the funnel of the appropriations process. This was the case in FY 2011. Congress was unable to pass final appropriations until early April and it was just not possible for the Government to do 12 months of business with only 6 months remaining in the fiscal year.

The passage of the “mega-bus” appropriations act is a cause for celebration among proposal professionals everywhere. The amount of the appropriations is not so critical. It is the timeliness that matters, because, the appropriations must be passed in a timely manner if the agencies are to have the time to release the desired number of solicitations.

The agencies, the industry contractors, and the proposal personnel all suffered in 2011 because there was not enough time to do the latent business that was out there and needed to be done. This was because of the toxic political environment.  With “wise politics” on hold and “compromise” as a lost art, the agencies just didn’t have time for all the procurements that needed to be done.  Our whole proposal market was thus about 15% plus lower in 2011 than it was in 2010.

With the 2012 appropriations now safely passed, there is every probability the 2012 market will be significantly faster than the 2011 market.  The dollars to be spent in 2012 are similar to 2011, and there will be three or four MORE months to spend it. We believe the 2012 proposal market will not be as fast as it was in 2010. But it will be a LOT faster than it was in 2011. OCI takes full responsibility for these predictions, whether that be for credit or for blame.