5 Government Contracting Trends to Watch for in 2022
The start of 2022 marks Biden’s second year of being president and our third full year of the pandemic. How has a new presidential administration and the global pandemic impacted government procurement? Just like it’s important to follow what kinds of products your consumers are buying and how much they are spending in the commercial world, it’s important for contractors stay on top of government initiatives and follow how the federal government plans to allocate their funding in 2022. Here are 5 government contracting trends we expect to see in 2022.
1. The Infrastructure Bill—Increased Funding and New Government Offices
Infrastructure has been a huge government keyword for the past year. You may have seen several news articles discussing the much-debated Infrastructure bill, but what does it mean for contractors? In November of 2021, Biden signed the $1.2 trillion bipartisan Infrastructure Investment and Jobs Act into law. As one of the largest infrastructure bills in U.S. history, we can expect massive government spending.
Here are some of the areas the bill covers and how much funding is anticipated:
- $110 billion for roads and bridges
- $39 billion to modernize public transit systems
- $66 for high-speed rail on Amtrak
- $65 billion for broadband internet
- $7.5 billion for nation’s first network of electric-vehicle chargers
- $55 billion toward clean drinking water
- $25 billion for airports
- $108 billion for the electric grid
This act will also establish several new government offices and programs including:
- Cyber Response and Recovery Fund
- Advanced Research Projects Agency (ARPA)
- Office of Multimodal Freight Infrastructure and Policy
- Rural Opportunities to Use Transportation for Economic Success Office (ROUTES)
One of the hopes of this bill is that it will give more opportunities to not only current contractors but to future small business contractor as well. The bill also will span federal, state, and local government markets, covering several industries. The obvious industries—engineering, construction, environmental, and telecom—can certainly expect an increase of government opportunities, but with the massive size of the projects and amount of spending, almost all industries could be affected.
2. IT and Cybersecurity Initiatives
It’s no secret the Biden-Harris Administration is putting a stronger emphasis on IT and cybersecurity. With a slew of malicious cyber incidents in 2021, the federal government is determined now more than ever to protect America’s security and privacy. This starts with the Executive Order (EO) to improve the nation’s cybersecurity and a proposed 2022 IT budget of $109 billon.
The Executive Order (EO) is crucial for contractors to follow because it requires agencies to enhance cybersecurity and software supply chain integrity. This means contractors will continue to see new guidance from NIST and CISA which will warrant modifications of contract language. We also expect to see future updates to the Federal Acquisition Regulation (FAR) which we have already begun to see.
The White House FY 2022 Federal Budget discusses 3 main ways to enhance federal IT and cybersecurity:
- Modernizing Federal IT Systems: The budget includes $500 million for the Technology Modernization Fund (TMF).
- Bolstering Federal Cybersecurity: $9.8 billion will go toward securing the federal civilian network and protecting the nation’s infrastructure.
- Improving the Federal IT Workforce: The 2022 budget proposes to identify and address critical skills gaps across IT and cybersecurity workforce. It also calls to invest in innovative training and recruiting programs.
As we saw with IT spending in 2021, the IT and cybersecurity industries are booming places for government contractors. That is if you have the right certifications and compliance.
In late 2021, the Department of Defense (DoD) released an updated version of the Cybersecurity Maturity Model Certification, or CMMC, calling it CMMC 2.0. CMMC was created so defense contractors could ensure they are properly implementing the cybersecurity practices and procedures needed to protect Controlled Unclassified Information (CUI) and Federal Contract Information (FCI).
CMMC 2.0 brought some changes including paring down the levels of CMMC from 5 to 3 and removing the third-party assessment requirement for contractors who do not handle CUI. While the regulations are seemingly less harsh, the DoD still has a long way to go in the rulemaking process, and therefore it’s something contractors need to stay on top of.
3. State and Local Government Budget Increase
State, local, and education (SLED) government budgets are showing the largest annual spending increase in 15 years for FY 2022. Paired with $350 billion in direct aid from the American Recue Plan Act and a sizable sum from the infrastructure bill, state and local government entities will be important to keep an eye on this year.
What are some of the focuses for SLED in 2022? Well, there is a big push for state and local entities to ramp up their cybersecurity, echoing the efforts of federal agencies. States are beginning to adopt a zero-trust approach to cybersecurity, and the Cybersecurity and Infrastructure Security Agency (CISA) is setting-up a 50-state network of federal cybersecurity coordinators.
According to a Deltek report, the following SLED industries exhibited a strong growth at the end of 2021, and expect to continue into 2022:
- Architecture and Engineering
- Professional Business Services
- Educational Products and Services
How does this all relate to you as a contractor? While GSA Schedule contractors can sell to any federal agency, they can also sell to state and local government agencies through certain government programs, so the SLED market is an important one to watch throughout FY 2022.
4. Small Business Prioritization
The push to back small businesses is a trend that continues from last year. In June of 2021, President Biden announced a goal to increase the share of contracts going to Small Disadvantaged Businesses (SDBs) 50% by 2025, meaning an additional $100 billion to SDBs over the next 5 years.
This year, the Biden-Harris Administration is enacting a series of reforms to the federal procurement process to help meet their target. They include:
- Increasing Small Disadvantaged Business set-aside percentages from 10% to 15% by 2025.
- Asking government agencies to grow the current statutory goal of 5% of contracting dollars going to SDBs to 11% by the end of FY 2022.
- Changing the federal government’s use of category management to increase contracting opportunities for underserved small businesses.
A Plan to Increase the Number of Small Business Contractors
Despite the increasing opportunities for small business contractors, there has been a significant dip in the number of small businesses participating in federal procurement over the last few years. Contract consolidation and bundling have both been a result of category management, which focuses on using taxpayer dollars more efficiently, and forming larger governmentwide vehicles. Unfortunately, these larger vehicles eliminated some of the contracts that small businesses were benefitting from, so category management has led to a reduction in small business contractors.
The White House is determined to change this by removing some of the barriers for underserved businesses to become contractors, tackling category management in a different way, and by making contracting opportunities more readily available as seen above. While category management will not disappear and in fact could become more of a focus in 2022, a White House memorandum from December 2, 2021 lays out a plan to hopefully alleviate some of the effect it has on small businesses.
Small business should keep their eye out for more opportunities, especially if you qualify for a small business set-aside. If you are not sure if you qualify or how to get involved, you should first figure out if you are a small business, and look into the different types of small business set-asides.
5. An Increase in Federal Contracting Requirements
As we’ve witnessed throughout the past year, 2022 will bring more federal requirements for government contractors. First, there is the federal vaccine mandate that requires government employees and contractors to be fully vaccinated, enforces masking and social distancing policies, and asks all contractors to designate someone to enforce the workplace efforts. However, this mandate is currently on hold as it’s contested in the Supreme Court, so it’s important to monitor any future changes.
There is also the Executive Order on “Ensuring the Future of America is Made in America by All of America’s Workers.” This order puts an emphasis on domestic products and services to strengthen our national industrial base and create more American jobs. This order and future mandates could affect your current GSA Schedule or your future contract. You’ll want to check in periodically to see what new regulations there are. In the meantime, you can focus on doing an internal review to make sure you are following the current Trade Agreements Act (TAA) and keeping your eyes open for future American-based opportunities.
Is Your GSA Schedule Contract Prepared for 2022?
With all these new opportunities, you’ll want to make sure your contract is updated, and you are prepared to respond to any relevant government solicitations. First, you’ll want to review all the things you need to do to stay compliant with your contract, and make sure your contract is complete, current, and accurate including your price list, your administrative information (such as POCs), and your sales reporting. Next, you’ll want to review your marketing practices and make sure your offerings are visible to government customers.
If you want to learn more about responding to government opportunities, you can check out our blogs “Everything You Need to Know About a Government Solicitation” and “How to Sell to the Government.” If you have questions about obtaining or managing your GSA Schedule contract, we would be happy to help you.